The state Treasury Department held its third quarterly online auction of the year for certificates of deposit recently and invested $8.9 million with three Baton Rouge banks. Another 22 banks statewide also submitted bids through BidLouisiana.com, the state’s Internet clearinghouse for CDs, and were entrusted with an additional $71.1 million. The highest rate accepted was 0.35% and the lowest was 0.28%. Interest earnings alone are expected to be around $118,000.
Even when the economy is rocky, CDs still represent a sound investment, says State Treasurer John Kennedy. “CDs reward the state in a variety of ways,” he says. “The treasury invests in CDs because they are stable and offer a relatively high degree of safety. Financial institutions benefit from having access to a large source of funding for banking activities. Louisiana citizens benefit from the loans created by banks’ access to a large source of funds.”
Locally, Fidelity Bank sold a $5 million CD at 0.28%, Business First Bank sold a $3.2 million CD at the same rate and Pelican State Credit Union received $700,000 for a 0.30% CD. Using BidLouisiana.com, the state treasury awarded cash to the banks with the highest bids in exchange for CDs. Each bank’s bid consisted of the amount of money it wanted and the interest rate it was willing to pay. Overall, the 25 participating banks submitted $87.8 million worth of bids during the July auction and the average interest rate was 0.29%.—Jeremy Alford
