Question

Smallville 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	$	6,000				0
Investment securities		22,000				8
Repurchase agreements		12,000				6
Loans less allowance for losses		80,000				10
Fixed assets		10,000				0
Other earning assets		4,000				9
Total assets	$	134,000
Liabilities and Equity					Rate Paid (%)
Demand deposits	$	9,000				0
NOW accounts		69,000				5
Retail CDs		18,000				7
Subordinated debentures		14,000				8
Total liabilities		110,000
Common stock		10,000
Paid-in capital surplus		3,000
Retained earnings		11,000
Total liabilities and equity	$	134,000

If the bank earns $120,000 in noninterest income, incurs $80,000 in noninterest expenses, and pays $2,500,000 in taxes, what is its net income? (Enter your answer in dollars, not thousands of dollars.)

Answer 1

JASSMATE Date Page Lenallsille Anauwer in desims edollau Bank $120 Non-interest income 80 NO0-interat enpewe $2 S00 Taxes Totalanterat 12 x61480 x lo. +. 22 x 8.0 4x9.10 income $10.84 Interast income Total iudexat 18 x 1 +14 x8 69 x 5.1 epese $5.83 Iuterast enpeuse Taxes Total expenses Total income- Nel income a$C-2154.a Net income

Firstly we have calculated the interest income and interest expenses from the balance sheet given in the question and then all the given statements in the question are used to calculate the final net income which is negative in this case. I hope this was of some help for you guys , any suggestions or comments are highly welcomed

Answer 2

How would you do it with a provision for a loan loss?