CMS Sept 2022

Internal Use Only

Repricing Betas

• Peer versus Bank Specific

Answer in the chat: What are the implications of Repricing Beta Assumptions?

• Do they generally make sense? Do they account for anticipated changes in the market? • Betas can differ depending on the current level of interest rates, as well as the direction and magnitude of rate changes modeled

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Internal Use Only

Repricing Lag

Pricing of deposits is a managerial decision

‐ Management decides the amount ‐ Management decides the timing

By lagging an increase in deposit rates, management can create a temporary increase in Net Interest Income

Banks in competitive markets are running a balancing game of rate increases and timing, but can realize a benefit

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