Laddered

The most common funding program utilized by PMA Banking partners is to purchase CD’s with a laddered approach; the maturities of the CD term investments vary in duration. Using this method, banks can manage interest rate risk and balance the funding costs, while diversifying deposits amounts within multiple PMA public entity client accounts.  

Since most PMA public entity participants prefer interest at maturity, the bank is able to manage their CD principal and interest payment outflows and laddered them in a way so that payouts take the place of typical monthly interest payments.  Another advantage of this method is to lock in funds at lower rates, if rates are expected to rise and interest rates look to fall, and then the institution can choose to have deposits mature and take in additional funding at the new market rate.