Using the Average Consolidated Average Balances, Interest, and Yields at the end of this document for a bank that reported $812 million in NII before provisions and $26.3 billion in average assets in 2013. Review the information and answer the following questions: a. What happened to earning asset yields between 2012 and 2013? What happened to the interest cost of liabilities over the same period? Were these changes positive or negative for the bank? What could cause each of these changes? b. What were the banks spread and NIM in 2013? Why did the two figures differ? c. How much did earning assets and interest-bearing liabilities change in 2013 versus 2012? What was the likely impact on NII from the differential change? Explain

TABLE 4 Average Consolldated Average Balances, Interest, and Ylelds 2013 2012 2011 (dollars in thousands) Average Balance Yield Average Rate Yield Average Rate Yield Rate Interest Balance Interest Balance Interest ASSETS Interest-earning Taxable loans, netto) Tax-exempt loans, net D) Less Allowance for loan losses assets $19,494,216 862,833 4.43% $19,645,210 919,945 4.68% s20,563,724 1,014,144 493% 112,0305,564 4.97 145,767 7,576 5.20 153,181 8,110 5.29 341,658 469,714 649,024 Loans, net 19,264,588 868,397 4.51 19,321,263 927,521 4.80 20,067,881 022,254 5.09 available for sale: Taxable investment 3,070,019 52,118 1.70 3,419,556 66,416 1.94 3,309,981 106,010 3.20 2,167 6.73 3,342,158 108,177 3.24 Tax-exempt investment 10,827 686 6.34 20,451 1,319 6.45 32,177 Total investment 3,080,846 52,804 1.71 3,440,007 67,735 1.97 TABLE 4 Average Consolldated Average Balances, Interest, and Ylelds 2013 2012 2011 (dollars in thousands) Average Balance Yield Average Rate Yield Average Rate Yield Rate Interest Balance Interest Balance Interest ASSETS Interest-earning Taxable loans, netto) Tax-exempt loans, net D) Less Allowance for loan losses assets $19,494,216 862,833 4.43% $19,645,210 919,945 4.68% s20,563,724 1,014,144 493% 112,0305,564 4.97 145,767 7,576 5.20 153,181 8,110 5.29 341,658 469,714 649,024 Loans, net 19,264,588 868,397 4.51 19,321,263 927,521 4.80 20,067,881 022,254 5.09 available for sale: Taxable investment 3,070,019 52,118 1.70 3,419,556 66,416 1.94 3,309,981 106,010 3.20 2,167 6.73 3,342,158 108,177 3.24 Tax-exempt investment 10,827 686 6.34 20,451 1,319 6.45 32,177 Total investment 3,080,846 52,804 1.71 3,440,007 67,735 1.97