Friday, March 2, 2018
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler • Tom Toburen • Josh Kiefer  Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer • Chuck Honeywell

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
2/23/18	1.38	1.64	1.85	2.02	2.25	2.39	2.62	2.79	2.88	3.04	3.16
2/26/18	1.39	1.66	1.87	2.03	2.22	2.37	2.60	2.77	2.86	3.03	3.15
2/27/18	1.49	1.66	1.87	2.08	2.27	2.43	2.67	2.83	2.90	3.06	3.17
2/28/18	1.50	1.65	1.86	2.07	2.25	2.42	2.65	2.80	2.87	3.02	3.13
3/1/18	1.50	1.63	1.85	2.05	2.22	2.36	2.58	2.74	2.81	2.97	3.09

                                                                                      Source: U.S. Department of the Treasury, as of 3/1/18  

Focus on Core

Asset Management Group has been involved in several conversations lately regarding banks considering new ways to increase core deposits.  Most bankers we speak with realize that by simply increasing rates across the spectrum of deposits can be both expensive and ineffective.  Additionally, most banks who issue deposit specials have noticed that a majority of the funds migrate into the special from an existing account.  The net result is that the bank pays up for dollars already on deposit.  As banking technology continues to evolve, the days of posting a deposit special followed by customers walking in the door seem to be slowly fading.  We now have to worry about a bank in another state or market.  Then there is the possibility of an internet bank competing for our local deposits.  Competition does not mean we are unable to obtain new funds, it simply means we have to try harder and that it might take a little more time.

A solution that allows you to fund your asset growth while providing you the time to implement a cost-effective deposit growth strategy is callable brokered CDs.  Issuing 2-year or longer fixed, callable brokered CDs provide the flexibility and funding you need without the pressure of just repricing your base.  2-year terms are required to be able to have a call feature.  This feature allows you, the banker, to call the CDs and return the principal and current interest to the investor without additional costs.  This is a huge benefit over other term borrowings that generally include significant prepayment penalty if you want out prior to maturity. 

Therefore, while your frontline employees work diligently to generate new deposit relationships for your bank, having new funds with a call feature provides you the flexibility to reduce funding when you reach your core growth target. This will allow your institution to continue to fund your asset growth cost-effectively.  At the beginning of every week, we send out the current balanCD funding rates.  If you would like to get more information on developing a solid funding profile or want more information, reach out to your Capital Markets Group representative.

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value