Funding Trends
Sound funding and investment strategies have the same staring point: good information. CBFC is committed to providing issuers and investors with the most current and relevant industry intelligence so that both can make the best business decisions.
| Growing Need for Wholesale Funding |
CBFC helps community bankers address a critical industry void caused by the continuing erosion of retail deposits that is likely to be exacerbated by the creation of newly chartered super-regional banks.
Core Deposits Continue a Declining Trend
- In 1992, 82% of an average bank’s funding came from retail deposits – today only 54% of deposits.
- The community bank wholesale funding market has grown to over $400 billion and continues to grow at 13% ($50 billion) per year. (Source: FDIC Call Reports)
| U.S. Wholesale Projected Funding Growth |
(Includes both large banks and community banks.) 
The $450 billion projected wholesale funding growth over the next five years does not include the large deposit appetite from the newly chartered super-regional banks.
| U.S. Domestic Bank Deposit Maturity Profile |
| Industry Drivers |
Current financial industry market conditions are causing many bankers to increase their funding agility and develop new strategies to contend with the swarm of potential problems they face.
- Low-Cost, Longer Term Funding – banks need to address asset/liability matching issues; and FHLB advances may cause liquidity strains with the pledging of collateral/purchase of FHLB stock.
- FHLB Stress – reports of possible frozen stock redemptions and reduced or no dividends. Possible impacts include increases in FHLB borrowing costs, tightening of collateral requirements and stock redemptions that can be stopped or delayed.
- New FDIC Guidelines on Liquidity Risk Management – new guidelines will force banks to have a stronger liquidity profile and develop contingency funding plans that include wholesale funding from diversified, non-correlated sources.
- Falling IDC/Lace Scores – lower scores can significantly limit a bank’s ability to fund and potentially increase funding costs going forward.
