7. Smallville Bank has the following balance sheet, rates earned on its assets, and rates paid on its liabilities.

Balance Sheet (in thousands)

Rate Earned Assets (%)

Cash and due from banks $ 6,000 4 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 Rate Liabilities Paid and Equity (%)

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? ( LG 12-5 )