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Estimating the Bank’s Cost of Funds

Estimating the Bank’s Cost of Funds. Common Sources of Funds. Funds sourced through deposits Funds sourced through borrowings Funds sourced from both deposits and borrowings. Fund sourced solely from Deposits. If funds come solely from deposits …. Computing the Average Deposit Balance.

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Estimating the Bank’s Cost of Funds

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  1. Estimating the Bank’s Cost of Funds

  2. Common Sources of Funds • Funds sourced through deposits • Funds sourced through borrowings • Funds sourced from both deposits and borrowings

  3. Fund sourced solely from Deposits

  4. If funds come solely from deposits …

  5. Computing the Average Deposit Balance • Data required: • Average of Total Daily Balances • Average Monthly Balances

  6. Average of Total Daily Balances

  7. Average Monthly Balance

  8. Computing the Interest Expense on Deposit

  9. Funds sourced solely from Borrowings

  10. If funds come solely from borrowings …

  11. Computing the Average Amount Outstanding

  12. Computing the Interest Expense on Borrowed Funds

  13. Funds sourced from both Deposits and Borrowings

  14. If funds sourced from deposits and borrowings …

  15. Computing the Interest Expense on Deposits and Borrowed Funds

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