Key takeaway: The banks most sensitive to falling rates are usually not the ones with a single odd ratio. They are the banks where public data shows a loan-heavy book, very light or very large securities exposure, unusually cheap noninterest-bearing funding, or loans that already exceed deposits. Those patterns do not prove the earnings direction; they tell you which banks deserve asset-liability follow-up before a fintech relationship, credit memo, or board discussion moves forward.
This post is written primarily for fintech teams choosing or monitoring a sponsor bank, meaning the regulated bank that holds accounts and supports program activity behind a fintech product. A proxy screen is a public-data triage test, not a full model of the bank. When the screen flags a bank, the follow-up is the ALM package: management’s asset-liability management report showing repricing buckets, deposit beta assumptions, duration, and rate-shock results.
Methodology / data freshness. As of 2026-04-23, Deep Digital Ventures Banking built this Q4 2025 screen from public Call Report fields: total assets from Schedule RC, securities from RC-B, loans and leases from RC-C, deposit detail from RC-E, and income context from RI and RC-K. For most domestic Call Report filers, FDIC FIL-10-2026 lists April 30, 2026 as the submission date for March 31, 2026 reports, so the screen avoids mixing filed and not-yet-filed quarters.[1] Source raw public numbers from the FFIEC Central Data Repository Public Data Distribution site,[2] confirm schedule definitions in the FDIC current Call Report forms and instructions,[3] and use FDIC BankFind Suite for institution lookup and name confirmation.[4]
Lower rates help most when interest-bearing deposit costs reset down faster than loan and securities yields. They hurt when floating-rate assets reprice before depositors accept lower payouts. Public data cannot show each loan’s coupon floor, deposit beta, or hedge position, but it can flag banks where the question is material enough to ask for the ALM package.
Examples From the Proxy Screen
Universe and selection: this is a six-bank illustrative sample from domestic Call Report filers in Deep Digital Ventures Banking with Q4 2025 data, $3.0 billion to $10.0 billion in total assets, and complete Schedule RC, RC-B, RC-C, and RC-E fields. The filter looked for at least one DDV review flag, defined below. The table is sorted by analytical pattern: high noninterest-bearing funding examples first, then the loan/deposit outlier, then loan-heavy and securities-light examples. These are not the top six banks nationally; they were selected to show different follow-up questions.
| Bank | State | Assets | Loans / assets | Securities / assets | Noninterest deposits | Loan/deposit |
|---|---|---|---|---|---|---|
| Stride Bank, N.A. | OK | $4.86B | 84.7% | 1.4% | 91.2% | 92.2% |
| The Bancorp Bank, N.A. | SD | $9.35B | 76.9% | 17.9% | 89.0% | 87.9% |
| Pathward, N.A. | SD | $7.56B | 66.3% | 17.8% | 95.7% | 78.9% |
| John Deere Financial, f.s.b. | WI | $3.40B | 99.0% | 0.0% | 1.0% | 264.1% |
| Sunwest Bank | UT | $4.09B | 80.2% | 12.6% | 44.3% | 103.2% |
| Metro City Bank | GA | $4.71B | 85.6% | 1.4% | 22.0% | 109.9% |
In the table, Stride Bank, N.A., The Bancorp Bank, N.A., and Pathward, N.A. show very high noninterest-bearing deposit ratios, while Metro City Bank shows an 85.6% loans/assets ratio with only 1.4% securities/assets. John Deere Financial, f.s.b. is included because a 264.1% loan/deposit ratio is the useful outlier: a specialized finance bank can fund lending from sources other than ordinary deposits, so the ratio is not automatically a bad-data artifact. It pushes the diligence question toward parent, wholesale, brokered, or other funding sources. Those are not conclusions. They are prompts for different diligence questions.
How to Read the Proxy
Treat this as triage, not a forecast. DDV review flags are simple public-data thresholds that push a bank into deeper review if two or more appear together: loans/assets above 80%, securities/assets below 5% or above 20%, noninterest-bearing deposits/total deposits above 50%, or loan/deposit above 100%. These are review thresholds, not regulatory limits.
| Proxy flag | Review rule | Why it matters in a lower-rate cycle | Primary public source |
|---|---|---|---|
| Loan-heavy balance sheet | Loans/assets above 80% | Asset yields may reset faster than deposit costs if loans are variable-rate or near repricing dates. | FFIEC Schedules RC and RC-C |
| Securities-light or securities-heavy | Securities/assets below 5% or above 20% | Low securities exposure means less mark benefit from lower rates; high exposure may improve marks but not necessarily cash yield. | FFIEC Schedules RC and RC-B |
| Large noninterest-bearing deposit base | Noninterest-bearing deposits/total deposits above 50% | Funding is already cheap, so lower rates may offer less direct deposit-cost relief. | FFIEC Schedule RC-E |
| Loans exceed deposits | Loan/deposit above 100% | The rate question shifts to wholesale funding, borrowings, brokered deposits, or parent funding. | FFIEC Schedules RC, RC-C, and RC-E |
Worked example: Stride Bank, N.A. shows 84.7% loans/assets, 1.4% securities/assets, 91.2% noninterest-bearing deposits/total deposits, and 92.2% loan/deposit in the screen. The first two ratios flag a loan-heavy, securities-light balance sheet. The third says deposit-cost relief may be limited because much of the funding already pays little or nothing. The fourth says loans do not exceed deposits, so the next question is how quickly loan coupons, deposit balances, and deposit betas move if short rates drop by 100 or 200 basis points.
