Academic journal article ABA Banking Journal

Deposits & Funding: The Hunt for a Lendable Buck

Academic journal article ABA Banking Journal

Deposits & Funding: The Hunt for a Lendable Buck

Article excerpt

Ten years ago, the first round of this survey had just been published and some CEOs were discussing the future of banking that it implied.

More than one wasn't so sure that the hunt for deposits would be an issue for community banks for much longer. In fact, several of those talking firmly believed that community banks were going to evolve into something much more like a localized mutual fund--taking in uninsured investments and placing them in local companies--strictly as a middleman.

Ten years later, none of that has come to pass. If anything, deposits have grown more important. Indeed, sources of funding have expanded over ten years, though not all banks tap every potential source. There are still a few markets where free checking isn't the norm--so much so that in two-thirds of the markets, it is no longer a competitive advantage, but a necessity. Further, some banks won't touch brokered CDs and other institutional funds, in spite of regulators' general acceptance of them nowadays.

Exhibit 27

Has free checking become common in your market?

No     8.2%
Yes   91.5%

If yes, does offering it still give any competitive edge?

No    65.5%
Yes   34.5%

Advantage strongest in
Northeast and Central states

Note: Table made from pie chart. … 
Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.