Banking Practice Exam

The definition of a bank's "burden" specifically refers to the difference between non-interest expense and non-interest income. This indicates the extent to which a bank's costs associated with operations and administration exceed its earnings from non-interest-related activities, such as fees and service charges.

When analyzing a bank's financial performance, understanding the burden is crucial because it highlights the pressure on a bank’s profitability from its operational costs. A higher burden indicates that non-interest expenses are consuming a greater portion of income derived from non-interest sources, which can negatively impact overall profitability.

The other options do not accurately define the burden. For instance, net interest income relates to the interest earned on loans minus the interest paid on deposits and does not factor into the burden concept. Therefore, only the relationship between non-interest income and expenses precisely encapsulates what is meant by a bank's "burden."