Bank Analysis School Case Study eBook

Sunny State Bank

IRR - FUNDING MATURITY INFO

Long-Term Funding (Repricing/Maturing > 3 Years) / Total Assets

1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

5.8%

4.3%

4.2%

4.1%

3.9%

3.6%

3.4%

Metrics

3.1%

2.9%

3.4%

Bank State All Banks

2.8% 3.0% 2.8%

3.1%

2.6%

2.5%

3.0%

3.0%

2.4%

2.3%

2.6%

2.4%

1.8%

2.3%

2.0%

2.0%

1.5%

20X9Q2

20X9Q3

20X9Q4

20X0Q1

20X0Q2

20X0Q3

20X0Q4

20X1Q1

20X1Q2

20X1Q3

20X1Q4

20X2Q1

20X2Q2

20X2Q3

20X2Q4

20X3Q1

20X3Q2

20X3Q3

20X3Q4

20X4Q1

20X4Q2

20X4Q3

20X4Q4

20X5Q1

20X5Q2

20X5Q3

20X5Q4

Non-Maturity Deposits / Total Assets

72.0%

68.2%

68.3%

67.3%

70.1%

68.0%

65.2%

64.4%

67.2%

65.9%

65.6%

64.0%

61.6% 62.3%

64.3%

62.1%

59.1%

60.0%

60.0%

56.7%

56.0%

53.5%

53.8%

50.9%

52.0%

50.1%

48.3%

49.6%

48.0%

49.1%

48.1%

46.7%

20X9Q2

20X9Q3

20X9Q4

20X0Q1

20X0Q2

20X0Q3

20X0Q4

20X1Q1

20X1Q2

20X1Q3

20X1Q4

20X2Q1

20X2Q2

20X2Q3

20X2Q4

20X3Q1

20X3Q2

20X3Q3

20X3Q4

20X4Q1

20X4Q2

20X4Q3

20X4Q4

20X5Q1

20X5Q2

20X5Q3

20X5Q4

Repricing risk is the most common form of IRR, and is caused by a mismatch in the term structure of assets and liabilities. If a bank's asset structure is long-term, risk to rising rates can be partly mitigated by a longer-term funding structure (which could include a high amount of stable non-maturity deposits).