Deposits

The Federal Deposit Insurance Corp.'s second-quarter report on the state of banking noted that while banks are enjoying strong profits, they face declining deposits, rising unrealized losses and shrinking net interest margins.

When the prices of U.S. goods and services soar, the Federal Reserve tends to raise its benchmark interest rate, and commercial banks are pinched in several fundamental parts of their business.

The regional bank's stock price is down 38% this year, and it recently got downgraded by S&P Global. While there's light at the end of the tunnel — as Key looks to rebound from the negative impact of soaring interest rates — analysts question whether the improvement will take too long to materialize.

New Peoples Bank announced J.W. Kiser will be its next president and CEO; D.A. Davidson hired Dan Fiandaca to lead its brokered CD underwriting group; Citizens Bank launches Roger, a digital bank for military members; and more in the weekly banking news roundup.

The company's U.S. banking unit, which focuses on wealth management, reported a $38 million quarterly loss. Executives said they're cutting staff in an effort to right the ship, but analysts questioned whether the expense cuts are aggressive enough.

The country's Big Six banks are seen as likely to continue struggling as they contend with deteriorating consumer finances and rising internal costs.

Cambridge Savings Bank's Ivy Bank online-only unit has spent two years offering CDs and savings accounts. Meanwhile, Sumitomo Mitsui Financial Group's new digital bank, Jenius, launched with personal loans. Both want to widen their product sets to benefit both sides of the balance sheet.

During the recent banking crisis, both businesses and wealth management clients moved their money out of banks. Commercial deposits have since recovered, but those in wealth accounts continue to decline amid fierce competition from both inside and outside the banking system.

Seven of the 11 largest credit unions in the country by assets experienced a year-over-year drop in earnings in the second quarter, with increased deposit costs being a primary culprit.

Firms that had ratings cut included M&T Bank, Webster Financial, BOK Financial, Old National Bancorp, Pinnacle Financial Partners and Fulton Financial.

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.