A bank has the following assets and associated interest rates:

ASSET AMOUNT INTEREST RATE

Loans 400 million 6%

Corporate bonds 100 million 5%

US Treasury notes/bonds 60 million 2%

Inter-Bank loans 75 million 1.55%

Cash (Reserves) 20 million 0%

Its liabilities are:

Demand Deposits 295 million 0%

Time Deposits 260 million 1%

Long term bonds 45 million 4%

Inter-Bank borrowing 10 million 1.5%

Borrowing from Fed 5 million 1.75%

Equity 40 million

SHOW WORK

Calculate the banks Net Interest MarginSuppose interest rates increase by 1% across the board (except for Demand Deposits and cash, of course). What is the new NIM?Go back to the original set of interest rates. Suppose due to the growing economy, customers add 25 million to the banks demand deposits, which the bank uses to make loans and purchase corporate bonds in the same proportion as now. Forevermore, other customers take 10 million out of their time deposits and put it into their checking accounts. What is the new NIM?