A Boom in Banks Issuing Brokered CDs

Banks issuing brokered CDs reached a new high of 1519 as of June 30, 2023, from a low of 1087 in 2022Q2. Our estimate is 2000 issuing banks at year-end 2023, above the high of 1914 in 2010Q3. By year-end 2024 we estimate there to be 3,000 issuing banks, an all-time high exceeding the peak in 2008.

The Fed funds ratio is currently 5.50% with the prospect for one more increase. These higher-for-longer rates drive the number of issuers as well as the amount of brokered CDs per issuer.

The number of bank issuers fell to a new low in 2022 reflecting the massive Federal government stimulus in 2020 and 2021 and the buildup of cheap deposits. The significant rise in the Fed funds rate in 2022 and 2023 altered deposit preferences, increasing the demand for brokered CDs.

Chart I

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John E Rickmeier, CFA

Robin Rickmeier
Marketing Director