bank liquidity and wholesale funding part i. 2 historical overview bank funding and liquidity...
TRANSCRIPT
Bank Liquidity andBank Liquidity andWholesale Funding Part IWholesale Funding Part I
Bank Liquidity andBank Liquidity andWholesale Funding Part IWholesale Funding Part I
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Bank Liquidity and Wholesale Funding Part I
Historical Overview Bank Funding and Liquidity Trends Federal Home Loan Bank Advance Trends Presentation Review
This course will address bank liquidity and wholesale funding history and trends.
Click the links below to launch each section of the course.
Bank Liquidity andBank Liquidity andWholesale Funding IWholesale Funding IBank Liquidity andBank Liquidity and
Wholesale Funding IWholesale Funding I
Historical Historical OverviewOverview
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Changes in Funding Sources
Advent and growth of FHLB borrowings Internet expansion Innovations in deposit products
– Indexed CD’s– CD’s with interest rate step-up options
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Asset Securitization
When managed properly: Can be a favorable
funding mechanism
When mismanaged: Can cause banks
to be listed as “problem institutions”
Can cause failures
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Balance Sheet Composition Changes
No longer able to rely solely on deposits Must look at other funding sources
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Borrowing Alternatives
National CD market Brokered deposits Repurchase agreements
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Traditional Core Deposits
Demand Deposit Accounts (DDA’s) NOW Accounts Savings Accounts Money Market Deposit Accounts (MMDA’s) CD’s less than $100M
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Question…
Can these still be considered “core” deposits?
It depends…
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Examiner Responsibilities
Identify stable funding sources for bank Not rely on historic definition of “core” deposits Look at behavior and characteristics of each
funding source Remember that each bank’s liquidity position is
unique Look beyond UBPR ratios and peer analysis
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In the next section…
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