Wells Bank has the following financial data for the current year: 6,000,000 9,000,000 9,000,000 10,000,000 Assets Reserv

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Wells Bank Has The Following Financial Data For The Current Year 6 000 000 9 000 000 9 000 000 10 000 000 Assets Reserv 1 (61.85 KiB) Viewed 27 times

Wells Bank has the following financial data for the current year: 6,000,000 9,000,000 9,000,000 10,000,000 Assets Reserves Securities < 1 Year 1 to 2 Years > 2 years Residential Mortgages Variables-rate Fixed-rate Commercial Loans < 1 Year 1 to 2 Years > 2 years Buildings, etc. 12,000,000 10,000,000 Wells Bank Duration Liabilities Duration 0.00 Checkable Deposits 10,000,000 1.6 Money Market Deposits 8,000,000 0.20 0.60 Savings Accounts 26,000,000 1.00 1.80 CDS 6.40 Variables-rate 9,000,000 0.30 < 1 Year 9,000,000 0.60 0.80 1 to 2 Years 6,000,000 1.60 7.20 > 2 years 6,000,000 2.20 Interbank Loans 8,000,000 0.00 0.60 Borrowings 2.20 < 1 Year 6,000,000 0.40 4.60 1 to 2 Years 6,000,000 1.60 0.00 > 2 years 6,000,000 3.60 Bank Capital 10,000,000 Total $110,000,000 12,000,000 12,000,000 18,000,000 12,000,000 Total $110,000,000 a. From previous experience, the bank manager of Wells Bank knows that 15% of the fixed-rate residential mortgages are repaid within a year. The bank manager also estimates that 15% of checkable deposits and 20% of savings deposits should be considered rate-sensitive. i. What is the current income GAP for Wells Bank? Shows all the calculations. 7 marks ii. If the bank manager of Wells Bank sells $3 million of its securities with maturities greater than two years and replaces them with securities maturing in less than one year; and revises the estimate of the percentage of fixed-rate mortgages that are repaid within a year from 15% to 25%, what will be the revised income gap for the bank? Shows all the calculations.