Treasury Revenue Hidden in Plain Sight
Monday, March 9, 2026
Marci Malzahn has spent two decades helping community banks build treasury management departments. At ICBA Live in San Diego last week, she asked a room full of bankers how many track treasury management fee income as a percentage of total income. Almost no hands went up. When she asked how many are waiving those fees regularly, almost all of them did.
This is a common pattern in banking — treasury management is treated as an add-on — a service you offer to keep commercial clients happy, not a revenue line you actively manage and grow. And because it's not seen as a revenue driver, it keeps getting deprioritized.
But there is a ton of revenue hidden in treasury management in both fees and deposits. A good example of this are specialty deposits: IOLTAs, 1031 exchange funds, commercial escrow, title company reserves, fiduciary deposits. Every regional bank has some version of these. Almost none of them are treating them as a product.
Here's what that looks like in practice:
IOLTAs
I spoke to several treasury officers at ICBA about law firm banking and the picture was consistent. Every commercial law firm is required to hold client funds in a segregated IOLTA account — and by law, the interest on those funds goes to the state bar, not the firm. Which means the bank is holding a large, pooled, non-interest-bearing deposit that costs it almost nothing.
The compliance requirements are tough — state bar audits, client-level tracking, airtight reporting — and that's exactly what most Treasury teams can't handle with their core. But that's also the opportunity. The bank that can meet those requirements is holding one of the cheapest deposits on its books, with a client that has no rate incentive to leave.
1031 Exchanges
One of the better conversations I had at ICBA was with the head of specialty deposits at a $4 billion bank. His team had made a deliberate decision to deprioritize 1031 exchanges — not because the business isn't there, but because without the right infrastructure the margin doesn't add up.
Real estate investors need funds held between sale and purchase, usually 45 to 180 days, and they're entitled to the interest earned during that window. The bank pays a modest rate, but it keeps a sizable, time-bound deposit on the balance sheet that would otherwise not be there at all. The regulatory requirements around QI status are the biggest pain for banks, but they're also what makes this a “specialty” product you can charge fees on.
Title and Escrow
Title companies also came up – large balances sitting in escrow while deals are in motion, non-interest-bearing, belonging to buyers and sellers rather than the title company itself. Exactly the kind of deposit banks should be competing hard for.
Most banks aren't winning it. The title company runs the whole workflow through Qualia or SoftPro — file-level tracking, disbursement timing, closing conditions. The bank holds the account with no visibility into any of it.
The banks that are actually capturing this business have figured out how to get embedded in the transaction itself — file-level sub-accounting, disbursement logic tied to closing conditions, direct integration with title production software so nothing gets re-keyed. That's what turns a passive deposit into a sticky one.
Other specialty deposits
I have only talked about the more traditional specialty deposits, but there are many other clients with complex workflows that would need more complex solutions: a municipality managing public funds across dozens of accounts, an alcohol distributor juggling state-by-state escrow regulation, a debt settlement company juggling thousands of creditors… These are relationships that bring millions in deposits — but they're too operationally complex for most banks to take on without the right treasury infrastructure.
The banks winning these clients aren't bigger. They're better set up. Complex clients need complex treasury solutions — and the ones that can deliver stop losing these relationships to larger institutions by default.
And that's without even getting into the fee structures and additional revenue these relationships can support…
What I Took Away from San Diego
Walking the floor at ICBA and sitting in sessions like Marci's, the same thing kept surfacing in different forms: bankers are more incentivized to close the next loan than to protect the current deposit relationship. No attention is paid to treasury management as a deposit driver and revenue generator. Specialty accounts feel like back-office complexity. Both get underpriced or waived entirely.
But the clients holding these accounts aren't rate-shopping. A law firm doesn't move its IOLTA because someone offers 10 extra basis points. These are operational relationships — the client's entire workflow runs through them. The cost of leaving is too high. Which means if you price them correctly and service them well, they're among the stickiest deposits you can hold.
The other thing that stuck: the loan bought a transaction. Treasury management bought the relationship. A 1031 exchange client whose funds you're holding is a real estate investor with active deal flow — a natural prospect for construction lending, CRE, and everything downstream. These aren't just deposit accounts. They're a foothold into relationships that compound.
What's missing for most banks isn't the market. The title companies, law firms, and real estate investors are already there. What's missing is the infrastructure to say yes when they show up — sub-accounting that actually works, pricing discipline, and a team that treats treasury as a revenue line instead of a service obligation.
There are millions of dollars sitting somewhere in your portfolio. The question is whether your treasury team is set up to find it.
