Liquidity & Balance Sheet
Wholesale Funding Ratio
Also known as Wholesale Funding
The wholesale funding ratio measures total borrowings (federal funds purchased, repurchase agreements, FHLB advances, other borrowed money and subordinated debt) as a percentage of total assets, the share of the balance sheet financed by borrowed money rather than deposits. A broader "reliance on wholesale funding" measure, which adds brokered and other non-core deposits over total funding, is served separately.
How is Wholesale Funding calculated?
Total borrowings (federal funds purchased, repurchase agreements, FHLB advances, other borrowed money and subordinated debt) divided by total assets. Brokered and large time deposits are not included in this measure.
Why does Wholesale Funding matter?
Wholesale funding is fast and flexible but flighty and rate-sensitive: it reprices and can disappear quickly under stress, unlike sticky core deposits. A high reliance on it raises both interest-rate risk and liquidity risk.
How do you interpret Wholesale Funding?
Most community banks run borrowings below 20% of assets. Above ~30% the bank is materially dependent on confidence-sensitive funding and more exposed to a rate or liquidity shock. Read together with the core-deposit ratio (its mirror image) and the liquid-assets ratio.
What is a good Wholesale Funding?
| Range | Label | Interpretation |
|---|---|---|
| < 15% | Low reliance | Predominantly core-deposit funded. |
| 15–30% | Moderate | Common for growth-oriented or larger banks. |
| 30–45% | Elevated | Material dependence on rate-sensitive funding. |
| > 45% | High | Heavy reliance on flighty, confidence-sensitive funding. |
Worked example
Frequently asked
Why is wholesale funding considered riskier than core deposits?
Core deposits (checking, savings, and small-balance accounts from relationship customers) are sticky and cheap. Wholesale funding (FHLB advances, brokered deposits, repos) reprices with the market and can be pulled or become uneconomic quickly, so heavy reliance raises both liquidity and interest-rate risk.
Are brokered deposits the same as wholesale funding?
Brokered deposits are one component of wholesale funding. Wholesale funding also includes secured and unsecured borrowings such as FHLB advances, fed funds purchased, repurchase agreements, and subordinated debt.
Sources
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