Five state banks won bids in an online, six-month certificate-of-deposits auction held by the state Board of Treasury Investments on Wednesday.

With the tightening economy, the auctions are a way for West Virginia banks to get money fast, which can be lent to West Virginians, said state Treasurer John D. Perdue.

"To compete in the world economy today, our bank needs some money," Perdue said. "With the auction, the banks can take that money and invest in West Virginians - home, car loans - to keep our economy going."

Despite national reports of an unstable financial market, he emphasized that West Virginia banks are not in trouble.

"Our banks are pretty secure and are able to compete in this bad economy at the moment."

The live auctions are held quarterly, with Wednesday's in front of business leaders and students at the University of Charleston's Graduate School of Business.

During each auction, $25 million of the state BTI money is available for bidding. The BTI manages more than $3.5 billion in funds invested by state agencies and local governments.

During the auction, the banks bid on the amount of interest they are willing to pay for use of a particular amount of money. In turn, the state generates more money than it would have if it had invested the money in U.S. Treasury bills.

The state BTI started the auctions in May 2006. So far, the BTI has earned more than $8.1 million from the investments. Wednesday's auction netted about $125,000 that BTI wouldn't have earned otherwise. The prior auction on Sept. 10 earned about $97,000.

On Wednesday, eights banks vied for the $25 million. Banks pay a fee to participate and must have certain backing collateral.

Bids start at $100,000 and top out at $5 million. Each bidding bank can receive no more than $5 million. A bank can bid an unlimited amount of times.

The interest rates on the funds had to be at least 1.122 percent, a benchmark based on a six-month treasury bill.

Five state banks won bids in an online, six-month certificate-of-deposits auction held by the state Board of Treasury Investments on Wednesday.

With the tightening economy, the auctions are a way for West Virginia banks to get money fast, which can be lent to West Virginians, said state Treasurer John D. Perdue.

"To compete in the world economy today, our bank needs some money," Perdue said. "With the auction, the banks can take that money and invest in West Virginians - home, car loans - to keep our economy going."

Despite national reports of an unstable financial market, he emphasized that West Virginia banks are not in trouble.

"Our banks are pretty secure and are able to compete in this bad economy at the moment."

The live auctions are held quarterly, with Wednesday's in front of business leaders and students at the University of Charleston's Graduate School of Business.

During each auction, $25 million of the state BTI money is available for bidding. The BTI manages more than $3.5 billion in funds invested by state agencies and local governments.

During the auction, the banks bid on the amount of interest they are willing to pay for use of a particular amount of money. In turn, the state generates more money than it would have if it had invested the money in U.S. Treasury bills.

The state BTI started the auctions in May 2006. So far, the BTI has earned more than $8.1 million from the investments. Wednesday's auction netted about $125,000 that BTI wouldn't have earned otherwise. The prior auction on Sept. 10 earned about $97,000.

On Wednesday, eights banks vied for the $25 million. Banks pay a fee to participate and must have certain backing collateral.

Bids start at $100,000 and top out at $5 million. Each bidding bank can receive no more than $5 million. A bank can bid an unlimited amount of times.

The interest rates on the funds had to be at least 1.122 percent, a benchmark based on a six-month treasury bill.

In Wednesday's auction, winning bid interest rates ranged from 1.8 to 2.9 percent.

Banks winning bids were: BB&T-Charleston, Freedom Bank Inc. in Belington, WesBanco Bank Inc. in Wheeling, United Bank Inc. in Parkersburg, CNB Bank Inc. in Berkeley Springs, Monongahela Valley Bank in Fairmont and Main Street Bank in Wheeling.

The banks bid blind - meaning they aren't able to see the other banks' bid amounts and interest rates. The auction lasts 30 minutes, with a flurry of action in the beginning, followed by a mad rush in the end.

Dan Lanier, senior vice president of government/public funds deposit manager at BB&T Charleston, said BB&T's strategy for the bidding is three-fold.

First is to get the maximum - $5 million. Second is to stay under the maximum interest rate allowed by corporate BB&T. And third is to not be the highest bidder.

On Wednesday, the bank got two out of three, he said. The bank won five $1 million bids, with interest rates ranging from 2.6 percent to 2.9 percent. However, the five bids had the highest interest rates of the winning bids.

While eight banks took part in the auction, Huntington Banks, which normally participates, sat out.

"Banks have so much they can invest in public funds," said. Jennifer Parsons, vice president of the bank's treasury investments. "We already have all of our collateral pledged. Maybe next time."

Reach Sarah K. Winn

at sarahkw...@wvgazette.com

 or 348-5156.