Based on the description of the transactions and the Forms 1099-R, what the bank did to process this return of contribution makes no sense. (Bank personnel are notorious for being rather clueless about how to process transactions involving IRAs.)
What they should have done is process a single return-of-contribution transaction that would be reportable on a single Form 1099-R with $7,339.73 in box 1, $339.73 in box 2a, code P in box 7 and the IRA/SEP/SIMPLE box marked.
The only reason that there would be $145.09 reported with code 1 is if there had been only $194.64 of gain attributable to the $7,000 being returned, meaning that the $145.09 was not part of the return of contribution. Even then the $195.64 should be present on the code-P Form 1099-R. Based on the description of events, under no circumstances should anything be reported with code 8. (Code 8 might make sense if this was a return of contribution from an employer plan like a 401(k), but nothing suggests that this is anything but a return of contribution from a traditional IRA.)
Note that there is no MAGI limit for being eligible to contribute to a traditional IRA. MAGI only has the potential to affect the deductibility of a traditional IRA contribution. Still, you were permitted to obtain a return of the contribution even though it was not an excess contribution.
