Banking Practice Exam

Non-interest income refers to the revenue that banks generate from sources other than the interest they earn on loans and securities. Understanding the components of non-interest income helps in analyzing bank profitability and revenue streams.

The correct answer, personnel expenses, is not classified as non-interest income because it represents costs associated with staffing, employee salaries, and benefits. These expenses are part of the operational costs of a bank and do not contribute to its income in any form. Non-interest income would typically encompass various fees and charges that banks impose on services they offer.

In contrast, checking account fees, insufficient funds service charges, and trust income all represent forms of revenue that contribute to a bank’s profitability but do not originate from interest on loans. Checking account fees are charged for maintaining accounts; insufficient funds service charges are fees imposed on customers whose accounts do not have sufficient funds to cover transactions; and trust income is derived from fees associated with managing trusts. All these options exemplify ways banks generate revenue through services rendered, distinguishing them as non-interest income.