Regional banks are barely a week removed from a crisis of confidence that led customers to pull deposits and investors to sell shares amid concern that accounts with more than $250,000 could be in limbo in the event that bank failures spread beyond Silicon Valley Bank and Signature Bank.

Yet, worry over the Federal Deposit Insurance Corp.’s deposit insurance cap — and wider, associated ramifications — leaves smaller banks with several strategies for the weeks ahead. Here’s a look at six of them.

1. Circumvent the deposit insurance cap (PacWest)

Banks like Los Angeles-based PacWest, whose shares fell 21% on March 13, have steered customers toward an “insurance cash sweep” service from Arlington, Virginia-based IntraFi Network that allows customers to divide large deposits into pieces less than the FDIC’s $250,000 deposit insurance cap and distributes them among a cooperative of banks, ensuring each slice is covered. 

“Looking for a new banking partner?” the bank tweeted Tuesday in a post, hyping protection on deposits up to $125 million.

IntraFi boasts a roster of nearly 3,000 participating financial institutions — most being community and regional banks — that make “reciprocal deposit” swaps among each other.

“We talk about this option with every large depositor,” Jill Castilla, CEO of Citizens Bank of Edmond in Oklahoma, told The New York Times. “It’s a very easy network to access, it doesn’t cost them anything, and it gives them more assurance.”

IntraFi’s transaction volume has jumped 15% since March 13, Mark Jacobsen, the company’s co-founder and CEO, told the publication.

2. Lean into government help (First Republic)

Wall Street leaders and U.S. officials, considering an intervention to prop up First Republic Bank, have floated the prospect of government backing meant to encourage a buyer to swoop in and help the San Francisco-based lender pull out of a spiral that has cratered its stock value by nearly 90% this year, Bloomberg reported Tuesday.

The government could help lift assets out of the bank, offer liability protection, relax capital rules or ease limits on ownership stakes, people with knowledge of the situation told the wire service. Representatives for the Federal Reserve, Treasury Department and the bank declined to comment to Bloomberg. The FDIC didn’t respond to requests for comment from the outlet.

Meanwhile, First Republic hired Lazard this week as an adviser on a review of strategic options, including a sale, a capital infusion or an optimization of assets, The Wall Street Journal reported Tuesday. First Republic also hired consultant McKinsey to help the bank envision its post-crisis structure, the outlet reported. 

Lazard and McKinsey joined JPMorgan Chase, which was already an adviser. In addition to advising, the nation’s largest bank was one of 11 lenders to deposit a collective $30 billion in the First Republic last week.

But that rescue plan saw criticism from Lloyd Blankfein, the former CEO of Goldman Sachs, another of First Republic’s 11 benefactors.

“I don’t find [the $30 billion infusion] very confidence-inspiring, because I don’t think they’re really doing an analysis and deciding on good credit or a good investment,” Blankfein told CNBC on Wednesday. “They’re not doing it out of a commercial analysis or the prospects of that institution. They’re doing it because they’re being asked to do it.”

First Republic lost $86 billion in deposits — accounting for roughly 72% of the bank’s uninsured deposits — between the March 10 collapse of Silicon Valley Bank and March 15, Morgan Stanley analysts estimated Monday, according to The New York Times.

3. Cash infusion, capital raise or downsize (PacWest or First Republic)

PacWest secured $1.4 billion in cash through an Atlas SP Partners financing facility, Bloomberg reported Wednesday, adding the bank has dropped a separate effort to raise capital. 

Deposit levels have “stabilized,” the bank said Wednesday in a statement. PacWest customers have pulled more than 20% of the bank’s deposits this year, according to Bloomberg. Roughly $4.9 billion of the $6.8 billion in outflows the bank has seen this year are in venture banking, PacWest said. The bank had more than $11.4 billion in cash on hand as of Monday, surpassing its roughly $9.5 billion in uninsured deposits, Bloomberg reported.

While PacWest has abandoned its capital raise, that path appears to be a top focus at First Republic, one source told Reuters.

But in case that fails, First Republic is examining ways to sell segments of its business, including some of its loan book — potentially to private-equity firms — or a sale of the whole bank, the wire service reported Tuesday.

4. What liquidity crunch?

Camden Fine, a former president of the Independent Community Bankers of America, told The New York Times that he spoke to “at least three dozen” CEOs of community banks across the country and, “without exception, every single one of them said: ‘We are seeing deposit inflows to our banks. We’re actually gaining deposits.’ 

“They were baffled by all this talk about deposits are fleeing smaller and regional banks and going to the megabanks,” Fine said Tuesday.

Scott Anderson, CEO of Zions Bank, told the publication, “things are calming down in the market.”

The Salt Lake City-based lender saw its share price fall as sharply as 44.1% on March 13. It has dropped 36% in 2023 as of Wednesday, according to MarketWatch.

5. Tell regulators to slow down (Zions Bank)

Anderson’s comment came on a day when Treasury Secretary Janet Yellen said the government could insure more deposits in an effort to stem contagion in the banking industry.

On the sidelines on the American Bankers Association summit where Yellen spoke, Anderson told Reuters that such a move would “[have] to be thoroughly discussed, it has to be thoroughly debated, it can't be a knee-jerk reaction.” 

"Businesses have more deposits in banks than most consumers,” Anderson said. “How do you take care of their deposits? That's based on trust. Issues like this have to be looked at carefully.”

6. Brace for tougher regulation

Smaller banks might do well to brace themselves for more scrutiny from regulators and lawmakers alike, Goldman Sachs’ chief operating officer, John Waldron, said Tuesday, according to Bloomberg, which cited an interview the executive gave to the German outlet Handelsblatt.

“Some smaller banks will need more capital, and the smaller institutions in the U.S. in particular will have to adjust to stricter regulation,” Waldron said. “As a result, they become more cautious about lending. This could have an impact on the real economy. Credit is becoming tighter, which in turn could damp economic growth.”

Waldron said he expects market volatility to continue in the short term.

Sen. Elizabeth Warren, for one, said a boost in deposit insurance should go hand in hand with tighter regulation.

“You bet I’d tie them together,” the Massachusetts Democrat told Bloomberg on Tuesday, although she focused her comments on larger banks.

“The big banks cannot have it both ways. They can’t say they want the government to backstop them and they don’t want any additional regulation,” she told the wire service. “That’s not the way the world works or at least not the way it should.”