Bank Analysis School Case Study

Sunny State Bank

IRR - FUNDING MATURITY INFO

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

5.8%

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

4.1%

3.9%

Metrics

3.1%

2.9%

Bank State All Banks

2.8% 3.0%

2.8%

3.1%

2.6%

3.0%

2.5%

2.4%

2.3%

2.6%

2.4%

2.3%

2.0%

2.0%

1.8%

1.5%

20X0 Q4

20X1 Q1

20X1 Q2

20X1 Q3

20X1 Q4

20X2 Q1

20X2 Q2

20X2 Q3

20X2 Q4

20X3 Q1

20X3 Q2

20X3 Q3

20X3 Q4

20X4 Q1

20X4 Q2

20X4 Q3

20X4 Q4

20X5 Q1

20X5 Q2

20X5 Q3

20X5 Q4

Non-Maturity Deposits / Total Assets

72.0%

70.1%

68.2%

68.3%

67.3% 67.2%

68.0%

68.4%

65.2% 65.6%

64.4% 64.3%

65.9%

64.0%

62.3%

61.6%

60.0%

62.1%

59.1%

60.0%

56.7%

56.0%

53.5%

53.8%

52.0%

20X0 Q4

20X1 Q1

20X1 Q2

20X1 Q3

20X1 Q4

20X2 Q1

20X2 Q2

20X2 Q3

20X2 Q4

20X3 Q1

20X3 Q2

20X3 Q3

20X3 Q4

20X4 Q1

20X4 Q2

20X4 Q3

20X4 Q4

20X5 Q1

20X5 Q2

20X5 Q3

20X5 Q4

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).