Bank deposit growth slowing – and offices closing at a faster clip, deposit insurer reports

Deposits at federally insured banks continued to grow over the past year, but at a slower rate than in recent years, the Federal Deposit Insurance Corp. (FDIC) reported in its latest quarterly report released Thursday.

In its FDIC Quarterly for the third quarter, 2018, the federal deposit insurer said total deposits held by FDIC-insured institutions rose from $11.81 trillion in June 2017 to $12.26 trillion in June 2018 – an increase of $450 billion, or 3.8%.

The agency said that both community and noncommunity banks reported a decline in merger-adjusted deposit growth rates during the year ended June 2018. Year-over-year, merger-adjusted deposit growth at community banks was 4.9%, slightly less than their five-year annual deposit growth rate of 5.1%. For noncommunity banks, year-over-year, merger-adjusted deposit growth was 3.6%, well below their five-year annual deposit growth rate of  5.5%.

Between 2013 and 2018, the FDIC said, noncommunity banks increased total deposits by 30.8% from $7.988 billion to $10.445 billion, and community banks increased deposits 28.3% from $1.417 billion to $1.818 billion on a merger-adjusted basis.

The FDIC also pointed out that the number of institutions declined from 5,787 to 5,541 and the number of offices declined from 89,839 to 88,053 over the one-year period. Deposits per institution rose 8.4% to $2.2 billion in 2018, the FDIC said; deposits per office increased 5.9% from $131 million in 2017 to $139 million in 2018.

“The number of offices operated by FDIC-insured institutions has declined steadily since June 2009,” the agency said. “The trend continued during the year ended in June 2018 as the number of offices declined by 1,786 (2.0%) to 88,053.” The FDIC said that is the second-fastest rate of decline in U.S. bank offices since the trend began. Also, it exceeds the five-year annual decline of 1.8%. The number of offices operated by FDIC-insured institutions has declined by 8,277, or 8.6%, over the past five years, the agency said.

FDIC Quarterly 2018 Volume 12, Number 4