Transcript Slide 1

MISSOURI LINKED DEPOSIT PROGRAM
The Missouri Linked Deposit Program partners with lending institutions to provide
low-interest loans to help create and retain Missouri jobs, expand the economy
and strengthen communities statewide.
The Missouri Linked Deposit Program helps qualified lenders from Missouri better
serve Missouri-based companies and agricultural operations by reducing the
interest rate on certain loans that borrowers can use to improve their businesses.
State Treasurer Clint Zweifel is committed to making the process simple and the
program easy to use, serving as a knowledgeable resource to lenders and
borrowers.
The Missouri Linked Deposit Program is well-funded with a total of $720 million
available.
SAMPLE RATE CALCULATION
State of Missouri Linked Deposit Program
Deposit Rate paid to State (August 2011)
Terms
Market Rate as surveyed by State
Less Cost of Collateralization
Net Market Rate (rounded)
1-yr
0.59%
-0.1250%
0.47%
2-yr
0.93%
-0.1250%
0.81%
3-yr
1.22%
-0.1250%
1.10%
4-yr
1.49%
-0.1250%
1.37%
5-yr
1.77%
-0.1250%
1.65%
Reduced by as much as 60%
-60%
-60%
-60%
-60%
-60%
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Deposit Rate paid to State (Rounded)
0.19%
0.32%
0.44%
0.55%
0.66%
________________________________________________________________________________________________________________
Maximum Loan Rate paid to Bank
Terms
1-yr
2-yr
3-yr
4-yr
5-yr
Borrower Lending Rate as attested by Bank
5.00%
5.25%
5.50%
5.75%
6.00%
X 70%
70%
70%
70%
70%
70%
Maximum Loan Rate for Borrower
3.50%
3.68%
3.85%
4.03%
4.02%
_______________________________________________________________________________________________________________
Net Interest Margin
3.31%
3.36%
3.41%
3.48%
3.54%
PROGRAM PROCESS
Treasurer Zweifel is committed to making the Missouri Linked Deposit Program process simple and the
program easy to use for approved lending institutions and borrowers.
1.
A borrower applies for a loan at a qualified lending institution. The lending institution applies its normal lending
procedures to assess the creditworthiness of the borrower.
2.
Once the loan is approved, the borrower or lender expresses interest in the Missouri Linked Deposit Program.
3.
The lender works with the borrower to submit the requisite loan and deposit applications via secure online
application system found here: https://www.treasurer.mo.gov/linkeddepositloanapps/default.aspx
4.
Treasurer Zweifel’s office determines the eligibility of the borrower for the Missouri Linked Deposit Program.
5.
Many loans can be approved within 10 business days. If there are problems with the application, Treasurer
Zweifel’s office will notify the lender so those issues can be addressed prior to approval.
6.
The lender is notified if the Missouri Linked Deposit Program loan is approved and the staff works with the
lender on placement of the deposit.
7.
Upon approval by Treasurer Zweifel’s office, the bank pledges collateral, if needed, and Treasurer Zweifel
deposits the funds through ACH.
GENERAL REQUIREMENTS
A depository contract is required with Treasurer Zweifel’s office. Any qualified lending institution whether large or small, urban or rural – can apply to partner with Treasurer Zweifel to access this program
for their customers.
Deposits must be fully collateralized. Collateral can include certain securities or FHLB letters of credit.
Acceptable collateral is posted on the website
(http://www.treasurer.mo.gov/policiesandinformation.aspx).
Unused amounts of the linked deposits are charged at the comparable market rate.
Early prepayment of loans may require payment at this higher rate. Treasurer Zweifel’s office can provide
lender options to avoid this higher payment.
A multi-year fixed rate loan is available on all Missouri Linked Deposit Program loans.
Audits are conducted periodically to ensure compliance with State laws.
Borrowers with employees will have to verify the immigration status of their employees. All borrowers
will have to provide a tax clearance letter.
Ineligible uses of the program include: speculative commercial developments; residential real estate;
finance companies; subsidiaries of foreign companies; non-profit institutions.
