Our analysis of the products that dominate retail franchise profits — checking, savings, and money market deposit accounts — shows that balance growth has been negligible on an acquisition-adjusted basis. As usual, however, there is considerable variation. Some banks have achieved more than a 4% compound annual growth rate in core deposits between 1993 and 1999; others have actually seen deposits shrink by as much as 3% per year.

Our analysis has uncovered five statistically significant factors that predict 85% of the variation among banks’ core deposit growth. Of these, four are related to value propositions as perceived by customers.

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