11/20/24

For nearly three months now, your OBL government relations team, with the help of member banks, has engaged in a significant advocacy campaign to push back on proposed changes to the Ohio Homebuyer Plus Program announced by the Treasurer in August. Based on member feedback, it quickly became clear that the biggest pain point was the draconian revisions to the interest rate formula that would impact state deposits at participating banks. These would have had a drastic negative impact because they applied to accounts already opened. These efforts have paid off and, today, the Treasurer's Office announced significant revisions to the interest rate changes paid on state deposits that were set to take effect January 1, 2025. THANK YOU to all bankers who engaged on this issue.

The original changes to the interest rate formula are as follows from the original TOS announcement:

• The Treasurer's office will utilize a new interest rate calculation methodology (Interest Rate). The Interest Rate will be determined and published quarterly, and the rate will be based on the existing 3-month Bid Ohio rate determination methodology (which closely emulates the 90-day U.S. Treasury Bill rate.) The Interest Rate is applied to the TOS Deposit Accounts as follows:
• TOS Deposit Saver Funding Account
  • TOS: 25% x Interest Rate
  • Saver Premium Rate: 75% x Interest Rate
• TOS Deposit Excess Funding Account
  • Q1 2025 TOS: 25% x Interest Rate
  • Q2 2025 TOS: 50% x Interest Rate
  • Q3 2025 TOS: 75% x Interest Rate
  • Q4 2025 TOS: 100% x Interest Rate

Example: The following uses the most recent 3-month Bid Ohio funding at 5.10%:

• TOS Deposit Saver Funding Account:
  • TOS: 1.275%
  • Saver Premium Rate: 3.825%
• TOS Deposit Excess Funding Account:
  • Q1 2025 TOS: 1.275%
  • Q2 2025 TOS: 2.550%
  • Q3 2025 TOS: 3.825%
  • Q4 2025 TOS: 5.100%

The revised changes to the interest rate formula are as follows and mostly center on the TOS Deposit Excess Funding account portion and the level of the phased in changes. Additionally, it should be noted that since the original TOS announcement, the 3-Month Bid Ohio rate has come down because it also is sensitive to interest rate changes. While the numbers below are used as examples, if interest rates continue to fall, the interest rates based off the 3-Month Bid Ohio rate may also be lower.

• The Treasurer's office will continue to utilize the 3-month Bid Ohio rate determination methodology (which closely emulates the 90-day U.S. Treasury Bill rate) which will be determined and published quarterly. The numbers below have been updated to reflect the most recent changes to the 3-Month Bid Ohio rate. The Interest Rate is applied to the TOS Deposit Accounts as follows:
• TOS Deposit Saver Funding Account
  • TOS: 25% x Interest Rate
  • Saver Premium Rate: 75% x Interest Rate
• TOS Deposit Excess Funding Account
  • Q1 2025 TOS: 25% x Interest Rate
  • Q2 2025 TOS: 25% x Interest Rate
  • Q3 2025 TOS: 50% x Interest Rate
  • Q4 2025 TOS: 50% x Interest Rate
• Example: The following uses the most recent 3-month Bid Ohio funding at 4.60%:
• TOS Deposit Saver Funding Account:
  • TOS: 1.15%
  • Saver Premium Rate: 3.45%
• TOS Deposit Excess Funding Account:
  • Q1 2025 TOS: 1.15%
  • Q2 2025 TOS: 1.15%
  • Q3 2025 TOS: 2.30%
  • Q4 2025 TOS: 2.30%

This is a significant reduction and change from what was originally proposed. Additionally, the TOS Office has committed to having further discussions next summer, once there is more data regarding the program, regarding any future changes. This will allow significantly more time for input, discussion, and notice of any future changes. While this is not everything that was hoped for, it is a significant victory and moves the needle for members participating in the program. OBL will continue to work with the TOS Office to push for additional changes to the program and ensure the long-term viability of the Ohio Homebuyer Plus Program and linked-deposit programs generally. Below, we have included the language directly from the Treasurer's office that was sent out today.