6. Commercial Banks (15 marks) Community Bank has the following balance sheet and income. Assets Cash and deposits Investment securities Gross loans Less: Allowance for loan losses Net loans Total assets Interest income Interest expense Net interest income Provision for loan losses Noninterest income Noninterest expense Income before taxes Taxes Net income Assets 6 Cash and deposits Investment securities Gross loans Less: Allowance for loan losses Net loans Total assets Balance Sheet $10m Deposits $24m Borrowed funds $70m $4m $66m $100m Total Income Statement Liabilities Common stock Retained earnings Total equity Balance Sheet (1) Fill in the blanks in the income statement above. (3 marks) (2) Calculate ROA and ROE. (2 marks) (3) During the month, a depositor withdraws $1m from this bank, and the managers writes $1m loan off its books, which is expected by the managers and reflected in allowance for losses. Update the balance sheet at the end of the month and fill in the table below. (10 marks) 7 Liabilities