Tag Archives: Bank of America

3Q09 Bank deposit trends

The large U.S. banks continued to reduce rates paid on interest-bearing deposits in 3Q09, as deposit competition eases.  Many banks reported q/q declines in average deposits.  However, with banks’ loan portfolios also shrinking, most of these banks improved their loan-to-deposit ratios.

The largest banks (Bank of America, Wells Fargo and Chase) offer by far the lowest rates; Wells Fargo’s rate fell 3 bps between 2Q09 to 3Q09, to 0.57%.  Regional banks maintain relatively higher rates, with KeyBank’s average rate above 2%.

For most banks, there was stronger growth in noninterest-bearing deposits, with many regional banks reporting double-digit annualized increases between 2Q09 and 3Q09.

Bank

Average Interest-Bearing Deposits ($BN, 3Q09)

Annualized Change in Interest-Bearing Deposits
(2Q09-3Q09)

Rate on Interest-Bearing Deposits (3Q09)

Rate Change (2Q09-3Q09)

Non-Interest Deposits (3Q09)

Annualized change in Non-Interest Deposits (2Q09-3Q09)

Bank of America (domestic)

$654.2

+6%

0.98%

-24 bps

$259.6

+18%

Wells Fargo

$633.4

-3%

0.57%

-3 bps

$172.6

-4%

Chase

$661.0

-7%

0.65%

-5 bps

N/A

N/A

PNC

$146.9

-13%

1.04%

-21 bps

$41.8

+8%

U.S. Bank

$129.4

+11%

0.92%

-8 bps

$37.0

-4%

SunTrust

$95.2

-2%

1.40%

-27 bps

$24.5

-1%

Capital One

$103.1

-15%

1.86%

-22 bps

$12.8

+6%

BB&T

$89.9

+56%

1.37%

-26 bps

$17.4

+50%

Regions

$73.7

-5%

1.62%

-16 bps

$21.1

+14%

Key

$54.4

-3%

2.10%

-12 bps

$13.6

+37%

Zions

$31.9

-4%

1.21%

-25 bps

$11.4

+27%

M&I

$33.5

+12%

1.58%

-13 bps

$7.9

+28%

Huntington

$33.4

-1%

1.92%

-19 bps

$6.2

+5%

The demise of bank branches?

In August 2009, Bank of America signaled that it would be reducing its branch network by up to 10%.  Some industry commentators took this to be indicative of the longer-term demise of the branch channel.  These analysts pointed to branch costs, as well as the increased usage of online banking and related services.  Most leading U.S. banks did reduce branch numbers in 3Q09.  However, many of these banks acquired other banks over the past year, and the reduction in branch numbers comes from the elimination of overlapping branches.

Going forward, banks may well continue to shave branch numbers in order to control costs and reduce branch density.  However, we do not envisage the demise of the branch channel.  What we are seeing is a re-evaluation of the role of the branch, given that online banking, online bill payment and mobile banks are not accounting for a growing share of day-to-day banking transactions.  In the future, branch activities will be more focused on complex interactions, such as lending, marketing of new products and services, the provision of financial advice and general relationship development.

The following are branch counts for leading banks in 3Q09 (with changes from 2Q09 in parentheses)

  • Wells Fargo: 6,653 (down 15)
  • Bank of America: 6,008 (down 101)
  • Chase: 5,126 (down 77)
  • PNC: 2,553 (down 53)
  • Regions (down 4)
  • BB&T: 1,859 (up 354, due to acquisition of Colonial Bank)
  • SunTrust: 1,690 (down 2)
  • Fifth Third: 1,306 (no change)
  • Citi Retail Banking North America: 1,051 (up 21)
  • KeyBank: 1,003 (up 10)
  • Huntington: 610 (no change)
  • Comerica: 444 (up 3)