CHARLESTON - Harrison County Bank of Lost Creek took on the big boys and won during a Jan. 9 on-line certificate of deposit auction conducted by the state Board of Treasury Investments.
Harrison bank officials successfully bid on $5 million in state deposits during the auction, observed by BTI staff, media, legislators and other interested parties. Those contingents watched results roll in on a video screen in the state Capitol's East Wing basement.
Harrison County Bank officials put up a 4.05 percent bid on $5 million, the largest single block of money available for deposit. Bank officials placed their bid with just more than a minute left in the 30-minute auction.
Chief operating officer Virgil McNemar said his bank looks forward to each on-line auction. A pool of $25 million is routinely available for deposits and banks compete with each other on interest rates to see who is "in" or "out" of the money. As the auction progresses, no bank knows what interest rate the other has bid.
"We try to utilize the states' money and invest it back into the economies of local areas," McNemar said. "We are a locally owned and operated bank. This on-line auction idea is really an outstanding vehicle to use for the purpose of gaining deposits."
Smaller West Virginia banks would have to spend an indeterminate amount of time amassing $5 million in deposits.
"When faced with competition from large interstate banks this keeps us all on an even playing field," McNemar said. "It would take a small community bank a llong time to accumulate $5 million in deposits."
BB&T placed the highest interest rate bid, at 4.23 percent on $1 million. The company gained a total of $5 million in deposits, spread over five separate $1 million segments.
Other banks that attracted deposits, and the amounts:
The auction also resulted in $103,000 more in earnings had the BTI simply invested the money in U.S. Treasury bills. Of nine such auctions, that is a record. Wednesday's additional earnings also brought to nearly $400,000 the cumulative additional earnings total.
Altogether, bids totaled $76 million, three times what was available for deposit. In nine auctions, the BTI has placed $228.8 million on deposit around the state. BTI officials held the first auction in May of 2006.
The $25 million available at auctions is part of nearly $3 billion the BTI manages, through short-term investments.
"We can't wait to hold another," said State Treasurer John Perdue, who serves as chairman of the five-member BTI board. "They seem to be getting more popular with each event."
For full auction results, go to www.bidwvauction.com.
Go to: BidWVauction Home Page
Please direct questions and comments regarding bidding procedures to the Auction Administrator or call (412) 391-5555.