Do you consider the marginal cost of funds when developing new deposit strategies?

This is applicable to retaining existing deposits as interest rates rise and fall, as well as developing new deposit campaigns to grow your institution. The obvious, and not so obvious costs of these deposit strategies can be captured using the Bank’s Marginal Cost of Funds Tool.

The Marginal Cost of Funds Tool is intended to start a conversation within a member’s institution when evaluating offensive and defensive deposit campaigns in comparison to using FHLB Des Moines funding.

The tool uses member assumptions for account balances, deposit costs, cost of FHLB Des Moines advances, and cannibalization rate. It also includes a breakeven feature to illustrate the impact of changing one assumption and keeping all others constant.

Questions?

Contact your Relationship Manager or the Strategies Team for more information about calculating your Marginal Cost of Funds.