Magazine article American Banker

High Yields, IRA Inflows Drove CD Deposits Up 30% in Quarter

Magazine article American Banker

High Yields, IRA Inflows Drove CD Deposits Up 30% in Quarter

Article excerpt

Higher yields and an influx of money into individual retirement

accounts continued to fuel growth in certificates of deposit during the first quarter.

The Federal Reserve reported last week that assets in small time

deposits grew at an annualized rate of 30% during the period. Deposits of under $100,000 at commercial banks and thrifts rose from $820.5 billion at yearend 1994, to $882.1 billion at the end of March.

During the first quarter of 1994, CD assets declined at an annual rate of 6.4% to $769.9 billion.

Some bankers attribute the growth in CD assets to continued aggressive pricing of CD yields in order to feed loan growth, and the annual rush to open IRAs before the April tax deadline.

At California Federal Bank, in Los Angeles, retail deposits grew $570 million during the first quarter, with the majority of the inflows going into seven-month and two-year CDs, according to Joseph Petitti, an executive vice president. …

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