When it comes to determining the value of a deposit base, there are three major components that drive franchise value: effective cost of funds, interest rate sensitivity (duration and convexity) and volatility.
If you got past the title it is likely that you care about the accuracy of your loan pricing more than the average banker. Banks have long ignored the variability around default risk and it is starting to be a problem, as with tighter spreads, there is now less room for error. While bankers solve for credit risk through taking loan loss reserves and through pricing, it is rare that a community banks takes into account default variability. Many large banks do and this article shows how community banks can gain about 80% accuracy through a simple methodology.