A number of these financial institutions are set to report earnings in the days ahead, thus showing the fuller impact of the outflow of deposits during the recent banking crisis, a Sunday (April 16) Wall Street Journal (WSJ) report noted.
“It’s maybe the most critical, sensitive quarter they’re ever going to report in,” Mike Brauneis, managing director at consulting firm Protiviti, told the WSJ.
Among the banks set to report their earnings are M&T Bank, Citizens Financial Group and U.S. Bancorp, the report said.
When Silicon Valley Bank and Signature Bank failed last month, customers fled other small and medium-sized banks, moving their money to bigger banks and money market funds.
As the WSJ noted, this is likely to lead many of the smaller banks to raise interest rates they are paying to prevent shedding more customers.
Some banks have already done so, the report said, with the largest increases coming from lenders with a large number of deposits that are greater than the Federal Deposit Insurance Corp.’s $250,000 cap or whose clients are concentrated in a few industries.
For example, California’s PacWest, which has a lot of startup customers, has recently offered as much as 5.5% for a shorter-term CD.
Banks seem to be trying to “get ahead of any potential situation” and “make sure they have the liquidity if difficulty should arise,” said Ken Tumin, founder and editor of DepositAccounts.com. “Things have started to change over the past month.”
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