WASHINGTON - In a sign that Internet banking continues to gain ground, deposit growth accelerated this year, despite a slight drop in the growth of the number of bank branches and offices, according to the Federal Deposit Insurance Corp.
In a study released Wednesday analyzing the most recent summary of deposit data, the FDIC said deposits jumped nearly 9% in the year that ended June 30, while the number of bank branches grew 2.9%. That was an even larger disparity than a year earlier, when deposits grew 8% and the number of branches rose 3%.
The study also noted that deposit growth, which averaged 8.3% a year from 2001 to 2005, has continued to be strong, despite a drop in population at branches. The FDIC found that the total population per branch fell to below 3,200, from 3,350 in 2001.
"These trends may imply a more aggressive retailing strategy as banks seek to provide a greater level of service to customers," wrote Ronald Spieker, the study's author and the regional programs chief in the FDIC's division of insurance and research.
Observers attributed the disparity between population and growth in deposits partly to the rise of Internet savings banks.
"The Internet is becoming a more important channel for gathering deposits than it ever has been," said James Chessen, the chief economist for the American Bankers Association.
Securities firms such as Charles Schwab Corp. and Merrill Lynch & Co. Inc. have also added deposits to their banks without adding branches, by moving investors' cash out of stocks and into bank accounts.
"The question is, where is the deposit growth occurring?" said Robert Davis, an executive vice president with America's Community Bankers. "Is it distributed throughout the industry, or is it only a phenomenon at a few institutions that are driving up deposits overall because of their extraordinary accounts?"
Mr. Spieker wrote that "brick-and-mortar banking offices" remain "the most common type of office location." A "key trend" in branch expansion has been more use of retail space, such as supermarkets and department stores, though banks are steadily using limited-service drive-up facilities less often, he wrote.
The study found that branch and deposit growth were strongest in metropolitan areas. Deposits in those areas in June jumped 9.4% from a year earlier - compared with 2.7% in what the agency called "micropolitan" areas. The number of branches grew 3.5% in metropolitan areas, compared with 1.4% in less populated areas.
Deposit growth has been strongest in coastal areas, the study said. Over the past five years, states with the highest deposit growth have included Nevada, Arizona, Utah, Texas, South Dakota, Georgia, Virginia, Delaware, and New York. Growth in the number of banking offices was more varied across the country, with states such as Wyoming, Colorado, Texas, Arkansas, Illinois, Georgia, and Florida leading the way.
Much of the deposit growth also occurred at larger banks. Banking companies with more than $10 billion of deposits reported 10.8% of deposit growth during the 12 months ending June 30. In contrast, institutions with less than $1 billion reported 2.5% growth.
The same pattern was true for office growth.
The report noted that 11 banking companies currently have branches accepting deposits in at least 15 states. Atop the list is Bank of America Corp., with branches in 31 states. U.S. Bancorp and JPMorgan Chase & Co. each have branches in 26 states, while Wells Fargo & Co. has branches in 23 and Wachovia Corp. has branches in 22.