EXAMPLES
Masonry Business in St. Charles, MO
Use of loan proceeds – refinance of commercial building
Overall project cost -- $592,000
Amount requested for MLDP -- $560,000 (five year fixed rate requested)
Deposit rate bank pays to State Treasurer – 0.90%
Original loan rate for borrower as attested by bank – 7.125%
New linked deposit loan rate for borrower – 4.99%
Bank loan interest margin – 4.09%
Retail Lumber Supply in Pleasant Hill, MO
Use of loan proceeds – refinance of commercial building
Overall project cost -- $3,100,000
Amount requested for MLDP -- $2,500,000 (one year linked deposit rate requested)
Deposit rate bank pays to State Treasurer – 0.30%
Original loan rate for borrower as attested by bank – 6.00%
New linked deposit loan rate for borrower – 4.20%
Bank loan interest margin – 3.9%
Consumer Chemical Manufacturer in St. Louis, MO
Use of loan proceeds – purchase equipment
Overall project cost -- $2,000,000
Amount requested for MLDP -- $2,000,000 (one year linked deposit rate requested)
Deposit rate bank pays to State Treasurer – 0.30%
Original loan rate for borrower as attested by bank – 6.00%
New linked deposit loan rate for borrower – 4.20%
Bank loan interest margin – 3.90%
CURRENT LINKED DEPOSIT LOAN VOLUME
(August 8, 2011)
The program is funded to $720 million
Current active linked deposits -- $360,695,822
Linked deposits placed for calendar year 2011 -$235,630,708
Linked Deposits approved by Treasurer Zweifel since
January 1, 2009 -- $741,299,488
TREASURER CLINT ZWEIFEL’S
2009 INVEST IN MISSOURI LEGISLATION
Treasurer Zweifel realizes deposits with Missouri banks are one of the
safest investments to make in today’s capital markets.
Deposits allow Treasurer Zweifel to reinvest in the State’s economy,
thereby increasing jobs, generating economic development and capital
formation.
Treasurer Zweifel’s office can and wants to increase reinvestment of State
monies in Missouri.
INVEST IN MISSOURI, which passed unanimously in the House and Senate,
enables Treasurer Zweifel to achieve a market return on State CD
investments AND increase deposits in Missouri banks.
INVEST IN MISSOURI (HB 883) also greatly expands and modifies the 25-year
old Missouri Linked Deposit Program to allow banks to use this lowinterest loan program to a far greater extent.
MISSOURI LINKED DEPOSIT PROGRAM
ENHANCEMENTS - EFFECTIVE AUGUST 28, 2009
PROGRAM NAME
OLD PROGRAM
NEW PROGRAM
Job Enhancement
Limits amount business can borrow to
$50,000 for each job created or retained
Allows companies with significant capital
needs to borrow $50,000 for each job,
plus the amount of capital outlay,
physical expansion, or renovation.
Small Business
Eligibility limited to fewer than 25
employees
Eligibility increased to fewer than 100
employees
Farm Operation
Farmers with more than 60% equity
were ineligible
All equity limits have been removed
Alternative Energy – Consumer
Not available
Allows individuals to receive Linked
Deposits when installing alternative
energy-producing equipment.
Alternative Energy – Operations
Available for businesses producing
energy for sale
Now available to businesses producing
fuel or energy for sale or for their own
use.
Local Governments
Not available
Available for political subdivisions to
make capital improvements or to
implement significant public programs
OTHER PROGRAM ENHANCEMENTS
Elimination of 1% floor rate on linked deposit rate paid to the State
Greater usage of 5-year fixed rates for Missouri Linked Deposit Program loans
Creation of a full-time Relationship Manager that will reach out to lending institutions to
share the benefits of the program, relay information and updates, and help users fully
understand the process.
– Jason Ramsey started as the Relationship Manager on August 17, 2009.
Streamlining of application process
– Many applications processed internally by staff within one week
– Higher-dollar applications processed within two weeks
On-line application system launched on October 1, 2010
FOR MORE INFORMATION
New resources are available to assist you through the process:
A new website has been developed (www.treasurer.mo.gov/linkeddeposit)
–
–
Online application is now available
General information and requirements about each program are available
Staff is available to walk lenders through the new online application system
Staff is available to answer questions about requirements for the Missouri Linked
Deposit Program, such as tax clearance letters, program eligibility requirements
and equity calculations.
www.treasurer.mo.gov/linkeddeposit
Phone: (573) 751-2372
Fax: (573) 751-2177
[email protected]
TO ARRANGE FOR A MEETING TO LEARN MORE
Contact information:
Jason Ramsey
Relationship Manager
Office of Missouri State Treasurer Clint Zweifel
Truman Building, Room 780
PO Box 210
Jefferson City, MO 65102
(573) 526-3485
[email protected]