Inside Financial Services

FDIC’s Summary of Deposits Reinforces Big Bank Dominance

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On September 30, the FDIC published its annual summary of insured deposits at U.S. bank and thrifts. This year’s data – collected from July 1, 2015 through June 30, 2016 – reinforces a few key industry trends which I expect to continue:

  • Branch Consolidation. For the seventh consecutive year U.S. branches continued to decline totaling 91,861 at June 30, down by 1,412 branches from the previous year. It is important to note that the 7.8% decline in bank offices between 2009 and 2016, follows fourteen years of a +1.5% compound annual growth rate. The steady reduction appears far less impressive when you consider that the number of branches increased by 22.9% between 1995 and 2009. The reduction in branch foot traffic provides banks the opportunity to trim expenses and re-invest savings into digital platforms.  And with increased popularity of mobile banking, don’t expect branch consolidation to slow anytime soon!


  • The Big Banks Are Winning. Gone are the days of big bank malaise, bogged down by expensive and poorly executed M&A. Today the big banks are focused on running the franchise, and it’s evident in the deposit growth numbers. The top four banks by total assets (BAC, JPM, WFC, C) grew deposits by a combined +5.5% y/y as of June 30th. While mid-single digit growth numbers won’t catch many eyes, remember these banks are not growing off of small dollar volumes. As of June 30, 2016, the big four collectively held $4.1 trillion of deposits, good for 36.4% of the country’s deposits. In other words the roughly $213 billion in deposits added by the big four over the last year would equate to the ninth largest U.S. bank by total deposits! To further reinforce the point, consider after the big four banks, the next 46 largest banks by deposits (that round out the top 50) collectively hold just over $4 trillion in deposits. And why would this trend slow? The ability of the largest banks to capture market deposit market share is complemented by the rapid adoption of digital banking, where the big four spent ~$18 billion on IT development in 2015 dwarfing the rest of the industry.
  • Consolidation Will Continue For Smaller Bank. While the big banks continue to win market share, the number of institutions with less than $1b in total assets decreased by 9% last year. Consolidation among smaller institutions is simply a reflection of the deposit outflows at smaller institutions where banks with less than $100m in total assets saw an 8.7% reduction in deposits, while banks between $100m and $1b in total assets suffered from a 2.6% decline deposits.


One Response to “FDIC’s Summary of Deposits Reinforces Big Bank Dominance”

  1. Gerard Hergenroeder

    It is about time. I’ve been in the business for 44 years. I thought this would have happened in Eighties and Nineties. Better late than never. Bank will need $ millions on the digital transformation. I expect the pace to accelerate.
    Another opportunity is the convergence of different payment platforms. The CIOs are afraid to talk about this one because it just like going through a merger. Technology exists to have a single platform for checks, ach, Swift, Sepa, corporate payments and faster payments. There is an opportunity to drive operational and IT expenses down by 75%.

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