A $20 billion bank was trying to diversify its wholesale funding by supplementing its FHLB advance position. It began laddering brokered CDs with maturities inside of one year and was having trouble finding cost-effective volume.
Potential Solutions
Rate specials
Internet deposits
Brokered sweep program
IntraFi FundingSM overnight or CD offering (formerly Insured Overnight Funding® and CDARS®)
Deposit listing services
Brokered CDs
FHLB advances
Benefits to Banks
Incurs no cost to bid
Brings in funds at a cost below the alternative
Helps to lower the bank’s loan-to-deposit ratio
Attracts deposits from a different customer type (local) than traditional brokered CDs
Settles next day with IntraFi Funding CD solution and same day with the overnight one
Is available without collateralization or stock purchase requirements
Bank’s Chosen Path
Bid opportunistically in the IntraFi Funding CD auction every week at rates below FHLB advances and brokered CD postings
Used IntraFi Funding overnight option leading up to peak needs, then obtained fixed-rate funding for a 1-month term with an option to renew into another 1-month term at maturity