Deposits

The San Francisco bank, on shaky ground after two regional peers failed last month, said that customers pulled more than 40% of their deposits last quarter. It's been forced to turn to more expensive sources of funding, which analysts said will squeeze its profitability.

The Dallas-based company is intentionally shedding certain deposit relationships that don't align with its new business model. Total quarterly deposits fell 12.6% year over year, but they rose 1% after excluding the relationships targeted for reduction, according to the bank.

Main Street companies, particularly those owned by women and minorities, depend on the flexibility of community and regional banks for their survival.

The Birmingham, Alabama, bank said that its deposits fell by $3.3 billion last quarter, and it projected a decrease of up to $2 billion between April and June. Executives assured investors that sizable liquidity sources are available.

A study published after last month's crisis finds that banks can guard against rate-driven deposit outflows by keeping more liquid funds available. It also concludes that financial institutions with higher rates of uninsured deposits are more likely to face bank runs.

The regional bank started making moves to protect deposits last year, which prevented steeper declines during a volatile first quarter, CEO Tim Spence says.

The Dallas-based bank expects some of the recent deposit outflows to return in the future.

Although the Columbus, Ohio-based regional emerged from the recent crisis relatively unscathed, management was still taking steps to shore up its balance sheet, including forgoing stock buybacks to strengthen a key capital metric.

The Cleveland-based regional bank said that its net interest income fell 10% — and profits declined by an even larger percentage — as it paid more to retain depositors. Still, CEO Chris Gorman said the company is "well prepared to handle the deposit challenges in front of the market."

Paying higher rates to customers should help stem deposit outflows at the Salt Lake City bank. But it's expected to contribute to a projected 7% drop in net interest income during the second quarter.