Has your organization seen decreased lending opportunities or have you had to downsize profitable lending programs as a result of your loan-to-deposit ratio?
Have you had to borrow money from the Fed or other funding sources due to lack of deposits? If so, have you seen an impact on your profit margins as a result of the actions you’ve had to take to improve your loan-to-deposit ratio?
If your financial institution is struggling to improve your loan-to-deposit ratio or has needed to take some of these more drastic measures, you are not alone! In fact, most lending institutions today would answer “yes” to at least one of the above questions.
Increasing Loan-to-Deposit Ratios
The financial crisis of 2008 led to a national surge in account openings and deposits, as consumers and businesses alike sought to secure their finances in retail financial institutions. But now, due to multiple rate hikes and a growing economy, many of these account holders are pulling their money out of these traditional accounts in favor of investment alternatives that offer more yield on their money.i
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