Question 1

Compare the relative earnings performance of Keystone National Bank with its peers in 1989 and 1990.

Question 2

Evaluate the financial risks Keystone National Bank has taken to attain these returns.

Question 3

Analyze the interest-sensitivity report in Exhibit 4. What are the shortcomings of the report in revealing Keystone’s interest-rate risk position at the end of 1990?

Question 4

Using the data in Exhibit 5, determine Keystone’s liquidity needs over the first quarter of 1991. How should the bank meet its liquidity requirements?

Question 5

Given the outlook for 1991 suggested in Exhibit 6, what specific recommendations would you make to the management of the Keystone National Bank for improving the bank’s earnings performance and financial strength?