Pub. 7 2017-2018 Issue 2

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S September • October 2017 15 But it’s not clear how sticky the money that moved to govern- ment funds is. The move fromprime funds to government funds has meant lower yields for investors. Indexed seven-day yields on institutional government funds were .16% in October 2016, compared to .29% for institutional prime funds. At some point, investors may get hungry for more yield and consider a return to prime funds or a move elsewhere. In Promontory Interfinancial Network’s Q3 2016 Bank Ex- ecutive Business Outlook Survey, bankers indicated that, so far, little impact has been felt fromthe change inmoneymarket fund ruleswhen it comes to increasingdeposit availability. Eighty-eight percent of all respondents indicated that theyhadnot seenan im- pact on deposit availability as a result of theMMMF rule change. Larger community banks with between $1 billion and $10 billion in assets were more likely to report that the MMMF rule change had impacted deposit availability. Twenty-five percent of respondents from larger community banks reported having seen an increase in deposit funding that could be attributed to the rule change. Going forward, there’s a notable delineation between the expectations of smaller communitybanks and larger community banks relating to the impact of the MMMF rule change. Larger communitybanksweremuchmore likely tosee the rule changeas eventually making deposits more available for their institutions. Forty-sevenpercent of respondents frombanksbetween$1billion and $10 billion in assets said they expect the rule change to drive amoderate increase in deposit availability. This compared to just 16% at banks with less than $1 billion in deposits. The increasedavailabilityof corporatedeposits thatwereonce kept inmoney market funds couldmake a substantial difference for banks, particularly larger community banks, which have indicated that they are eager to add corporate deposits to their funding mix. Of thevariousdepositor types (retail, corporate, public funds), corporate deposits were perceived to be the least accessible by communitybanks.Only 16.4%of respondents indicated that they perceived corporate deposits to be “very accessible.” By compar- ison, more than 30% of respondents perceived retail and public fund deposits to be very accessible. n About Promontory Interfinancial Network Promontory Interfinancial Network offers unique services that bring banks and other institutions together in a way that helps each to benefit from the Power of ManySM—enabling them to offer services that otherwise might be too difficult or costly for them to offer on their own and providing them with tools to help manage their balance sheets. Promontory Interfinancial Network’s services include Insured Cash Sweep®, CDARS®, Bank Assetpoint®, Residential Mortgage NetworkSM, IND®, and Yankee Sweep®. For more information about Promontory Interfinancial Network and its services, please contact Glenn Martin at (866) 776-6426, ext. 3462 or gmartin@promnetwork.com. © 2017 Promontory Interfinancial Network, LLC Of the various depositor types (retail, corporate, public funds), corporate deposits were perceived to be the least accessible by community banks. Only 16.4% of respondents indicated that they perceived corporate deposits to be “very accessible.” By comparison, more than 30% of respondents perceived retail and public fund deposits to be very accessible.