--- title: "Wholesale Funding and Community Bank Liquidity Risk" description: "Wholesale funding benchmarks, examiner thresholds, and peer comparison data for community bank CFOs and treasurers preparing ALCO and board packages." canonical_url: https://www.bankregreports.com/blog/wholesale-funding-liquidity-risk-data/ source: BankRegReports published: "2026-10-20" updated: "2026-10-20" --- When brokered CDs start repricing faster than your loan book earns through, the ALCO room gets quiet in a specific way. Every treasurer at a $500M community bank knows it. Wholesale funding dependence, a core community bank liquidity risk, does not announce itself as a crisis; it accumulates quietly through three or four quarters of loan growth funded by rate-sensitive liabilities, and then it concentrates risk at exactly the moment when markets are least forgiving. The March 2023 failures of SVB and Signature Bank were unusual in scale, but the underlying dynamic (a funding structure built on confidence-sensitive money that can exit faster than assets can be liquidated) is a risk dimension every community bank examiner takes seriously today.
Distribution of net non-core funding dependence across U.S. banks
Reliance on non-core (wholesale) funding across the U.S. banking industry.
## What Counts as Wholesale Funding, and Why Does Composition Matter? The regulatory definition of "non-core" or wholesale funding is broader than many bankers think. For community and mid-size banks, the primary components are: **[Brokered deposits](/blog/brokered-and-uninsured-deposits/)**: both time and non-time balances sourced through deposit brokers rather than direct customer relationships. These appear on Call Report Schedule RC-E and receive special regulatory treatment: banks that are less than well-capitalized face statutory restrictions on accepting them, and even well-capitalized banks that rely heavily on brokered CDs draw examiner attention. **FHLB advances**: for most community banks, this is the largest single wholesale funding source. FHLB borrowings are secured, carry lower counterparty risk than unsecured wholesale markets, and many banks use them as a genuine structural funding tool rather than a stress backstop. The risk is specific: it shows up when the pledgeable collateral base shrinks (through loan sales, AFS mark-to-market losses, or credit deterioration) or when advance maturities cluster at short tenors that require frequent rollover. **Large time deposits**: balances above $250K, particularly those sourced through rate aggregator platforms and listing services. These are economically similar to brokered deposits in a stress scenario: they reprice immediately to market and they leave when a competitor bids higher. The FFIEC Call Report distinguishes these from relationship-based large-balance deposits, which behave differently. The official source is the [FFIEC](https://www.ffiec.gov). **Short-term borrowings**: fed funds purchased, repurchase agreements, and other overnight or short-tenor instruments from Schedule RC-M. These are the most rate-sensitive and the most confidence-sensitive component of the funding stack. The aggregate level of wholesale dependence matters, but the composition tells you more. A bank running 18% of assets in FHLB advances with 10-year fixed-rate advance structures is in a categorically different risk posture than one running 15% in 90-day brokered CDs that reprice next quarter. ![Wholesale Funding Composition - Community Banks $300M-$10B, Q2 2026](figures/wholesale-funding-liquidity-risk-data-1.svg) ## The Numbers Examiners Are Looking At There is no single regulatory bright line for wholesale funding dependence, but practitioners and examiners work from a well-established range of informal thresholds. A composite wholesale funding ratio (brokered deposits plus FHLB advances plus short-term borrowings as a share of total assets) above 20–25% is where examiners at community banks begin asking detailed questions in a CAMELS liquidity review. No public peer median exists for that composite. The closest published measure is the UBPR's net non-core funding dependence ratio, which nets short-term investments against non-core liabilities: for $1B–$10B banks its median was 27.5% at March 31, 2025 and the 75th percentile 49.7% (BankRegReports analysis of Call Report data). Some business models (mortgage warehouse lenders, certain specialty finance franchises) operate structurally higher and manage it with committed facilities and diversified counterparty relationships. The model matters. What examiners want to see is that you know your funding structure, have stress-tested it, and have a credible contingency funding plan that does not depend on markets remaining open. The UBPR pre-computes a ["non-core funding dependence" ratio](/blog/net-non-core-funding-dependence/) that approximates this measure and shows you where your institution sits relative to peer quartiles in a format the regulators themselves use. For ALCO packages and board presentations, this is the clearest apples-to-apples comparison available. ![Net Non-Core Funding Dependence Distribution - Banks $1B-$10B, Q2 2026](figures/wholesale-funding-liquidity-risk-data-2.svg) ## How the Rate Cycle Changed the Calculus From 2021 through mid-2023, community bank [deposit betas](/blog/deposit-beta-and-cost-of-funds/) were suppressed. Banks could fund loan growth cheaply even as the Fed moved rates 525 basis points in one of the most aggressive hiking cycles in modern history. From March 31, 2022 to the September 30, 2024 peak, the median $1B–$10B bank's cost of total deposits rose 2.19 percentage points against a 525-basis-point Fed move, a cumulative beta of about 42% (about 53% on interest-bearing deposits). Banks over $10 billion ran somewhat higher, about 45% and 60%. The lag worked in reverse when deposit competition intensified. Banks that funded aggressively into that window with wholesale sources found their cost of funds repricing sharply even as asset yields adjusted slowly. The pressure has eased