U.S. bank deposits dropped during the 12-month span that ended June 30 for the first time since 1994, when the Federal Deposit Insurance Corp. began collecting the data, S&P Global Market Intelligence summary published Monday.
Deposits fell 4.8% year over year to $17.269 trillion amid bank runs that contributed to three major bank failures in the first half of 2023. The drop in total U.S. bank deposits was widespread, with most large banks reporting lower deposit levels compared to last year. Of the $871.60 billion overall plunge, 30% came from the four largest banks — JPMorgan Chase, Bank of America, Wells Fargo and Citi, S&P noted.
Though total deposits at JPMorgan fell 2.8% year over year to $2.068 trillion as of June 30, the lender held its position as the country’s largest deposit holder for three consecutive years. The decline came even with the inflow from the acquisition of First Republic Bank.
"Our core view remains modest deposit declines across the franchise" as quantitative tightening continues, JPMorgan CFO Jeremy Barnum said on an earnings call in July.
Bank of America, which ranked first in deposits in 2020, saw its deposits drop 5% to $1.888 trillion — a drop of 3 basis points of its market share to 10.93%. Wells Fargo’s deposits, meanwhile, fell 6% to $1.377 trillion, and Citi’s slid 0.8% to $757.14 billion, the report noted.
Among banks included in the report, BMO saw the largest gain over the year, at 51.7%. The jump in deposits — to $202.24 billion — came as the bank in February closed its $16.3 billion acquisition of Bank of the West.
The overall deposit decrease reflects the turmoil in the banking sector — stemming from rising interest rates, inflationary pressures and erosion of consumer confidence. The FDIC maintains the banking system is well capitalized, but the first drop in deposits in nearly three decades points to the mounting stress on the financial institutions. That stress may continue as the regulator, along with the Federal Reserve and the Office of the Comptroller of the Currency, proposed capital requirements that would force the largest U.S. banks to hold 19% more, on average.
Charles Schwab saw the biggest deposit decline during the 12-month span, of the companies measured, with a 31.1% reduction to $304.79 billion. The downturn was largely due to outflows from brokerage accounts.
SVB Financial Group — the 15th-largest U.S. bank by total deposits on June 30, 2022, dropped off the list after its subsidiary Silicon Valley Bank collapsed in March. First Citizens Bank agreed later that month to buy SVB’s deposits and loans.
Branch count fell to 77,796 from 79,172 during the 12-month span as banks continued to consolidate locations to bring down costs and adapt to digitalization, the S&P report found.