The Federal Home Loan Bank of Boston's Marginal Cost of Funds Analysis can show you how to minimize the cost of growing your institution at the margin. By measuring the impact of deposit disintermediation, you can learn the true cost of your incremental funds.

Avoid Paying up to Grow Deposits
Today's increasingly rate-driven depositors are often opting for the higher yields that mutual funds and stocks provide. As a result, community financial institutions face slow deposit growth, and many now see a larger role for wholesale funding in their strategies for supporting loans and investments.

As the ratio of traditional "core" deposits to assets weakens, net-interest spreads are threatened. And "paying up" for retail deposits will only squeeze spreads more. How to retain core deposits while controlling total liability costs is a critical issue — requiring careful evaluation of deposit-pricing strategies and marginal costs of funds.

The Federal Home Loan Bank of Boston's financial strategists would be happy to help you review methodologies, model potential strategies, and consider the impact of alternative funding.

For more information about our Marginal Cost of Funds Analysis, please contact your relationship manager. The model is also available through Direct+, the Bank's online account-information and transaction service for registered members.