The growth dynamics in brokered CDs increased in average brokered CDs per issuing financial institution from $44 million in 1997 to $203 million in 2017. The growth was due to the increase in insurance levels to $250,000 in July 2010, mergers of banks issuing brokered CDs, and strong growth in loans and deposits for the core banks issuing CDs. Using estimates of brokered CDs outstanding, IDCFP divided the estimate each quarter by the number of financial institutions with brokered CDs outstanding. The level of brokered CDs per issuing institution peaked at $143 million in the 4th quarter of 2008. The per bank brokered CD outstanding average fell to under $116 million in 2010. Since then, the balance of brokered CDs per institution rose to a record $203.4 million in the 3rd quarter of 2017. The growth in brokered CDs per issuing bank rose from $2.6 million a quarter in 2016 to $13.8 million in the 3rd quarter of 2017, and an estimated $15 million in the 4th quarter of 2017 to an estimated average balance of $218.4 million.
The number of banks, thrifts and credit unions with outstanding brokered CDs was 1,330 in the 3rd quarter of 2017. As tax cuts, infrastructure spending, and other government initiatives drive rising spending, GDP growth expands toward 4% a year, causing bank lending to begin to grow (as does the volume of time deposits) and more financial institutions to issue more brokered CDs. Brokered CDs outstanding are now 21.4% of their respective time deposits, up from 15.1% in the 4th quarter of 2008. The proportion of outstanding brokered CDs as a percent of time deposits of banks issuing CDs has grown consistently each quarter from 2008 to 2017, and is projected to reach 25% in 2019.
IDCFP estimates brokered CDs per issuing financial institution will rise to $300 million by 2019 (see chart below). The number of financial institutions with outstanding brokered CDs could expand to 1,400. Estimated brokered CD balances would then rise to $420 billion in 2019, a 56% increase from the 3rd quarter of 2017 reported balance of $270 billion.