Thanks for this article. I think I might be able to add some value to this topic.
The classic CD is not as uniformly offered across banks as many might think. There are surprising variations in how individual financial institutions address time deposits today. I have attached a checklist for financial institutions to use to compare their processes and procedures for selling and servicing long term savings deposits with what we have observed are proven to be best in class approaches.
For the majority of the items on the list there are associated industry publications to explore the substance of these best practices. If anyone wants them, I can provide links.
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Neil Stanley
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Original Message:
Sent: 06-30-2021 12:23
From: Barb Rehm
Subject: Everything You Want to Know about CDs But Were Afraid to Ask
Banks of all sizes are shedding CDs, and the larger the bank, the greater the decrease, according to this week's complimentary post from S&P Global Market Intelligence. "Banks Use Excess Liquidity to Shed Another $100B of CDs" reports CDs decreased 6.6%, or $100.65 billion, industrywide during the first quarter. Over the last nine months, bank CD holdings have fallen $400 billion. The story includes a chart showing how key CDs are to various-sized banks. The largest banks held just 3.2% of their deposits as CDs at March 31 while that figure was 21.4% at banks with fewer than $3 billion in assets. Federal Home Loan advances are also shrinking at banks of all sizes, falling 9.6% industrywide in the first quarter and now make up just 1.1% of industry liabilities.
None of this is surprising given deposits have grown 6.2% over the first half of 2021 while loans have declined .5%. Across the industry the average rate on a one-year CD has declined 22 basis points over the past year, to 0.28%. Market Intelligence also includes a chart listing the banks making the biggest moves in CD composition.
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Barb Rehm
Senior Managing Director
IntraFi Network
Arlington VA
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