Liquidity & Balance Sheet
Reciprocal Deposits
Reciprocal Deposits are deposits placed at one bank but swapped through a network (IntraFi/ICS, ModernFi) into multiple receiving banks, each below the $250,000 FDIC insurance limit per depositor. They are treated as core deposits under regulatory rules when they meet specified thresholds.
Formula
A customer deposits $5M at Bank A. Bank A routes $4.75M through a network to 19 other banks in $250K increments, keeping $250K itself. The customer sees one account but receives FDIC insurance across all 20 banks. Bank A receives reciprocal deposits from other network banks in the same amount.
Why it matters
After the 2018 EGRRCPA reform, reciprocal deposits up to the lesser of 20% of liabilities or $5B are excluded from brokered deposits for well-capitalized banks — a major regulatory recognition that sticky large deposits via reciprocal networks behave like core deposits. Reciprocal deposit growth converts uninsured concentration risk into insured stability.
How to interpret
Reciprocal deposit growth is broadly positive. Banks heavily reliant on reciprocal deposits (above 15-20% of total deposits) should still be evaluated for underlying customer concentration; reciprocal coverage protects the depositor, not the bank, from withdrawal risk.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| < 5% of deposits | Light | Limited reciprocal program. |
| 5–15% | Active | Established reciprocal program; healthy diversification. |
| 15–25% | Heavy | Material reliance on reciprocal networks. |
| > 25% | Concentrated | Operational dependence on network membership. |
Worked example
Frequently asked
Are reciprocal deposits the same as brokered deposits?
Pre-2018, yes. Post-EGRRCPA, reciprocal deposits within statutory caps are excluded from brokered classification for well-capitalized banks. This reduces FDIC assessment costs and improves the core-deposit ratio.
Who operates the largest reciprocal-deposit networks?
IntraFi (formerly Promontory Interfinancial Network) operates the ICS and CDARS networks — the dominant US providers. Newer entrants (ModernFi, others) have built smaller but growing networks since 2022.
Why didn't SVB use reciprocal deposits more heavily?
Reciprocal-deposit caps ($5B or 20% of liabilities) were below SVB's deposit base; the bulk of SVB's deposit book was concentrated tech-startup operating accounts that exceeded reciprocal capacity. Smaller community banks have been more effective at this risk-management technique.
Sources
- FFIEC Call Report Schedule RC-E Memo Item 1.g
- 12 CFR §337.6 — FDIC brokered deposit rules
See Reciprocal Deposits across 4,335 US banks
BankRegReports ranks every FDIC-insured institution by Reciprocal Deposits, refreshed quarterly within 48 hours of FFIEC release.