Deposits

The Federal Reserve’s forceful moves to fight inflation are resetting expectations about how quickly banks will need to start raising their deposit rates.

The technology giant is partnering with a fintech firm to deploy $25 million of deposits at minority-owned banks, community development financial institutions and other mission-focused lenders. It’s part of a broader effort by the iPhone maker to combat systemic racism.

In a recent survey, just over half of community bankers expressed concern that the central bank will harm the U.S. economy by raising rates too fast in its quest to contain inflation.

Executives at the Alabama bank anticipated that some corporate deposits would start to leave during the first quarter as interest rates rose. Instead, deposits grew to a record $138.7 billion.

On Dec. 31, 2021. Dollars in thousands.

Banks flush with liquidity are likely to keep deposit yields low even as the rates they earn on loans widen, which should result in higher net interest income. One industry analyst predicts “NII to the sky.”

Year to date Sep. 30, 2021. Dollars in thousands.

Stablecoins are unlikely to be the future of payments despite their growing market value in the last two years, according to a Federal Reserve Bank of New York blog post.

The Buffalo, New York, bank is tweaking its loan mix and reducing some deposits in interest-bearing accounts. It says the moves should boost its net interest margin, which has declined in almost every quarter since the start of the pandemic.

Executives predict a 5% to 6% bump in lending this year, and they also say they'd be comfortable if up to a third of the Cincinnati company's excess cash migrates away.