WHEN LIFE GIVES YOU LEMONS,
LEARN FROM IT.

Knowledge is power. Understanding depositors is the key to building
successful deposit programs and products to meet their needs and yours.
Your Farin Advisor and Core Deposit Analysis results will help you predict
depositor reactions to new offers based on past behavior, meet regulatory
expectations and drive profitability. Cheers!

FARIN CORE DEPOSIT ANALYSIS

Understanding the past to better plan for the future.

Farin strongly advises institutions take full advantage of the knowledge buried in their data to better understand existing and potential deposit customers.

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ASSET/ LIABILITY MANAGEMENT TOOLS
WITH THE POWER TO DRIVE DECISIONS.

Current regulations require Core Deposit Analysis or Core Deposit Studies of non-maturity deposit accounts to better understand your institution’s level of “core” funds and how your core accounts are likely to behave in the future, based on past reactions to change.

Given the enormous impact assumptions made based on Core Deposit Analysis have on capital and earnings, it is imperative that you entrust this analysis to a proven Advisor, rather than use a short-course study to simply comply with regulations. Farin can help you perform Annual Core Deposit Analysis or a “Vintage” Core Deposit Analysis, for a more in-depth understanding of your core accounts.

There is much to be learned hidden in your data and the cost of being wrong on this set of assumptions can be catastrophic. Your Farin Advisor will help you determine the importance of each factor and develop a process to help avoid making unfortunate decisions.

“While having data is valuable, the key to success is knowing how to interpret and effectively use that data. Farin provides written recommendations to help you take full advantage of your analysis, enhancing the value of your institution’s non-maturity deposit sector, improving pricing betas and reducing funding costs.”

Urum Urumoglu – Farin Senior Consultant, ALM and Core Deposit Analysis Expert

WHY CHOOSE FARIN?

OUR EXPERIENCE

  • We have over 30 years of experience delivering financial analysis and advisory services.
  • Farin is recognized by institutions, regulators and trade associations as industry leaders in Core Deposit Analysis, specializing in Vintage Core Deposit Analysis.

OUR FOCUS

  • Our Core Deposit Analysis Experts will help you determine the necessary data, interpret the results and translate that information into actionable plans.
  • Exceptional customer service is our goal – We are just the right size – big enough to provide cutting edge financial analysis, yet small enough to give you the attention and care you deserve.

SENSITIVITY ANALYSIS IS THE KEY

We believe the goal of sensitivity analysis is to discover which assumptions contribute the most to volatility – not to determine failure points. Knowing the most critical components hidden in your data will help you make better decisions regarding funding and pricing, as well as develop effective change strategies.

“It is crucial that institutions understand the impact rising rates may have on overall funding costs of key deposits, and the impact on capital and earnings.  Farin can help you prepare for and profit from change.”

Urum Urumoglu– Farin Senior Consultant, ALM and Core Deposit Analysis Expert

Most ALM models do not address the impact of rising rates on surge deposit costs, because most account structures contain all the balances in one account, that are given a single assumption for repricing in rising rates. No consideration is given to how the potential “surge” balances may reprice, thus causing the interest expense levels to be understated and less volatile. If you use Farin Foresight for ALM modeling, you can vary account structures to provide this vital information quickly and efficiently.

WE BELIEVE IN “REALITY CHECKS”

Farin suggests sensitivity testing of individual assumptions and scenarios (combinations of assumptions) to disclose the full impact of changing rates – because in real life your institution will encounter multiple challenges simultaneously – lags, betas, and surge balances. In addition, we run your testing scenarios in plausible rate shock environments that are neither immediate nor parallel, to more accurately estimate the impact on your institution. This level of analysis will show whether or not your institution will survive from a capital, earnings and liquidity perspective, if major assumptions are wrong. Annual Core Deposit Analysis, focusing on back testing and trend analysis, is strongly advised.

CORE DEPOSIT ANALYSIS FEATURES AND BENEFITS

  • Development of institution-specific decay rates, pricing lags and beta assumptions
  • Improves asset-liability modeling accuracy, leading to better-informed management decisions
  • Easily integrates into most institution’s Asset/Liability model for analysis, forecasting, budgeting and reporting
  • Evaluates changes in deposit accounts through variable interest rate cycles to better understand depositor behavior
  • Measures depositor’s response to promotional rates when market interest rates move
  • Demonstrates how pricing betas and decay rates translate into core deposit intangibles in EVE and NEV calculations
  • Provides critical information for developing pricing strategies and managing funding costs to meet deposit growth objectives

VINTAGE CORE DEPOSIT ANALYSIS

If you’d like to dig deeper, to completely understand how your core deposit accounts react to changes over time, talk to us about a Vintage Core Deposit Analysis. We know gathering all the necessary data can be a daunting task, we will help every step of the way. Farin uses your institution’s historical data and applies the standard interest rate shocks of +/- 100, 200, 300 and 400 basis points. Analysis is provided on standard deposit classifications such as DDA accounts, NOW accounts, Savings Accounts and MMDA accounts. Updates are provided annually, which will help your institution capture the behavior of core deposit balances during changing economic environments.

MAKING SENSE OF YOUR CORE DEPOSIT STUDY

Read Urum’s latest articles►

CORE DEPOSIT ANALYTICS — 2 PART WEBINAR

Instant access to critical information you can use ►

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“The goal of analysis is not to be 100% right, but rather to know if we are in danger if we happen to be 5-10% wrong.”

Urum Urumoglu
Farin Senior Consultant
ALM and Core Deposit Analysis Expert
608-661-4210
urum@farin.com

More about Urum ►

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FARIN CORE DEPOSIT ANALYSIS

Our Core Deposit Analysis model has been independently certified to fully and accurately perform mandated regulatory analyses and reporting of interest rate risk for both income-at-risk and value-at-risk

CORE DEPOSIT ANALYSIS

Jake Lawler

Farin Financial Risk Analyst
608-661-4206
jlawler@farin.com

“While loading data for analysis, we look for trends and irregularities. If there’s a spike or dip in account balances, we drill down until we find the source, then run the model with and without outliers to discover the true characteristics of the core deposit funds. This attention to detail is what sets Farin apart from other study providers.”

More about Jake ►

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For 30 years we’ve specialized in areas of Financial Risk Management and developed these tools to help financial institutions like yours plan ahead and ultimately thrive in any economic environment.