Pub. 7 2016 Issue 3

FALL 2016 27 West Virginia Banker Across the United States, local and state governmental entities use Promontory’s reciprocal deposit services to access multi-mil- lion-dollar FDIC insurance through a single banking relation- ship. In this way, they are able to safeguard taxpayer money, keep funds local, and eliminate the burden of ongoing collateral tracking. Because of shifting factors in the banking industry, public fund deposits are becoming more available to community banks. Now is a time when many government finance officers are consider- ing shifting investments out of money market funds into bank deposits. It is also a time when many of the nation’s largest banks do not want public fund deposits, as new regulations raise the cost of public unit deposits to large banks (but not to smaller and mid-sized banks). Increased availability of public deposits, reduced price competi- tion for these funds from large banks, and fewer alternatives for government finance officers may provide an opportunity to com- munity banks, particularly those who offer CDARS® and ICS® to their public fund customers. And here is more good news — today, 50 states have laws that enable governmental entities to protect deposits through CDARS, and 47 states have laws enabling Insured Cash Sweep®, or ICS. West Virginia law recognizes the use of both CDARS and ICS for public unit deposits. About Promontory Interfinancial Network. Promontory is the leading provider of FDIC-insured deposit placement services. Their services include Insured Cash Sweep, CDARS, IND®, and Yankee Sweep®, which enable banks and other financial institutions to build strong, multi-million-dollar re- lationships; replace higher-cost deposits; reduce collateralization; and purchase cost-effective funding. n For more information about Promontory and its services, contact Erich Buckenmaier, Regional Director, at (866) 776-6426, ext. 3354 or ebuckenmaier@promnetwork.com. Take Another Look at Public Fund Deposits By Erich Buckenmaier, Promontory Take Another Look at Public Fund Deposits By Erich Buckenmaier, Promontory Deposits from public funds are becoming an increasingly important source of funding for many c more government entities have been moving their deposits out of the country’s largest banks—a requirements affecting large institutions. At the end of Q4 2015, more than half of the deposits f local government entities were placed in banks with fewer than $50 billion in assets. In addition, Q4 2015, public fund deposits at banks with assets fewer than $50 billion grew by 11%. 1 Public Fund Deposits Held at Banks Based on Asset Size Across the United States, local and state governmental entities use Promontory’s reciprocal depo multi-million-dollar FDIC insurance through a single banking relationship. In this way, they are ab taxpayer money, keep fu ds local, and eliminate the burden of ongoing collateral tracking. Because of shifting factors in the banking industry, public fund deposits are becoming more avail banks. Now is a time when many government finance officers are co si ring shifting investmen funds into bank deposits. It is also a time when many of the nation’s largest banks do not want p new regulations raise the cost of public unit deposits to large banks (but not to smaller and mid-s Increased availability of public deposits, reduced price competition for these funds from large ba alt rnatives fo government fina ce o ficers may provide an opportunity to community banks, pa offer CDARS ® and ICS ® to their public fund customers. And here is more good news — today, 50 states have laws that enable governmental entities to p through CDARS, and 47 states have laws enabling Insured Cash Sweep ® , or ICS. West Virginia law both CDARS and ICS for public unit deposits. About Promontory Interfinancial Network. Deposits from public funds are becoming an increasingly im- portant source of funding for many community banks as more government entities have been moving their deposits out of the country’s largest banks—a result of new LCR requirements affecting large institutions. At the end of Q4 2015, more than half of the deposits from Federal, state, and local government entities were placed in banks with fewer than $50 billion in assets. In addition, between Q4 2014 and Q4 2015, public fund deposits at banks with assets fewer than $50 billion grew by 11%. 1