FAIRMONT — The Office of the State Treasurer’s online certificate of deposit auctions are continuing to support local economies like Fairmont.

The West Virginia Board of Treasury Investments (BTI), which is part of the West Virginia State Treasurer’s Office, held the most recent auction on July 14 from 10 to 10:30 a.m. State Treasurer John Perdue is the chairman of the board of the BTI.

Greg Stone, spokesman for Perdue, said the first online CD auction was held in May 2006. Five more auctions are scheduled between now and April of next year. The dates are Sept. 8, Oct. 13, Jan. 12, March 9 and April 13.

“Treasurer Perdue has always found it important to try to pump some lending capital into the state’s banks because in these tough economic times people need to borrow money at reasonable rates,” Stone said.

Glenda Probst, executive director of the BTI, explained that this entity invests the operating funds of state government, which are basically tax dollars. When the BTI took on this responsibility five years ago, none of that money was invested in West Virginia. So the BTI created the online CD auction program as a way to place some of those funds in state banks.

“It’s just been very successful,” she said. “We’re really delighted with the results. It’s something we’re very pleased with here and hope to continue.”

Probst said the process is called a blind auction, meaning banks are not aware of the other participants’ bids. Only approved state depositories with branches in West Virginia can participate.

By logging onto a common website, banks can place bids on different amounts of money by offering interest rates on the funds, and can make multiple bids and upgrade those bids many times within the half-hour time frame, she said. Banks are said to be either “in-the-money” or “out-of-the-money.”

The maximum bid amount is $5 million, and $100,000 is the lowest banks can bet. Banks have to bid above the benchmark interest rate, which is based on the going rate for a six-month treasury bill, Stone said. The benchmark was set at .25 percent for the recent auction.

At the end of the 30 minutes, the financial institutions with the highest bids receive the awards, Probst said.

Stone said the BTI monitors the auctions, while a third party administrator keeps track of the bids and when they come in.

The BTI had $20 million to auction on July 14 and received $38.5 million in bids from seven banks. The bids of six banks were accepted, including MVB Bank of Fairmont, which took home $2.5 million at a rate of .28 percent.

MVB Bank has received a total of $30.5 million since the auction began in 2006, Probst said.

Eric Tichenor, chief financial officer for MVB Bank, manages the bank’s funds from the online CD auctions.

“If we have any use for money, we try to participate,” Tichenor said of the auctions.

“It gives us an opportunity for some lower cost funds, which we can use to either fund loans or we’ve funded some actual CD asset purchases over the past two years with these.”

MVB Bank tries to get the money at the lowest cost it can, and sometimes that leads to success, he said.

During this month’s auction, Jefferson Security Bank of Shepherdstown was also awarded $5 million at a rate of .325 percent, which was the highest rate accepted. Freedom Bank Inc. of Belington received $5 million at .310 percent, and Clear Mountain Bank of Bruceton Mills got $3 million at .3 percent. Harrison County Bank of Lost Creek obtained $2 million at .3 percent, and WesBanco Bank Inc. won $2.5 million at .275 percent, the lowest rate accepted for a winning bid.

With these manageable rates, the banks don’t have to pay the BTI a great deal of interest and can in turn lend money to local businesses and the community. Both parties benefit, because the financial institutions are able to make a profit and the borrower is able to get a low interest rate for a loan, Stone said.

He said this bidding process is a handy, fair and competitive vehicle to spread lending capital out into the various communities in the state. The hope is that once the banks acquire this money, they spread the wealth to consumers.

“It’s all intended as a shot in the arm for local economies in the state and different regions of the state,” Stone said.

Probst said one advantage that the auction provides is the ability for banks to receive a large amount of money with one process.

“From the state’s perspective, we’re making more than we would make if we went out and bought a treasury bill,” she said. “We like to use a portion of that money to invest in West Virginia.”

Since the inception of the program, the BTI has placed $674 million in West Virginia banks and has earned the state $9 million in interest, Probst said.

For more information or the full results, visit bidwvauction.com.

E-mail Jessica Borders at jborders@timeswv.com.