The Financial Managers Society’s FMS Update (May 2016) features an article, “Funding Strategies – Should Wholesale Funding Have a Place in Your Growth Strategies?” with input from Tom Hauck, Managing Director and Principal of Austin’s Financial Management practice area. As competition for deposits heats up, rates remain low and margins stay thin, wholesale funding has a seat at the strategic table once again, even if questions remain. According to Hauck, core deposits will always be the preferred funding type, but because of the low rate levels in recent years customers aren’t moving very much so it’s been difficult for many community institutions to attract core deposits. The key to making wholesale funding work for both community institutions and regulators is a combination of due diligence with respect to funding sources, documentation, robust modeling and sufficient capital. Hauck advises that keeping a close eye on an institution’s level of wholesale funding can help avoid problems related to over reliance down the road.

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