Bank Analysis School - Case Study & Resources

LIQUIDITY - WHOLESALE FUNDING

Sunny State Bank

Wholesale Funding to Total Assets

14.0%

12.5%

12.0%

10.0%

Metrics

8.9%

8.7%

Bank

8.0%

State

6.2%

All Banks

5.5%

6.0%

6.2%

4.9%

20 X9 Q4

20 X0 Q4

20 X1 Q4

20 X2 Q4

20 X3 Q4

20 X4 Q4

20 X5 Q4

Net Noncore Funding Dependency Ratio

18.0%

16.9%

16.0%

14.0%

12.0%

10.8%

9.1%

9.0%

10.0%

Metrics

7.7%

8.0%

Bank

6.0%

6.3%

State

6.0%

4.0%

All Banks

2.0%

0.0%

(2.0%)

20 X9 Q4

20 X0 Q4

20 X1 Q4

20 X2 Q4

20 X3 Q4

20 X4 Q4

20 X5 Q4

• Wholesale funding includes brokered deposits, listing service deposits, FHLB borrowings, other borrowings, and Federal Funds purchased. Note that this is different from what is included as noncore funding on the UBPR. • Reliance on wholesale funding contributes to liquidity risk because these funding sources may not be available in times offinancial stress. However, the strategic use of a moderate amount of wholesale funding should not be criticized at banks in good financial condition with adequate risk management practices. Examiners should be quicker to criticize the use of wholesale funding if there is a lower level of capital, asset quality problems, or weak risk management. • Net Noncore Funding Dependency Ratio matches the UBPR. The UBPR definition of noncore funding includes: TCDs > insurance limit, brokered deposits, FHLB borrowings, other borrowings, and federal funds purchased.