Keystone has a few strengths looking at its present financial condition financial statements. However, the bank is willing and able to pay higher competitive rates compared to other banks in the area. This is likely to send a strong signal to potential customers who may wish to take advantage of the rates by increasing their core deposits at Keystone Bank. Also, increasing local economic activities can also be viewed as strength to keystone. This is because if the local people are making more money than they need, they will be willing to save some especially at high rates of return which would benefit them and Keystone at the same time. It will increase their core deposits and decrease their dependence on other sources for loanable funds.
Commercial and consumer loans are also strength of keystone looking at the two year period compared to their peers. They need to capitalize on that and see if they offer some commercial loans to the new company’s coming into town at competitive rates. Weakness:
Keystone Bank has a wide range of weaknesses compared to its peers. Some of their weaknesses are a result of their high exposure to credit risk, interest rate risk and liquidity risk. Credit risk can be defines as the risk of a corporation not being able to pay its debt as they become due. Keystone has a lot of CD’s on its books and need to pay the holders of the CD as they become due. This is going to put a lot of financial stress on the bank considering the fact that interest rates are low and the national economy is slowing down. Liquidity risk can be defined as a company’s ability to convert its assets into cash at fair market value. Keystone Bank’s liquidity measures are below the average of its peers. If you consider its temporary investments to assets for 1990 and 1989, they were 10.64% and 11.02% compared to 15.07% and 16.15% of its peers. This means that Keystone Bank is investing in products that cannot be...