The growth dynamics in brokered CDs has been the increase in average brokered CDs per issuing bank from $40 million in 1997 to $180 million in 2017. The growth has been 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.

1. Dynamics of the Brokered CD Market
The growth dynamics in brokered CDs has been the increase in
average brokered CDs per issuing bank from $40 million in 1997
to $180 million in 2017. The growth has been 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 banks 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 $120 million in 2010. Since then, the balance of
brokered CDs per bank rose to a record $180.6 million in the 1st
quarter of 2017. The growth in brokered CDs per issuing bank
increased $3 million a quarter in 2016 to $10 million in the most
recent quarter, and an estimated $11 million in the 2nd quarter of
2017 to an average balance of $191.4 million.

2. The number of banks with outstanding brokered CDs averaged
1,280 in recent quarters. 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 and banks issuing brokered CDs.
Brokered CDs outstanding are now 19.4% 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
60% increase from the 2nd quarter of 2017 estimate of $245
billion.