NEW YORK— A little-known but fast-growing corner of the U.S. banking system that helps institutions extend federal deposit insurance beyond the $250,000 limit is facing new scrutiny as its dominant provider takes on more debt and competition intensifies, according to a new report.
IntraFi Network LLC, which operates a nationwide system allowing banks to swap large customer deposits among themselves so each portion remains federally insured, saw business surge after the collapse of Silicon Valley Bank in 2023, Reuters reported. The company, backed by private equity firms Warburg Pincus and Blackstone, now facilitates the vast majority of so-called reciprocal deposits.
Questions About Resilience
However, reported Reuters, recent credit downgrades and rising leverage have raised questions about the resilience of the model, even as regulators and policymakers debate changes that could reshape demand for such services.
According to the FDIC, banks held $438 billion in reciprocal deposits as of late 2025, up sharply from $158 billion in 2022. The deposits allow customers with balances above the $250,000 FDIC insurance cap to maintain full coverage without opening accounts at multiple institutions, Reuters explained.
IntraFi automates that process by breaking up large balances and placing them across a network of banks, with each portion qualifying for federal insurance, Reuters explained, adding that banks pay fees to participate, while the government provides the underlying guarantee.
‘Highly Profitable’
According to Reuters, the business has proved highly profitable. In 2024, IntraFi generated $506 million in earnings before interest, taxes, depreciation and amortization on $635 million in revenue, an operating margin of about 80%.
That profitability, however, has drawn leverage, the Reuters report stated. In August, credit rating agencies Moody’s Ratings and S&P Global Ratings downgraded IntraFi’s debt to the equivalent of B-, six notches below investment grade, citing a growing debt burden. The company issued $2 billion in debt, including $1.4 billion used to pay dividends to owners, according to the agencies.
The added borrowing increased annual interest expense and reduced the company’s cushion to service its debt, while growth in earnings has slowed as post-crisis demand for deposit protection has eased, Reuters said.
IntraFi told Reuters its debt level is appropriate for its size and business model and consistent with peers, adding that it holds about $200 million in cash and expects continued growth.
New Competition
At the same time, competition is emerging. A bank-owned rival network, NBID, launched last year, and financial technology firm Fiserv acquired competitor StoneCastle. Policymakers are also weighing proposals to expand FDIC coverage on certain accounts to as much as $10 million, which could reduce future demand for reciprocal deposit services, the report added.
While IntraFi does not hold deposits itself, regulators have warned that heavy reliance on a single intermediary could pose risks. Reuters noted that Christopher McBride of the Office of the Comptroller of the Currency cautioned in 2024 that disruptions tied to reciprocal deposit networks could trigger large, rapid movements of funds across the banking system.
