Deposit Trends: Larger Banks Are Winning The Growth Battle

Analysis by the FIG Partners Research team found that deposits in the U.S. banking system grew by 1.5% in the first quarter of 2018 vs. the prior quarter in late 2017.

  • On a year-over-year basis, total deposits rose 3.8%.
  • The compound growth rate over the past 41 quarters since 2007 is 7.2%.

We examined all FDIC institutions in existence in 2007 and tracked all banks in subsequent years (some merged or failed, while a handful of new companies joined the FDIC). Total deposit dollars were tracked and individual categories such as DDAs, NOW, Money Market, and CDs were examined.

Highlights from the analysis includes the following:

Banks above $10 billion in assets were the only institutions with growth in the past 12 months. This is partly due to a trend of fewer FDIC players at the smaller end of the size scale. In the past year and decade, the number of larger institutions has expanded. This is particularly true for banks above $10 billion, but the same trend holds for banks between $1 billion to $10 billion as industry-wide consolidation continues to be a driving force.

Banks in the $1 billion to $10 billion category experienced a deposit contraction both in 1Q18 vs. 4Q17 and in the past year. The Research team believes the graduation of banks across the $10 billion threshold is driving sheer dollars to a greater extent than those institutions rising above $1 billion.

Money Market deposits and CDs both expanded for the largest banks, but contracted elsewhere. The contraction of smaller banks is the key trend that investors should note.

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