Big banks winning larger share of deposits

The FDIC recently published U.S. deposit data for the period ended June 30, 2010. Two quick takeaways:

  1. Deposit growth slowed significantly over the past year.  Following the financial crisis in the second half of 2008, U.S. consumers ramped up their savings rates, and banks competed aggressively for these deposits.  As a result, U.S. deposits grew 7.6% between end-June 2008 and end-June 2009.  Over the past year, competition for deposits has declined, as many banks’ loan-to-deposit ratios fell below 100%, and banks’ need to grow deposits as a funding source abated.  The growth rate for deposits in the year to end-June 2010 was 1.5%.
  2. Due to bank consolidation, a flight to safety, and a re-emphasis on relationship banking, larger banks have grown deposits at a stronger rate than the industry average.  The top 50 U.S. banks increassed deposits  by 4.4% in the year to end-June 2010, compared to 1.5% for all banks.  The top 50 banks’ share of total deposits rose from 57% in 2007 to 63% in 2010.