Neil - I know you're right that bankers haven't given this question nearly enough thought.
I'm going to guess that the consumer has more flexibility with the 5 Year CD with a 5% yield than the 5 Year UST.
Tell me why I'm wrong (or right)?
Thanks
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John Tyson
CFO;Chief Financial Officer
Altamaha Bank & Trust Company
Vidalia, GA
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Original Message:
Sent: 05-10-2023 17:29
From: Neil Stanley
Subject: Understanding the Structural Differences Between Term Investment Options
In today's marketplace bankers are getting serious about managing deposits. So how do our industry offerings compare to other similar options for investing money? The banking industry appropriately didn't want to pay a liquidity premium to get term deposits when interest rates were at the floor and there was a surplus of deposits. But that has changed.
Due to the last 15 years of complacency in the evolution of deposit offerings, how do bank and credit union term deposits stack up to alternative fixed income investments today. I am concerned that many bankers may never have thought about this question "Which is a better investment?"
- 5-year U.S. Treasury with a 5% yield
- 5-Year Bank CD with a 5% yield
- No preference
Every banker should understand this question and objectively assess your competitive posture today. What do you think?
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Neil Stanley
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