Treasury Council
Treasury strategy and balance sheet management
- 1.
The Fed held rates on June 17, 2026 at 3.50%-3.75%, but the posture was not dovish. The statement kept inflation language firm, and the June SEP median moved the projected 2026 year-end fed funds rate to 3.8% from 3.4% in March. Inference: the base case is still higher-for-longer, with renewed hike risk rather than near-term relief.
- 2.
FUB's treasury problem is still deposit mix, not raw deposit stability alone. The strongest internal signal remains lagging NIB: down about $3,000 across 48,000 business accounts, or roughly a $144 million shortfall, even while year-over-year core deposit growth was reported at 7.2%.
- 3.
The pressure intensified in June. A June 16 internal note says the bank is down $90 million in deposits for the year, with an estimated $3 million to $8 million of next-year interest income risk if trends do not improve.
- 4.
Industry conditions do not suggest a broken deposit market. In the Fed's June 18 H.8 release, total commercial bank deposits rose from $19.285 trillion in May to $19.354 trillion in the week ended June 10, while "other deposits" rose and large time deposits edged down. Inference: system liquidity still looks available; FUB's challenge is composition, pricing discipline, and relationship recapture.
- 5.
No fresh Karen-specific treasury pack, wire-pricing memo, or First Fidelity / correspondent banking update surfaced in the local workspace or Gmail search set for the review window. That gap should be explicit in the meeting.
- ›April customer deposits were down $36 million, driven by four relationship outflows totaling nearly $90 million and an $18 million corporate balance decline.
- ›Internal reporting still described the April position as stable overall, but also noted continued pressure into mid-May.
- ›On June 16, internal discussion said the bank was down $90 million in deposits for the year and increasingly dependent on alternative deposits.
- ›NIB remains the core earnings problem. Internal reporting said NIB balances were down about $3,000 on average across 48,000 business accounts, or about $144 million.
- ›Net interest income ran $1.8 million unfavorable to budget in April, and NIM compressed 3 bps, primarily due to deposit mix.
- ›External deposit data still looks constructive. In the Fed's H.8 release, commercial bank deposits increased about $69.8 billion from May to the June 10 weekly reading; "other deposits" rose by about $98.3 billion over the same span while large time deposits fell about $28.5 billion. Inference: the market is not universally starved for deposits, but customers are still reallocating within cash products.
- ›Management has already discussed a 7-month CD and a money market rate change. The right question is not whether to move rates, but what exact balance behavior each move is intended to produce.
- ›Justin's best posture with Karen is informed questioner, not instructor. The key questions are:
- ›Which balances are we defending?
- ›What beta are we assuming by segment?
- ›What relationship value do those balances carry beyond spread?
- ›Where are we paying up for balances that do not deepen treasury-services attachment?
- ›If the team cannot show segmented economics for operating DDA/NIB, MMDA, retention CDs, and large treasury-linked relationships, then the council is discussing price before strategy.
- ›The May 20 monthly financial review said overall risk trend was increasing, with non-performing assets around $192 million and about $70 million of loans 30-59 days past due. That is not a treasury datapoint, but it matters for board tone, funding confidence, and capital flexibility.
- ›The June 16 internal note said the risk rating was moving from "high" to "significant." Again, not treasury-specific, but it reinforces the need for tighter balance-sheet discipline rather than reactive pricing.
- ›No fresh FDIC, examiner, or capital-ratio treasury datapoint surfaced in the reviewed source set.
- ›Set an explicit 2H26 NIB recovery target by market, banker book, and treasury-services attachment, instead of discussing deposit pressure only in aggregate.
- ›Turn the June deposit-risk discussion into a standing monthly treasury readout: NIB by segment, top relationship runoff watchlist, pricing actions taken, and expected margin effect.
- ›Use the external backdrop to stay selective. Since systemwide deposits are still growing, FUB does not need to chase every marginal balance if relationship economics are weak.
- ›The Tulsa treasury opportunity referenced in May still matters. Internal notes pointed to roughly a $23 million opportunity there, which is a reminder that relationship wins can offset some pricing pressure.
- 1.Whether to launch the 7-month CD, and what explicit funding or retention objective it serves.
- 2.Whether to reprice money market accounts now, and which segments are in or out.
- 3.Whether to set a formal NIB recovery target for 2H26 by market, segment, and banker ownership.
- 4.Whether treasury wants a monthly segmented deposit pack, not just aggregate deposit reporting.
- 5.Whether the council believes current deposit pressure is primarily a pricing issue, a relationship/onboarding issue, or a treasury-services penetration issue. The answer drives the action plan.
- ›Fed tone after June 17. A hold happened; the more important signal is that the projected path shifted more hawkishly.
- ›Deposit mix deterioration. Total deposit growth without NIB recovery still pressures earnings quality.
- ›Short-end cash alternatives. With 3-month bills at 3.68% and the 2-year at 4.20% on June 17, sophisticated customers still have attractive outside options.
- ›Reserve and liquidity signals. Reserve balances fell week over week while the TGA rose; not a stress event, but still worth watching.
- ›Missing treasury intel. No Karen / First Fidelity / wire-pricing memo was found in the four-week review set.
- 1.Ask Karen for the current treasury pack before or at the meeting:
- 2.NIB balances by segment and top 25 relationships
- 3.MMDA and CD repricing scenarios
- 4.large-balance runoff watchlist
- 5.any pending correspondent or wire-pricing changes
- 6.Ask Ryan and Brian for a June month-to-date snapshot on deposits, NIB, cost of deposits, and NIM so the meeting is not working off April-only numbers.
- 7.Push for a simple decision table in the meeting: defend, reprice, or let-runoff by balance type.
- 8.Confirm whether treasury wants a standing monthly NIB recapture readout with named owners.