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	$	6,500				0
Investment securities		27,000				8
Repurchase agreements		17,000				6
Loans less allowance for losses		85,000				10
Fixed assets		15,000				0
Other earning assets		5,000				9
Total assets	$	155,500
Liabilities and Equity					Rate Paid (%)
Demand deposits	$	14,000				0
NOW accounts		74,000				5
Retail CDs		23,000				7
Subordinated debentures		19,000				8
Total liabilities		130,000
Common stock		15,000
Paid-in capital surplus		3,500
Retained earnings		7,000
Total liabilities and equity	$	155,500

If the bank earns $125,000 in noninterest income, incurs $85,000 in noninterest expenses, and pays $2,550,000 in taxes, what is its net income? (Enter your answer in dollars, not thousands of dollars.)

Answer 1