Regulatory Compliance : National Benchmarks

"What do my peers look like?" is an often heard question relating to core deposit and loan prepayment behaviors.

To answer that question in a general way, MPS produces national average index information on core deposit and loan prepayment values for ALM applications.  Index type data provide low cost "approximation level" inputs for institutions that do not require franchise specific behavior measures against which to judge institution ALM application inputs.

MPS national average index data are based on MPS statistical analyses of deposit and loan prepayment behavior for a large number of institutions, representing billions of dollars in deposits and millions of depositor decisions.  This strong empirical base creates ALM inputs that have regulatory credibility in applications where institution specific behavior values are not considered necessary.

Separate index information is produced for Banks/Thrifts and Credit Unions.

Benchmarks can be made more specific, however, by customizing the underlying data to match the client institution.  MPS analog deposit analyses base benchmark information on averages of a custom set of MPS statistical deposit analysis client forecast data.  Selection of the institutions used is based on how close they match the client institution in terms of location, asset size, operating type, and other characteristics.

Analog benchmarks provide good approximations to institution specific deposit behaviors in three areas – supply/liquidity sensitivity to interest rate changes, repricing, and average lives/present values/durations.  Analogs can be used for pre-assessing the behaviors of proposed or new categories, creating temporary inputs where a long enough time series of data to support statistical analysis is not available, and where low cost equity at risk compliance is desired (when customized benchmark level deposit behavior data is sufficient).

Analog behavior information is superior to generic deposit behavior indices because its sources are customized to the characteristics of the category and the client institution.