somewhat since mid-2024, but it has not reversed. Community banks that grew brokered deposit books or increased FHLB advance balances by 40–50% between 2021 and 2023 are still working down those concentrations. The median net interest margin for the $1B–$10B peer group bottomed at 3.07% in March 2024 and had recovered only to 3.34% by March 31, 2025, with deposit repricing lag as the primary driver. The banks that entered the cycle with stronger core deposit franchises (higher proportions of non-interest-bearing demand, deeper retail and small business relationships) held NIM better and face less structural pressure today. This is why the trend and rate of change in wholesale reliance matters as much as the current level. A bank that has been reducing its brokered deposit share for three consecutive quarters is demonstrating active funding diversification. A bank that added $40M in brokered CDs in the most recent quarter to fund new originations is moving in the other direction and will get questions about it at the next exam. ## What the Board Wants to See vs. What Management Tracks Senior management and the ALCO typically track funding composition in granular detail: advance maturities by month, brokered CD repricing schedules, collateral availability at the FHLB and Fed discount window, and contingency sources under base and stress scenarios. That level of detail is appropriate for internal risk management. The board presentation needs to answer two simpler questions: where do we stand relative to peers, and is the trend improving or deteriorating? A one-page exhibit showing the non-core funding dependence ratio against the peer group median and 75th percentile, plotted over eight quarters, communicates the risk posture clearly to directors who are not reading the UBPR themselves. The [loan-to-deposit ratio](/blog/loan-to-deposit-ratio/) belongs in the same exhibit. The median for $1B–$10B banks was 88% at June 30, 2026; ratios above 100% almost always come with elevated wholesale reliance as the funding gap. If your loan-to-deposit ratio has been climbing while your core deposit share has been falling, the ALCO needs to address both dynamics explicitly. ## Building the ALCO Package Pulling peer-comparative wholesale funding data used to mean either paying an enterprise data vendor or spending an afternoon downloading FDIC call report files and reconciling them manually. The [BankRegReports platform](https://www.bankregreports.com) makes this a ten-minute task. You search for your institution, select a peer group by asset size or custom RSSD list, pull the relevant funding metrics across trailing quarters, and export to Excel. The underlying data comes from FFIEC Call Reports, UBPR, and Federal Reserve Y-9C filings for holding company analysis, the same sources examiners use, standardized and queryable without any data engineering. Fintech teams and analysts who build automated workflows can access the same data through the platform's API, but for the CFO or treasurer building an ALCO deck, the web interface and Excel export handle everything. ## The Examiner's Lens on Liquidity Funding structure is assessed under the L component of [CAMELS](/blog/camels-rating-system-explained/), but examiners are increasingly looking at the interaction between liquidity and interest rate risk as an integrated exposure rather than two separate ratings. A bank with an elevated wholesale funding ratio that also has significant [unrealized AFS losses](/blog/unrealized-losses-on-bank-securities/) (reducing the net value of pledgeable collateral) faces compounded stress. The SVB post-mortem has made examiners attuned to exactly this combination. The contingency funding plan (CFP) has moved from a checklist exercise to a document examiners read carefully. They want to see tested assumptions about how quickly each contingent source can be drawn, what the cost differential is relative to current funding, and whether the institution has actually drawn on discount window credit to verify its operational readiness. Banks that have not tested their Fed discount window access in the past two years should do so before their next exam cycle; not having a tested relationship is a gap examiners note. The most effective ALCO and board presentations on liquidity go one step further than the peer benchmark: they show the stress scenario explicitly. What happens to the funding structure if brokered CDs reprice up 75 basis points and 30% of the large time deposit book does not roll? What is the net interest income impact over the next four quarters? That forward-looking stress framing, backed by the same regulatory data your examiners are reviewing, is what separates a thorough liquidity assessment from a backward-looking ratio summary. --- The benchmarks and peer data referenced in this post are available through the [BankRegReports platform](https://www.bankregreports.com), no data engineering required. Search any FDIC-insured bank, pull peer group comparisons, and, on the Pro plan, export to Excel for your ALCO package or board presentation. ## About this document This is the markdown twin of the page named in `canonical_url` above. Source filings are public record; the cleaning, normalization, cross-source linkage, and derived metrics are BankRegReports' own. Attribute with a link to the canonical URL. Markdown twins are published for editorial content only. Institution data pages do not have them. For data at scale use the API, which is documented at https://www.bankregreports.com/api/ and specified at https://www.bankregreports.com/openapi.json. It returns typed JSON with explicit units and periods, and one call replaces hundreds of page fetches. ## Sitemap - [Glossary](https://www.bankregreports.com/glossary/): every metric, with formula and thresholds - [Blog](https://www.bankregreports.com/blog/): analysis and explainers - [API documentation](https://www.bankregreports.com/api/): the programmatic way to get this data - [XML sitemap](https://www.bankregreports.com/sitemap.xml): the complete crawlable index