The MVP of Bank Funding

Every year, sportswriters and fans argue over baseball MVP awards. It's a fun debate because it’s not as simple as who hit the most home runs. Players contribute in different ways, and a skillful manager knows how to draw upon the strengths of each.

Similarly, banks have a roster of choices on the funding side of the balance sheet: traditional deposit accounts, brokered CDs, FHLB advances, wholesale funding lines—and reciprocal deposits. Some of these tools are flashy sluggers; others are reliable but limited in how much they can do. And then there's the player who does everything well, every season—much like reciprocal deposits.

The Case for the Trophy

In addition to putting up offensive numbers, valuable players prevent runs and contribute in ways that may not appear in the box score. Reciprocal deposit services safeguard depositor funds by placing large deposits across a network of banks in increments under the standard FDIC insurance maximum. High-value, large-dollar depositors—such as businesses and public funds—are quick to appreciate the benefit of access to aggregate multi-million-dollar FDIC insurance through a single bank relationship. Banks recognize that reciprocal deposits are typically sticky, providing stability in both calm and more volatile market cycles. In its recent study of the bank failures of 2023, the FDIC concluded that “deposit insurance stabilized deposits and reduced depositors’ propensity to run.”1 Banks rely on reciprocal deposits to grow relationship deposits while reducing risk for both banks and depositors.

There’s also the sabermetric argument baseball fans know well. Traditional statistics, from batting average to home run totals, don’t reflect a player’s full value. Wins Above Replacement, or WAR, compares a player’s performance to what would reasonably be expected from a replacement player. Similarly, reciprocal deposits compare favorably to conventional funding alternatives. Section 902 in the recently-passed 21st Century ROAD to Housing Act significantly raises the limit for reciprocal deposits that can be reported as nonbrokered, reinforcing the role that reciprocal deposits play as a stable funding source throughout the banking industry.2 And the WAR keeps adding up: reciprocal deposits are typically less expensive than brokered deposits, listing deposits, and collateralized deposits (and with no collateralization hassles).

Consistency also matters. Just as a great player performs well across a full season, reciprocal deposits offer a scalable, dependable source of funding across economic cycles.

Built-In Versatility

In baseball, the most complete players are "five-tool" talents — able to hit for average, hit for power, run, field, and throw, rather than being a specialist in just one skill. Reciprocal deposits can provide a bank with a similar kind of flexibility on its balance sheet. Keep reciprocal deposits on balance sheet to meet loan demand or other liquidity needs. When flush with cash, sell the deposits to deposit network members for fee income. Switch back and forth as needs change with no lost relationships or re-papering friction.

About IntraFi

Every winning team needs a front office that knows how to build a roster for the long season. IntraFi has spent decades doing exactly that for reciprocal deposits, building infrastructure that lets this MVP-caliber tool perform game after game for 3,000+ member banks and counting.

1 FDIC Staff Studies. Dissecting Depositor Flight: An Analysis of the Spring 2023 Bank Failures. a https://www.fdic.gov/center-financial-research/staff-studies-may-2026.pdf?ref=elmomento.io

2 https://www.congress.gov/bill/119th-congress/house-bill/6644/text  

Deposit placement through ICS is subject to the terms, conditions, and disclosures in applicable agreements. IntraFi is not an FDIC-insured bank, and deposit insurance covers the failure of an insured bank. A list identifying IntraFi network banks appears at https://www.intrafi.com/network-banks. Certain conditions must be satisfied for “pass-through” FDIC deposit insurance coverage to apply.