Correspondent Blog

During a regulatory exam, one of the first questions you will be asked these days is your percentage of uninsured deposits to total deposits. The concern is grounded in the SVB/First Republic 2023 liquidity crisis and data that shows higher balance accounts are more interest rate and risk-sensitive than lower balance accounts. In this article,…

Over the last few months, we have been hosting dozens of banks to lender lunches across the country.  At these lender lunches we discuss credit and pricing trends, deposit gathering strategies, loan pricing and structuring, and fee generation opportunities for community banks.  While we will author a separate article about what we heard from community…

Last week we concluded the industry’s first and only pure deposit focused conference in Denver in conjunction with S&P Global. Given that deposits are a bank’s most important product, there is plenty of room for most banks to improve deposit performance, and we could potentially coming up to a period of changing rates, we thought…

In the trenches of the battle for deposits, banks have ratcheted up their tactics. While some banks pay customers a 4.25% interest rate for funds in a money market, other banks, such as Chase, Citi, Capital One, PNC, and others, pursue a tactic of offering a near-up-front cash bonus to open the account. In this…

In F1: The Movie, Brad Pitt’s character tries to tell his experienced team that “The corners are for combat,” which is a little like telling a banker that customer service is essential. Regardless of the obviousness, the point stands that in F1 racing, cornering takes precision, confidence, and nerves of steel. A F1 driver must…

Bank deposits are evaluated by the investment market and industry analysts on how non-correlated they are to interest rates. We are concerned with growing beta as it is an indication of poor deposit management and/or a challenging interest rate environment. In this article, we evaluate and test four deposit strategies to see which performs the…

It is not every day that you get to own a portion of a banking vendor without putting capital in upfront. ModernFi, a company that provides reciprocal deposits providing access to insurance through network banks (subject to certain conditions) and competitor to legacy deposit networks, is in the process of building a bank-owned consortium to…

Every bank has some percentage of deposits that they “hand” or bespoke price. Exception pricing occurs when a rate sensitive customer requires a higher rate to maintain or grow their deposit balances at the bank. Deposit exception pricing is both an art and a science and, in this article, we discuss five tactics that will…

You set deposit pricing targets, and invariably, you must deal with customers (and bankers) who want to exceed those targets. While this primarily occurs in certificates of deposit and money market accounts, it also occurs in savings accounts, analyzed transaction accounts, and interest-bearing transaction accounts. The question is – when do you grant an exception,…

In the quest for deposits, one successful tactic at top-performing banks is to target the right types of customers. While desiring to bank everyone in your community is noble, it can be a poor use of resources. Some customers offer better returns because they use more banking services and have more deposit balances. Not to…

It is a long held notion in banking that you only move deposit rates when the Federal Reserve moves rates. However, if you think about this practice, it doesn’t make much sense in terms of a bank’s profitability. Markets are dynamic. Interest rates, and funding costs, move independently from the Fed.  In this article, we…

The banking industry’s cost of funding earning assets (COF) is highly correlated to short-term interest rates. The Federal Reserve lowered short-term rates by 100bps in late 2024, with expectations of additional rate cuts in 2025. On average, community banks have not been able to lower their COF, now recognize the reality of a pause by…