Bank of the West has a following financial statement for the current year. The manager predicts that 15% of fixed-rate mortgages prepay this year. The manager also estimates that 10% of checkable deposits and 20% of savings accounts are rate sensitive. Assets Liabilities Duration Duration $ Amount $1,500,000.00 $ Amount $15,000,000.00 Reserves 0 2 Checkable Deposits MMDAS Savings Accounts $4,300,000.00 0.1 Securities $6,000,000.00 1 2 Years $8.000.000.00 8.6 Variable-rate $3,400,000.00 0.7 Fixed-rate 2 Years 2.4 A $8.000.000.00 0 Commercial Loans 2 Years 4.5 $250,000.00 1.5 1 to 2 Years > 2 Years 4.5 $1,250,000.00 $7,000,000.00 Building, etc. $2,400.000.00 0 Bank Capital Total $60,200,000.00 Total $60,200,000.00 Question: What will happen to the net income of the bank if the interest rates rise from 3% to 4%? Net income will decrease by $337,000 O Net income will increase by $154,750 O Net income will increase by $337.000 Net income will decrease by $142.000 Net income will decrease by $154.750 Net income will increase by $59.750 O Net income will decrease by $59.750 Net income will increase by $142,000 Bank of the West has a following financial statement for the current year. The manager predicts that 15% of fixed-rate mortgages prepay this year. The manager also estimates that 10% of checkable deposits and 20% of savings accounts are rate sensitive. Assets Liabilities Duration Duration $ Amount $1,500,000.00 $ Amount $15,000,000.00 Reserves 0 2 Checkable Deposits MMDAS Savings Accounts $4,300,000.00 0.1 Securities $6,000,000.00 1 2 Years $8.000.000.00 8.6 Variable-rate $3,400,000.00 0.7 Fixed-rate 2 Years 2.4 A $8.000.000.00 0 Commercial Loans 2 Years 4.5 $250,000.00 1.5 1 to 2 Years > 2 Years 4.5 $1,250,000.00 $7,000,000.00 Building, etc. $2,400.000.00 0 Bank Capital Total $60,200,000.00 Total $60,200,000.00 Question: What will happen to the net income of the bank if the interest rates rise from 3% to 4%? Net income will decrease by $337,000 O Net income will increase by $154,750 O Net income will increase by $337.000 Net income will decrease by $142.000 Net income will decrease by $154.750 Net income will increase by $59.750 O Net income will decrease by $59.750 Net income will increase by $142,000