When more customers started to pull deposits at the end of last year, Glacier had to pivot quickly to try to hold on to them. In the first quarter, Glacier paid $46 million in interest, up from $5 million a year earlier. Total deposits still fell 7%.
“We went through a decade of zero to low rates, and so there was a little muscle memory that had to be developed in terms of competing for deposits,” CEO Randy Chesler said on a call with analysts in April.
Businesses and wealthy customers were the first ones to start looking for higher rates last year. Now, every type of customer with extra cash is looking for more interest, said Chip Reeves, CEO of MidWestOne Financial Group (MOFG), which is based in Iowa City, Iowa.
“It’s probably the greatest deposit competition that I’ve seen in my banking career,” said Reeves, who has worked in the industry for three decades.
Houston-based Prosperity Bancshares (PB) found that even public-sector clients such as counties, cities and school districts were pulling deposits and moving them to higher-yielding investment vehicles. “I don’t really see those coming back,” CEO David Zalman said on an earnings call in April.
~ Rachel Ensign and Gina Heeb, "Everyone Wants Interest on Their Deposits. That's Bad for Main Street Banks.," The Wall Street Journal, July 6, 2023
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