A record $862 Billion of deposits have left banks since the Fed started raising rates in March of 2022, a few takeaways: 👉The previous record was $70B of withdrawals during the 2008 financial crisis. 👉$896B has flowed to Money Market Funds during this timeframe, another record. 👉Trillions came into banks from the stimulus packages, but how many banks prepared for this level of outflow? And the #1 question for bank leaders is this: What is your plan to successfully navigate these historical deposit challenges? Because without a good answer to that question…literally nothing else will matter. #bankingindustry #communitybanking #economy
📌$70 Billion in bank deposit outflows this week, brings us to the lowest levels since May:
I would personally love to keep my savings in our local credit union, but how do you turn down over 5% APY in an external money market? The money is entirely liquid too. Can you speak on the process of establishing these rates, and why they can vary so greatly from one bank to another?
Andy Pohlman There’s not a lot of options other than to ride out the storm until rates subside Without knowing the collateral damage of these unprecedented rate hikes, making a guess by lending long could prove difficult Especially with Money Center Banks who’s cost of funds are significantly less than community banks
Seems like the FED will be keeping the rates elevated for another 6-12 months as well with all known, current information. Will the Commercial Office loans that need to refinance over the next year an issue or overhyped concern?
Totally agree with your thoughts Andy! And the strategy must go beyond just having the 'best' customer service to attract in deposits customers.
Founder & President at Pacific First Wealth Management
1y📌The dollar amount and velocity of inflows to Money Market Funds is historic: