Public Funds

Having a variety of reliable funding sources is critical for managing liquidity. Regulators insist banks be able to identify, measure, monitor and control liquidity risk in a timely and comprehensive manner. PMA Funding helps more than 1,000 banks accomplish this through stable, consistent and flexible deposit solutions.

What are Public Funds Deposits?

Public funds deposits are derived from a variety of political subdivisions including school districts and municipalities. These entities are a vital part of their communities and often rely on PMA and their local financial institutions to aid in the development and implementation of sound, proven investment strategies.

community growth—the pma difference

Through its financial planning and cash flow programs, PMA can help a public entity match its assets to its liabilities, creating a predictable, defined investment plan. PMA is then able to coordinate with financial institutions to place investments based on each political subdivision’s cash flow plan. The benefit to the public entity is the ability to invest available resources until the day they are needed and meet expenditure obligations. The benefit to local financial institutions is a stable, low cost source of deposits that helps maintain economic growth.

A diversified funding SOLUTION

The Problem: Occasionally, local financial institutions are limited from participating in political subdivision deposits due to the cyclicality risk commonly associated with public funds deposits. That is, their deposit base decreases as liabilities come due, and increases as assets (tax dollars) are received. This does not typically provide a steady, core deposit base for banks.

The Solution: PMA Funding may be able to provide a solution to cyclicity risk through its vast network of public funds deposits that spans beyond your local community. Because these entities have varied revenue cycles, banks can now take a laddered approach to their portfolio planning. This gives banks the ability to mitigate the “sawtooth effect” of public funds deposits by replenishing diminished public funds with those from other political subdivisions. (See chart to the right.)

benefits of public funds deposits through pma funding

Funds generated from political subdivisions are a stable and flexible tool for helping banks overcome the challenges of today’s economic environment. Benefits include:

  • defined cash flows and known revenue streams;
  • year-round access to a vast source of funds from school districts and municipalities;
  • varied revenue cycles allow for a laddered approach to portfolio planning;
  • flexible terms ranging from 30 days to two years;
  • same-day settlement;
  • small- and large-block deposit options;
  • no additional fee above stated rate;
  • deposits opened and titled in the name and tax ID number of the school district or municipality;
  • FDIC insured and/or collateralized options.