Bank Analysis School September 2023 - Case Study
Sunny State Bank
LIQUIDITY - WHOLESALE FUNDING
Wholesale Funding to Total Assets
14.0%
12.5%
12.0%
10.0%
8.9%
8.7%
7.7%
Metrics
7.4%
8.0%
6.4%
6.2%
7.7%
Bank State All Banks
5.7% 5.5% 5.5%
5.4%
5.2%
6.0%
5.0%
4.8%
4.9%
4.8%
4.8%
4.7%
4.0%
4.2%
3.7%
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
Net Noncore Funding Dependency Ratio
10.0% 12.0% 14.0% 16.0% 18.0%
16.9%
11.5%
10.8%
11.5%
9.4%
9.1%
9.0% 9.5%
Metrics
8.1%
8.2%
7.7%
2.0% 4.0% 6.0% 8.0%
6.8%
Bank State All Banks
6.5%
7.0%
6.5%
6.0%
5.9%
5.8%
5.7%
5.3%
5.0%
2013Q4
2014Q1
2014Q2
2014Q3
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q1
2018Q2
2018Q3
2018Q4
• 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 of financial 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.
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