a) Core deposits are only 8% of the total assets.Thus bank is vulnerable to quick cashwithdrawl and high interest rate sensitivity. It should increase the core deposits.

b) long term securities are a major part of the total assets. Thus in case of any increase in interest rate bank will not be able to adjust quickly and face problems. Bank shouldfocus on interest rate flexible assets and liabilities.

Core deposits 50TA 625core deposits/TA 8.00%long term securities 150long term/TA 24.00%

Interest bearing checking accounts are increasing while passbook savings deposits are decreasing. Thus the management should be concerned as money is moving away from loyal andless interest rate sensitive money to high interest rate sensitive money.

Interest bearing checking accounts are increasing while passbook savings deposits are decreasing. Thus the management should be concerned as money is moving away from loyal and

Bank is having conditional deposit pricing method where it does not charge any maintenance fees on account balalnces over $1500 while it charges fixed price as well as per check charge fee for account balances below 1500$. Thus it is encouraging customers to keep more money in the deposit account as well as this policy may drive away the small customers as charges are more for the accounts below $1000.

Bank is having conditional deposit pricing method where it does not charge any maintenance fees on account balalnces over $1500 while it charges fixed price as well as per check charge fee for account balances below 1500$. Thus it is encouraging customers to keep more money in the deposit account as well as this policy may drive

Deposit Flow Interest Offered Marginal Cost Marginal Cost Rate Marginal Revenue10 3.00% 0.30 3.00% 6.25%15 3.25% 0.19 3.75% 6.25%20 3.50% 0.21 4.25% 6.25%26 3.75% 0.27 4.58% 6.25%28 4.00% 0.15 7.25% 6.25%

MR-MC Profits3.25% 0.3252.50% 0.452.00% 0.551.67% 0.65 Bank should offer 3.75% interest rate to its depositers so that

-1.00% 0.63 profit is maximised.

Deposit Flow Interest Offered Marginal Cost Marginal Cost Rate Marginal Revenue100 2.75% 2.75 2.75% 5.50%200 3.25% 6.5 6.50% 5.50%300 3.75% 11.25 11.25% 5.50%400 4.00% 16 16.00% 5.50%500 4.25% 21.25 21.25% 5.50%600 4.50% 27 27.00% 5.50%

Marginal Revenue MR-MC Profits5.5 2.75% 2.75 The bank should try to attract 100 million deposits as only 5.5 -1.00% 4.5 in this case MR-MC>0.5.5 -5.75% 5.255.5 -10.50% 65.5 -15.75% 6.255.5 -21.50% 6

Servicing Costs $ 2.65 Deposit 1000Overhead $ 1.18 Savings $ 0.66

Profit Margin $ 0.50 Monthly Fee $ 4.33 Monthly Fee $ 4.33 New Fee $ 3.67

January 400Febraury 250March 300April 150May 225June 300July 350August 425September 550October 600November 625December 300

Average 372.917interest 10.75APY 2.883