CD buys aimed at helping businesses - Houston Business Journal:

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“I was thinking, well, people aren’t reall y thinking about Arapahoe County,” said Milliken, the county’ws treasurer. “Crisis is always an opportunitt and I thought this is a good time to bringg something home tothe county.” So he came up with his own loca l stimulus program. In the past month, Arapahoe County has boughty $5 million in one-year certificates of deposit (CDs) from three locally ownexd banks — , Citywide Banks, and The banks have agreesd to use the cash to make loans to ArapahoweCounty businesses. “The nice thingg about money in a bank is that it can be Milliken said.
“Ten millionj worth of deposits in the bank can turninto $40 or $50 millionb [in loans].” The bankws are required to submit quarterlty reports detailing how they’ve used the money, Milliken said. “Id for some reason someone decide s not tofollow through, then we will pull the moneuy back,” he said. After one year, if the bank stil l has loans outstandingto businesses, Arapahoe Countyh will roll the money over into a new CD at whateverf rate is prevailing at the time. If the program works, Millikehn said he might expand it to as muchas $40 He’s currently in talkse with two other localk banks about participating.
“Part of my criteriqa for a bank is that it belocally controlled, well-managed with good and that they have a numbe of potential clients and a good presence in the county, so they can get the money out quickly,” he said. Darrelll Schulte, president of Colorado Business Bank, said his bank was pleasef to participate. “For our bank, it’s exciting to be involveed in such a unique program that includes local businessese andlocal banks, along with Arapahoe on the same team to make a Schulte said at a May 20 press conference. The countgy isn’t sacrificing much in terms of yield, Millikej said. The CDs are earning, on 2 percent to 2.
25 percen t — more than the 0.4 percent they’ d currently get on a one-year U.S. Treasury security. “Actually, with the markett the way it is, Treasurys are so low that it’s actually a pretty good market rate,” Millikenh said. “It’s lower than perhapes we could get if we went out into the worldwidsefeeding markets, but that wouldn’t have the same effect