1. Brokered CDs Forecast to Accelerate 59% to $392
Billion by 2019, Up from a Reported $247 Billion in the
2nd Quarter of 2017
The growth dynamics in brokered CDs increased in average brokered
CDs per issuing financial institution from $44 million in 1997 to $185
million in 2017. The growth was due to the increase in insurance levels to
$250,000 in July 2010, mergers of banks issuing brokered CDs, and
strong growth in loans and deposits for the core banks issuing CDs.
Using estimates of brokered CDs outstanding, IDCFP divided the estimate
each quarter by the number of financial institutions with brokered CDs
outstanding. The level of brokered CDs per issuing bank peaked at $143
million in the 4th quarter of 2008. The per bank brokered CD outstanding
average fell to under $116 million in 2010. Since then, the balance of
brokered CDs per bank rose to a record $185.5 million in the 2nd quarter of
2017. The growth in brokered CDs per issuing bank rose from $2.6
million a quarter in 2016 to $8.5 million in the 2nd quarter of 2017, and an
estimated $11 million in the 3rd quarter of 2017 to an estimated average
balance of $196.3 million.

2. The number of banks, thrifts, and credit unions was 1,331 in the 2nd quarter
of 2017. As tax cuts, infrastructure spending, and other government
initiatives drive rising spending, GDP growth expands toward 3% a year and
bank lending begins to grow (as does the volume of time deposits) financial
institutions issue more brokered CDs. Brokered CDs outstanding are now
20.3% of their respective time deposits, up from 15.1% in the 4th quarter of
2008. The proportion of outstanding brokered CDs as a percent of time
deposits of banks issuing CDs has grown consistently each quarter from
2008 to 2017, and is projected to reach 24% in 2019.
IDCFP estimates brokered CDs per issuing bank will rise to $280 million by
2019 (see chart below). The number of banks with outstanding brokered
CDs could expand to 1,400. Estimated brokered CD balances would
then rise to $392 billion in 2019, a 59% increase from the 2nd quarter of
2017 reported balance of $247 billion.