Bank Analysis School eBook

Internal Use Only

Cheetos Bank was not Using Bank-Specific Deposit Beta Assumptions…

Deposit Study

Model Assumptions (defaults)

Internal Use Only

Which Resulted in Inaccurate Earnings Simulation Projections

The 12/31/2021 modeling (+400 basis point ramped scenario) projected net interest income would decrease 6.3%

Actual 2022 net interest income increased 24.0%

Lesson : Deposit beta assumptions are critical to the accuracy of earnings simulations and should be bank-specific.