MPS Indeterminate Maturity Deposit Index reports enable more accurate funds transfer pricing (FTP) and profitability analysis by providing quantitative and defensible answers to key crediting rate questions. Report information, including existing balances run off data, can be directly input into any FTP or profitability model. The MPS Indeterminate Maturity Deposit Index Report meets the needs of those institutions that require only benchmark level estimates of crediting rate inputs for their FTP application.
The report provides interest expense sensitivity and existing balances run off information for nine deposit categories. Key analytical elements can be user defined by category to produce custom crediting rate determinations.
With this MPS service, your institution is empowered to:
- More precisely credit indeterminate maturity deposit values in FTP applications
- Attribute profitability contributions more accurately in all levels of profit analysis
- Avoid losses in performance that can result from overly conservative crediting values
- Better define and enforce deposit based compensation plans and incentive targets
- Create an atmosphere of greater understanding and trust between Treasury and Retail
The institution provides online input for current total balances and rates paid information for up to nine categories of core deposits for Banks/Thrifts (DDA Personal, DDA Business, NOW Personal, NOW Business, Savings Personal, Savings Business, MMDA Personal Low, MMDA Personal High, MMDA Indexed). Credit Union reports have six categories available (NIB-Share Drafts, IB-Share Drafts, Regular Shares, MMDA High, MMDA Low, MMDA Indexed). The resulting report produces benchmark estimates of interest expense sensitivity, existing balances run off, and duration customized to the institution's inputs. The values produced can be directly used as inputs for FTP and profitability models.
Run off data underlying MPS core deposit index reports is obtained from recent applications of the MPS Advanced Assessment Methodology. This patent pending, advanced econometric approach analyzes historic core deposit behavior in a simultaneous equations system that reflects banking practice and depositor decision influences. It produces high precision forecasts of total balances supplied and rates paid behaviors, plus the category inter-dependencies that often characterize deposit supply. It further produces retained balances behavior forecasts, from which the cash flow run off from existing deposit balances can be calculated.
The information used in producing MPS indeterminate maturity deposit index reports represents billions of dollars of aggregate deposit balances reflecting the monthly account level decisions of millions of depositors. The data underlying the MPS Indeterminate Deposit Index is the broadest available view of micro-level indeterminate maturity deposit behavior available today.
How to Obtain MPS Indeterminate Maturity Deposit Index Service Reports
This service is sold and delivered over the Internet for client convenience. General features of the service's purchase and delivery processes are as follows.
MPS Indeterminate Maturity Deposit Index Reports are available as an annual subscription (4 quarterly or 12 monthly reports) or as single reports. Using a web page order form, the user chooses the term of the contract (annual 4 or 12 report subscription or single report), method of payment (invoice or credit card), and a user ID and password. Upon payment confirmation, user access to the appropriate area of the MPS web site is granted.
The MPS Indeterminate Maturity Deposit Index Report requires institution input of category specific data on balances and rates paid via a web page input form. Repricing across +/-100 bp rate shock scenarios, Net Interest Expense (NIE) inputs, and truncation points can be accepted as MPS defaults or overwritten. Once user input is submitted, the report runs in a matter of minutes. An e-mail is sent to the user when the Indeterminate Maturity Deposit Index Report is available for access on the website. For annual subscriptions, a reminder e-mail is also sent as a prompt to submit the institution's input.
What if a Higher Level of Precision is Needed?
For some institutions, benchmark type estimates of FTP and profitability may not provide a high enough level of precision. This could include institutions with more sophisticated FTP models and profitability applications, more complex balance sheets, or where more precise and franchise specific information is required.
In such cases, the MPS Indeterminate Maturity Deposit Analysis Service can provide the answer. This service delivers institution specific analyses of indeterminate maturity deposit behavior and value, produced using the MPS Advanced Assessment Methodology. Deliverables available in this service provide institution or franchise indeterminate maturity deposit (and CD) behavior estimates that are precise enough to support the business or regulatory needs of any institution.