Question: Jefferson Security Savings is attempting to determine its liquidity requirements today (the last day in August) for the month of September. September is usually a month of heavy loan demand due to the beginning of the school term and the buildup of business inventories of goods and services for the fall season and winter. This thrift institution has analyzed its deposit accounts thoroughly and classified them as explained below. Management has elected to hold a 75 percent reserve in liquid assets or borrowing capacity for each dollar of hot money deposits, a 20 percent reserve behind vulnerable deposits, and a 5 percent reserve for its holdings of core funds. The estimated reserve requirements on most deposits are 3 percent, except that savings deposits carry a zero percent reserve requirement and all checkable deposits above $48.3 million carry a 10 percent reserve requirement. Jefferson currently has total loans outstanding of $2,389 million, which two weeks ago were as high as $2,567 million. Its loans mean annual growth rate over the past three years has been about 8 percent. Carefully prepare low and high estimates for Jefferson's total liquidity requirement for September.
