Ensure your loan pricing model is calibrated with bank specific assumptions that drive real results.
Loan pricing software is only as good as its assumptions. Over time, as your institution evolves, these assumptions can potentially become stale. Our Tier II Cost & Profitability Analysis is designed to eliminate this risk. This annual analysis will ensure all of the assumptions in your model, as well as the important ROE Targets, remain in-sync with the operating condition of your bank.
A list of the deliverables include:
- Fully balanced Funds Transfer Pricing (FTP) calculation including cost of funding on loans, investments, and other assets, as well as credit for funding on non-maturity deposits, time deposits, other liabilities and capital.
- Simulated net interest margin calculation on each critical loan and deposit product.
- Credit risk adjusted provision expense allocation.
- Expense allocation model that allocates total non-interest expense across both sides of the balance sheet and into variable/fixed or direct/indirect categories.
- Capital allocation based on regulatory risk weightings.
- Product level net profit and Return on Equity contributions used as the basis of recommended LoanPricingPRO® ROE target levels.