Big banks outpacing the industry in deposit growth

Register now

When it comes to gathering deposits, the big banks keep getting bigger and small banks keep shrinking.

While it’s a story that’s been told before, the trend has accelerated in the last 12 months. During that span, the seven biggest banks collected deposits at a much faster rate than a year earlier, while deposits shrank faster at the smallest banks, according to data recently released by the Federal Deposit Insurance Corp.

The largest banks have flexed their muscles in the past year, after regulations were eliminated and capital requirements were loosened. JPMorgan Chase, Bank of America, PNC Financial Services Group and others have opened dozens of branches in new markets and have spent billions of dollars to improve technology.

Their efforts have paid off when it comes to stockpiling deposits, the cheapest type of funding for loan growth. Big banks are set to benefit even more, as interest rates fall and they cut their own rates on savings accounts and CDs.

“For us, today, deposits are growing really good and deposit rates are declining,” Kelly King, chairman and CEO of the $231 billion-asset BB&T in Winston-Salem, N.C., said Tuesday at an investor conference. “I’m really happy that we’re able to manage that margin impact on deposit costs and still have growth."

In the 12-month period that ended June 30, deposits at banks with at least $250 billion in assets rose by 4.4%, to $6.9 trillion. That was faster than the group’s 0.8% growth rate from a year earlier. It was also faster than the overall industry’s 4.2% rate.

At banks with less than $100 million in assets, deposits fell by 12.3%, to $53.9 billion. A year earlier they decreased by 5.4%.

Not all is gloomy with community banks. In the second quarter, community banks’ net income rose by 8.1%, to $6.9 billion, according to the FDIC. More than 96% of community banks were profitable.

But there is no doubt the largest banks are using their heft to take deposit market share. In Houston, JPMorgan widened its lead as the nation's biggest bank, with its market share climbing to 44% from 42%. It also added market share in Miami, New Orleans and San Francisco.

Bank of America grabbed market share in markets such as Boston; St. Louis; Raleigh, N.C.; and Washington.

National figures aggregated by asset size were released last week as part of the FDIC’s Quarterly Banking Profile. Data for specific institutions and geographic markets was issued Friday as part of the agency’s yearly Summary of Deposits report. The FDIC report does not reflect the market share of online-only banks, including the $164-billion Ally Financial in Detroit or Chime in San Francisco.

For reprint and licensing requests for this article, click here.