Deposits

Revisions in 2020 to the way regulators classify "hot" deposits struck some observers as risky, at least in theory. Silvergate seems to have made that risk less theoretical.

Binance, the world's largest cryptocurrency exchange, said it's temporarily suspending deposits and withdrawals of U.S. dollars using bank accounts, and will work to restart the service soon.

Coinbase, Paxos, MetaBank and PayPal all claim the primary purpose exception, which allows companies to place deposits at banks without limits applied to brokered deposits.

Uncertainty surrounding the regulatory approval process and overall economic conditions will act as a brake on bank mergers and acquisitions in 2023, says John Corbett, CEO of Florida-based SouthState.

As deposits grow scarcer, the Stamford, Connecticut-based bank's acquisition of interLINK earlier this month promises to yield billions of dollars in core funding it can put to work paying down borrowings or purchasing securities, CEO John Ciulla says.

Almost a fifth of U.S. banks are offering savings rates of 2% or more, a huge spike from a year ago, according to new data. Banks are paying more out of fear their customers will flee to competitors offering higher rates.

While branch closings remain the norm throughout the industry, the hunt for suddenly scarce deposits is prompting some community banks to move in the opposite direction and expand their branch networks.

The McLean, Virginia-based bank is building its deposit base — in contrast with many banks that are starting to see outflows. But the growth is accompanied by rising interest expenses, which are expected to cut modestly into profit margins this year.

The Birmingham, Alabama, bank expects up to $5 billion in additional deposit declines in the first half of 2023 but is hopeful for potential growth in funding later this year.

The parent company of Silicon Valley Bank, which has been mired in deposit challenges, expects little near-term change in the deployment of venture capital dollars, which executives say will keep putting pressure on SVB's balance sheet.