Problem

Old Settlers State Bank has recorded the following financial data for the past three years...

Old Settlers State Bank has recorded the following financial data for the past three years (dollars in millions):

 

Current Year

 Previous Year

 Two Years Ago

Interest revenues

$80

$82

$84

Interest expenses

66

68

70

Loans (Excluding nonperforming)

400

405

400

Investments

200

195

200

Total deposits

450

425

475

Money market borrowings

100

125

75

What has been happening to the bank’s net interest margin? What do you think caused the changes you have observed? Do you have any recommendations for Old Settlers management team?

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