As a broker, would you be interested to learn about new banks or credit unions as potential issuers of brokered CDs to capitalize on this forecast? Would it be helpful to see the characteristics of these institutions, such as loan to deposit ratio or loan growth, that could be applied to similar institutions?

IDC Financial Publishing, Inc. (IDCFP) has developed a method to estimate brokered CDs less than $250,000, issued by banks or credit unions, using our databases. In the following article, we describe this process and how this information can be used to discover new prospects.

In the second quarter of 2021, IDCFP analyzed all 4,391 banks in our Deposit Database and determined which institutions reported brokered deposits, reciprocal deposits, brokered CDs $250K or greater, and insured brokered deposits. In reviewing the quarterly changes in insured brokered deposits and comparing that to the change in time deposits, IDCFP can isolate brokered CDs less than $250K and the value of insured sweep accounts for each bank. Separately, using uninsured brokered deposits, we estimate uninsured sweep accounts.

Correction in Estimates of Brokered Deposits Published on September 13^th, 2021

The FDIC finalized revisions to its regulations relating to brokered deposits, effective April 1, 2021. In bank financial reports for the second quarter 2021, the FDIC failed to restate first quarter brokered deposits related to changes in rules of defining brokered deposits and potential transfer out of brokered and into core deposits.

In order to estimate the various types of brokered deposits like brokered CDs and sweeps, IDC Financial Publishing (IDCFP) relies on quarter-to-quarter dollar changes for each bank. As a result, IDCFP restated first quarter brokered deposits (total insured and uninsured) by eliminating any bank with a 10% or more decline in reported first quarter to reported second quarter levels. IDCFP then used the adjusted first quarter brokered deposits compared to reported second quarter levels to estimate the components of brokered deposits (see Table I).

Table I

Following are the takeaways from IDCFP’s deposit database for commercial and savings banks.

1. Brokered deposits increased $9.8 billion from the adjusted first quarter to June 30^th, 2021, as both the number and the amount of brokered CDs rose.
2. Bank reciprocal deposits and large brokered CDs over $250,000 both increased in the second quarter of 2021.
3. Brokered CDs with CUSIPs, estimated by IDCFP, fell $22.1 billion to $250.4 billion, and the number of issuing banks declined by 27.
4. Estimated brokered CDs without CUSIPs, however, increased by $4.8 billion.
5. IDCFP’s estimate of bank insured sweep accounts rose $18.9 billion, as the stock market continued to recover.
6. Bank uninsured sweep accounts also increased $853 million to $83 billion.

From IDCFP’s deposit database, you can determine key information on brokered CDs:

• The total amount of estimated bank brokered CDs less than $250K (Table II & III, Column 8) and the dollar and percentage change over the last year (Table II & III, Columns 9 & 10) in each domestic bank with or without CUSIPs.
• The estimated sweep accounts and reported reciprocals and brokered CDs $250K or greater for each bank.
• Characteristics of domestic banks that issue brokered time deposits with CUSIP IDs can be used to determine other domestic banks as potential issuers. Characteristics for all domestic banks include the loan to deposit ratio, loan growth in dollars and percentages, and other pertinent ratios.
• For access to all deposit data, please send inquiries to info@idcfp.com or visit www.idcfp.com.

Table II
Ten Largest in the Total of Brokered Time Deposits Less than $250K

Table III
Ten Largest in Dollar Increase in Brokered Time Deposits Less Than $250K Over the Past Year

IDCFP has been helping CD brokers and investors, insurance companies, federal agencies, numerous state governments and a host of other institutions make better decisions using our database and proprietary CAMEL rating methodology since 1985.

To view all our products and services please visit our website www.idcfp.com.
For more information about our Deposit Database, or for a copy of this article, please contact us at 800-525-5457 or info@idcfp.com.

John E Rickmeier, CFA
President
jer@idcfp.com

Robin Rickmeier
Marketing Director