The following table summarizes the financial assets and financial liabilities of PL Banking Corporation in a tabular format.

Required:
1. Discuss the nature of the interest rate risks facing PL Banking Corporation.
2. Based on the information given, calculate, using sensitivity analysis, the effect of

(a) A 50 basis-point increase in interest rate and

(b) A 100 basis-point increase in interest rate on the earnings of the institution.

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Assets: Assets Fixed rate loans Average interest rate Variable rate loans Average interest rate Liabilities: Savings (fixed rate) Average interest rate Time deposits (fixed rate) Average interest rate Time deposits (variable rate) Average interest rate ... Long-term debt (variable rate).. Average interest rate ..... ***** Maturing in 20x1 $1,280,000 7.5% 990,000 8.28% 1,800,000 2.5% 2,080,000 4.5% 300,000 6.5% Maturing in 20x2 $890,000 7.8% 480,000 8.50% 0 290,000 4.8% 180,000 6.7% 500,000 5.4% Maturing in 20x3 $560,000 8.02% 250,000 8.6% 0 80,000 5.0% 0 Total book value $2,730,000 7.7% 1,720,000 8.38% 1,800,000 2.5% 2,450,000 480,000 500,000 5.4% Fair value $2,838,000 1,720,000 1,800,000 2,380,000 500,000