Wednesday, December 29, 2021
PORTFOLIO SALES AND SERVICE:
George Morris • Chris Thompson • Sean Doherty • Kevin Doyle • Mark Tranckino
Jeff Goble • Nicole Burczyk • Natalie Regan • Aaron Stoffer • David Farris • Lonnie Harris
Brian Schaff • Josh Kiefer • Robert Schuyler • Tom Toburen • Aaron Hemphill • Jared Willhoft
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January To-Do Item: Forward Deposit Review
Over the past almost two years, banks have seen an unplanned surge in deposits from PPP loans (and government repayment) along with some organic growth. The stickiness of these deposits varies bank to bank, so some banks may be returning to a normal loan to deposit ratio while others are still swimming in excess cash. Even if your bank identifies with the latter, consideration should still be given to brokered deposits. The benefits of accessing cheap funding now are there and should be studied. Rather than looking at the dollars being raised as going directly to Fed Funds, which might be raised three times next year, you could add funds to your bond portfolio with targeted maturities less than when the brokered CDs come due. Also, adding a call date for 5-10bps would allow more flexibility to the final payoff.
Shown below are current indications for issuing brokered CDs. As rates are still low historically, funding longer term deposits could provide cushion to a different part of the next rate cycle. There may not be a way to see what is ahead, but making decisions based on historical trends and data and preparing for the next potential high in rates, could be advantageous.
Call us to discuss a plan that could be beneficial for your bank’s current and future balance sheet.
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