Deposits

Heading into the year, U.S. banks were facing pressure to pay higher rates to their depositors. But they could not have anticipated just how important deposits would soon become.

The $225 billion-asset Citizens Financial Group has partnered with the fintech Pinwheel to streamline the process for new account holders to switch the direct deposit of their paychecks from their old banks.

The Connecticut bank agreed to pay $350 million to acquire Ametros Financial, a custodian and administrator of medical funds from insurance claim settlements. Some analysts see the deal as a signal that Webster does not plan to sell its health savings account business, which has been the subject of recent speculation.

Mobile banking features that encourage customers to set savings goals can supercharge customer loyalty and attract new primary banking customers. A renewed focus on consumer savings may also help banks offset the decline in deposits reported at many banks in 2023.

Bank CEOs are eyeing a near-term peak in deposit costs as the Fed perhaps moves closer to cutting interest rates. But the pressures they've faced this year as depositors ask for more compensation may not die down right away.

Top industry executives said this week that price increases are abating, even if they haven't yet fully abated. Their remarks reflect increased confidence that the Federal Reserve will hold interest rates steady — or perhaps even cut them — in the first half of 2024.

Los Angeles-based City National Bank recorded a $247 million loss during a tumultuous final quarter of its fiscal year. But executives at the bank's Canadian parent company say they expect a return to profitability in the first quarter.

The Champaign, Illinois-based company said it would pay $41.6 million to acquire Merchants and Manufacturers Bank Corp., which has five branches in the Greater Chicago area.