Falling-Rate Questions
- How quickly do asset yields reset? If loans/assets are above 80%, ask for the next 12-month loan repricing bucket, fixed-versus-variable mix, coupon floors, and the bank’s net interest income sensitivity for down-rate shocks.
- How much deposit cost relief is available? Use Schedule RC-E to separate noninterest-bearing deposits from interest-bearing deposits; a bank already funded mostly by noninterest-bearing balances has less room to lower deposit expense.
- Are deposits operational or rate-seeking? Call Reports show deposit categories, but they do not show whether balances come from operating accounts, fintech program funds, escrow balances, or rate-shopping customers. That gap belongs in the diligence request.
- Do securities marks improve enough to matter? The FDIC Quarterly Banking Profile for Q4 2025 reported industry unrealized losses on held-to-maturity and available-for-sale securities of $306.1 billion, down $31.0 billion from the prior quarter, after mortgage rates declined and mortgage-backed securities values improved.[6]
Why Direction Is Not Obvious
Three effects can point in different directions in the same quarter. Interest-bearing deposits and borrowings may reprice down, improving funding cost. Variable-rate loans and new production may reset lower, reducing asset yield. Securities marks may improve as market rates decline, but that valuation benefit does not automatically replace lost interest income.
The FDIC’s Q4 2025 Quarterly Banking Profile shows why timing matters. Industry net interest margin rose 5 basis points to 3.39% because funding costs fell more than earning-asset yields. Community bank NIM rose 4 basis points to 3.77%. That is an industry result for one quarter, not a rule for every bank in this screen.[6]
Second-Pass Diligence
After the rate screen, separate credit concentration from rate exposure. The one hard regulatory yardstick in this post is the 2006 Interagency CRE Concentration Guidance, published by the OCC as Bulletin 2006-46.[5] It identifies banks for further supervisory analysis when construction, land development, and other land loans equal 100% or more of total capital, or when total CRE loans equal 300% or more of total capital and CRE loans grew 50% or more during the prior 36 months. Those thresholds are about CRE concentration, but they matter when a loan-heavy bank also has rate-sensitive real estate credit.
Also check public orders before relying on a sponsor bank. The FDIC, OCC, and Federal Reserve enforcement pages can change the read if an order touches liquidity, interest-rate risk, strategic planning, capital, BSA/AML, third-party risk, concentration, or governance.[7][8][9]
The decision rule is simple: do not label a bank a lower-rate winner or loser from one ratio. Put it into full diligence if it hits two DDV proxy flags, if it is near the CRE criteria, or if a current public action raises liquidity, capital, concentration, or governance questions. The next document to request is management’s interest-rate sensitivity table, followed by deposit beta assumptions, loan repricing schedules, securities duration, and any hedging summary.
FAQ
Which banks are most sensitive to falling rates?
Start with banks that hit two or more proxy flags, then compare the flags against the bank’s own ALM disclosures. The screen tells you where sensitivity may be material; the direction depends on repricing terms, deposit behavior, funding mix, and hedges.
Do high noninterest-bearing deposits make lower rates good or bad?
They can be good because they are cheap funding, but they provide less funding-cost relief when rates fall because they already pay little or nothing. The better question is whether asset yields reset faster than the remaining interest-bearing deposit costs.
Why can loan/deposit above 100% be misleading?
It can flag funding pressure, but at specialized or captive finance banks it may also reflect a business model that relies on parent, wholesale, brokered, or other non-retail funding. Treat it as a funding question, not an automatic error.
What should be reviewed after this screen?
Review the bank’s interest-rate sensitivity table, deposit mix, loan repricing buckets, securities duration, RC-R capital position, CRE concentration, and any public enforcement action. For sponsor-bank diligence, add third-party risk and deposit program concentration to the request list.
DDV Tools
Inside DDV, use bank search and individual bank profiles first, then move to the peer comparison view only after the ratio screen flags a bank. Compare at least one similar-size peer in the same business model before treating any ratio as unusual.
Sources
- [1] FDIC FIL-10-2026, Consolidated Reports of Condition and Income for First Quarter 2026: https://www.fdic.gov/news/financial-institution-letters/2026/consolidated-reports-condition-and-income-first-quarter
- [2] FFIEC Central Data Repository Public Data Distribution site: https://cdr.ffiec.gov/public/
- [3] FDIC current Call Report forms, instructions, and related materials: https://www.fdic.gov/bank-financial-reports/current-quarter-call-report-forms-instructions-and-related-materials
- [4] FDIC BankFind Suite documentation for institution lookup and name confirmation: https://banks.data.fdic.gov/docs/
- [5] OCC Bulletin 2006-46, 2006 Interagency CRE Concentration Guidance: https://www.occ.gov/news-issuances/bulletins/2006/bulletin-2006-46.html
- [6] FDIC Quarterly Banking Profile for Q4 2025: https://www.fdic.gov/quarterly-banking-profile/quarterly-banking-profile-q4-2025
- [7] FDIC enforcement decisions and orders database: https://orders.fdic.gov/s/
- [8] OCC enforcement actions page: https://www.occ.gov/topics/laws-and-regulations/enforcement-actions/index-enforcement-actions.html
- [9] Federal Reserve enforcement actions page: https://www.federalreserve.gov/supervisionreg/enforcementactions.htm