Deposits

Banks locked in funding by offering more enticing rates on certificates of deposit last quarter, but rebuilding liquidity came at a cost. Competition isn't dying down either, with a couple of credit unions floating 6% CD rates.

The Hicksville, New York, company says its deposit base is stable and poised for growth four months after its acquisition of the failed Signature Bank, some of whose depositors fled to larger banks. Private bankers — including new hires from another failed bank, First Republic — are trying to win back lost deposits.

The European Central Bank will stop paying banks for the money they are required to keep at the institution as a minimum reserve, a surprise move that could cut billions from lenders' interest income. 

BMO Financial Group will enable payments, hold deposits and more for Grounded Technologies, a company that sources funding for banks from a diverse mix of asset managers.

American Banker's annual list reviews the financial results for the best-performing large institutions.

Stock prices of banks on this annual list of top performers with at least $50 billion of assets have fallen with the rest of the industry's shares. Executives say their strong fundamentals will win over doubters.

The Dallas-based company, which saw $3.7 billion of deposits withdrawn after Silicon Valley Bank failed, now predicts average deposits will fall 14% to 15% compared with last year. However, the pace of outflow is slowing, say the bank's executives.

Some credit unions and banks are taking a step back from the U.S. auto lending market, but Ally CEO Jeffrey Brown said the overall sector remains healthy. Though credit is weakening, the loans that the company is making are bringing large returns.

The nation's second-largest bank has weathered the Federal Reserve's rate hikes better than many others, but it's still at the central bank's mercy as deposit pressures continue.

Executives say Bank of New York Mellon can maintain its upbeat forecasts on net interest income and perhaps beat its expense-control goals. However, they warn deposits could shrink in the second half.

The Pittsburgh superregional reported lower second-quarter earnings as net interest income tapered and deposits fell from the previous quarter. CEO William Demchak predicted further weakening of loan demand and NII through the current quarter.

The brokerage firm reported that during the second quarter bank deposits fell 31% from a year earlier. But executives suggested that the worst is now over.

The average credit union member had saved $286 less in March compared to a year earlier. That was the largest per-member drop in credit union history, fueled by rising costs of living and more aggressive competition.

For now, worries about more bank failures have faded. But in the wake of the recent industry turmoil, higher funding costs are expected to weigh on banks' second-quarter results.

Smaller regional banks kept funding costs in check and relied on robust noninterest income to earn their spot as a 10 top-performing bank on American Banker's annual ranking.

In June's roundup of American Banker's favorite stories: Attempts to steal consumer data target a growing number of banks, credit unions secure deposits outflowing from other financial institutions, Citizens recruits 50 former private banking employees of First Republic and more.

Banks are simultaneously looking to shed their obligations under laws like the Community Reinvestment Act and begging the government for more support in the form of higher deposit insurance limits.

The Fed's aggressive tightening has been a boon for money markets, which have drawn investors seeking a haven from volatility and tiring of the skimpy rates on bank accounts.

Data from recent bank failures suggests that prevailing assumptions about which deposits are the most volatile could be dangerously flawed.