A DI has assets of $14 million consisting of $2 million in cash and $12 million in loans. It has core deposits of $8 million. It also has $3 million in subordinated debt and $3 million in equity. Increases in interest rates are expected to result in a net drain of $2 million in core deposits over the year. a-1. The average cost of deposits is 3 percent and the average yield on loans is 6 percent. The DI decides to reduce its loan portfolio to offset this expected decline in deposits. What is the cost to the firm from this strategy after the drain