Community Bank has the following balance sheet, rates earned on its assets, and
ID: 2655861 • Letter: C
Question
Community Bank has the following balance sheet, rates earned on its assets, and rates paid on its liabilities.
Balance Sheet (in thousands)
Assets
Rate Earned (%)
Cash and due from banks
$?7,900
0
Investment securities
29,600
1.50
Repurchase agreements
15,960
1.15
Loans less allowance for losses
106,400
7.25
Fixed assets
13,500
0
Other assets
??5,320
0
Total assets
$178,680
Liabilities and Equity
Rate Paid (%)
Demand deposits
$?27,490
0
NOW accounts
90,700
0.50
Retail CDs
23,940
1.20
Subordinated debentures
?15,000
5.50
Total liabilities
157,130
Common stock
5,000
Paid-in capital surplus
5,000
Retained earnings
?11,550
Total liabilities and equity
$178,680
If the bank earns $159,000 in noninterest income, incurs $306,000 in noninterest expenses, and pays $3,320,000 in taxes, what is its net income? (Please show work)
Assets
Rate Earned (%)
Cash and due from banks
$?7,900
0
Investment securities
29,600
1.50
Repurchase agreements
15,960
1.15
Loans less allowance for losses
106,400
7.25
Fixed assets
13,500
0
Other assets
??5,320
0
Total assets
$178,680
Liabilities and Equity
Rate Paid (%)
Demand deposits
$?27,490
0
NOW accounts
90,700
0.50
Retail CDs
23,940
1.20
Subordinated debentures
?15,000
5.50
Total liabilities
157,130
Common stock
5,000
Paid-in capital surplus
5,000
Retained earnings
?11,550
Total liabilities and equity
$178,680
Explanation / Answer
Interest income = (29,600,000 x 1.50%) + (15,960,000 x 1.15%) + (106,400,000 x 7.25%)
= 444,000 + 183,540+ 7,714,000
= $8,341,540
Interest expenses = (90,700,000 x 0.50%) + (23,940,000 x 1.20%) + (15,000,000 x 5.50%)
= 453,500 + 287,280 + 825,000
= $1,565,780
Net income = $3,308,760
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Interest income 8,341,540 + Non interest income 159,000 Total income 8,500,540 Less: Interest expense - 1,565,780 Less : Non interest expenses - 306,000 Income before tax 6,628,760 Less : Income tax - 3,320,000 Net income 3,308,760Related Questions
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