Your Deposits, Their Charter
The Re-Banking of America · Part Two
By: Paul Schaus
September 2, 2026
Yesterday I argued that consolidation is funding the de novo wave. Today, the quieter half of the story, because the fastest-growing category of new bank charter is not trying to be a bank at all. It is a vehicle for holding other people's short-duration balances: payroll float, tax escrow, custody cash, stablecoin reserves. Three payroll companies have already chartered. The balances they are taking are sitting in a bank's deposit base today — possibly yours — and the M&A market just told us those deposits are worth an 8.3 percent premium. This is the deposit drain that will never show up in your outflow reports.
A community bank CEO asked me this summer which of the new charter applicants should he be worried the most for his bank. He was expecting a crypto name. I told him it was a payroll company in New Jersey, and he laughed. He should not have.
In February 2024 the OCC granted preliminary approval to Paycom National Trust Bank, an uninsured national trust bank whose entire business is to act as trustee of trusts holding its affiliate's "human capital management and related payment obligations." In plain English: Paycom chartered a bank to hold its own clients' payroll money. It opened that August.
Then it happened again. OneSource Virtual, a payroll and HR services provider, opened its federally chartered trust bank on July 1 of this year. And again: UKG, Ultimate Kronos Group, one of the largest payroll processors in the country received conditional approval in January for UKG National Trust Bank, which will serve solely as trustee of trusts holding client payroll funds and payroll tax remittances. A related filing, TaxBank, N.A., arrived in April applying the same structure to tax escrow.
Once is an experiment. Twice is a copy. Three times, with a fourth variant in the queue, is a playbook.
Understand what this charter is, because its power is in what it is not. An uninsured national trust bank takes no deposit. Legally, the client balances it holds are trust assets, not deposits. No deposits means no FDIC application, no deposit insurance premiums, and no CRA obligation. Because the bank neither takes demand deposits nor makes commercial loans, its parent stays outside the Bank Holding Company Act, no Federal Reserve supervision of Paycom, OneSource, or UKG the way a bank holding company is supervised. One regulator, the OCC. UKG's approval required $10 million in capital.
Now look at it from the processor's side of the table. Every payroll company holds float — client funds in the gap between collection and payday, and tax withholdings in the longer gap before remittance dates. Historically that float sits at partner banks, and the banks earn the spread. The trust charter lets the processor become the fiduciary of its own float, capture the earnings, drop the bank-partner dependency, and do it inside a federal charter with a fraction of a bank's regulatory load. For a large processor the annual float earnings run well into nine figures at current rates. Ten million dollars of capital to internalize that is not a hard board decision.
The same logic reaches well past payroll, and the filings show it reaching. Interactive Brokers won approval in May for a national trust bank to custody securities and sweep cash. The stablecoin issuers, Circle operating since July, Ripple organizing are the same structure applied to reserves. Twenty-eight of the eighty-four institutions in the current formation pipeline are trust charters, the single largest category, and very few of them have anything to do with what a trust officer would call trust work. They are float vehicles wearing fiduciary clothes.
If the playbook holds, the next filers are easy to list, ADP and Paychex, whose client fund balances are among the largest in the industry. Gusto, Rippling, Deel, TriNet in the next tier. Beyond payroll, any business that aggregates short-duration client cash at scale — title and escrow companies, 1031 exchange facilitators, benefits administrators, class-action and settlement administrators, property managers. Every one of them currently parks those balances at a bank. Every one of them can now read three approved precedents.
Here is where this stops being an interesting structure and becomes a pricing problem for your bank. In the current M&A data, the median core deposit premium paid in bank acquisitions has climbed from 2.5 percent in 2023 to 8.3 percent this year, more than tripled. Acquirers are paying up for one thing — stable, low-cost funding.
Hold the two facts side by side. The market is paying the richest deposit premiums in years at exactly the moment a new charter class exists whose whole purpose is to remove those balances from bank balance sheets. The buyers and the charterers are pricing the same asset. One is paying 8 points over book to acquire it; the other is spending $10 million to stop renting it from you.
And none of these registers in the numbers your board watches. When a payroll processor moves its client trust accounts from your institution to its own trust bank, no depositor leaves, no account closes in anger, no rate was outbid. A commercial relationship simply does not renew. The deposit drain of the last cycle was rate-driven and visible. This one is structural and quiet.
First, find your exposure this quarter. Pull every deposit relationship that is really somebody else's client money held at your bank, look at payroll processors, PEOs, title and escrow, benefits administrators, HOA and property managers, fintech program accounts, trustee and fiduciary balances. Most banks have never tagged these as a category. Size it, price it, and know the concentration.
Second, triage by charterability. A national processor with nine-figure float can charter; the regional title agency and the local property manager almost certainly never will. The first group is a retention conversation you should be having at the CEO level now, with pricing and service on the table before their board reads the Paycom precedent. The second group is a growth opportunity, because the same fragmentation that keeps them from chartering makes them durable clients, if you build the escrow and sub-accounting capability they need.
Third, decide whether to be the answer instead of the casualty. Not every processor wants to run a bank, even a small one. There is a real business in being the sponsor institution that offers trust-grade sub-accounting, transparency, and yield-sharing good enough that chartering is not worth the trouble. Some banks will lose this deposit base. A few will consolidate it.
This is the fight for the franchise at close range, the contest this series is about. The trust charter wave looks like a fintech story, and most bankers have filed it under things that do not concern Main Street. Look again at what the charters hold. It is your commercial deposit book, one specialty at a time — and the acquirers paying 8.3 percent premiums have already told you exactly what it is worth.
CCG Catalyst advises community and regional banks, credit unions, and fintech companies on deposit strategy, charter decisions, and payments. If you want help sizing your institution's float and fiduciary deposit exposure — or evaluating whether a specialty deposit business is your next growth engine — reach out to our team at www.ccgcatalyst.com, or see the full library at CCG Insights.
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By: Paul Schaus | Founder & Managing Partner, CCG Catalyst Consulting
Disclaimer: The views expressed in this article represent the perspective of CCG Catalyst Consulting based on our direct experience advising financial institutions. This commentary is intended to stimulate industry discussion and does not constitute legal, accounting, or regulatory advice.
