A $200 million bank is involved in real estate warehouse lending that causes them to have daily balance sheet fluctuations of $15-20 million.

Potential Solutions

-FHLB overnight advances

-Fed Funds purchased

-Correspondent line of credit


Benefits to Bank

-Is cost effective compared to other options

-Counts as a deposit, not a borrowing (enhances loan-to-deposit ratio)

-Is available without collateralization or stock purchase requirements

-Frees up capacity if it needs to tap FHLB

-Diversifies overnight sources of funding, a positive for a contingency plan

Bank's Chosen Path

The bank decided to use ICS to manage the daily fluctuations.