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FYI: An Update on Emerging Issues in Banking
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Highlights from the 2005 Summary of Deposits Data
Today marks the official release of the 2005 Summary of Deposits (SOD) data, a report detailing total deposits at the individual office level for every FDIC-insured institution. Collected each June by the FDIC and the Office of Thrift Supervision (OTS), the SOD represents a rich resource for analyzing deposit market trends at the national and local levels.1 This issue of FYI highlights some preliminary conclusions from this year’s SOD data.
Despite Industry Consolidation, Offices and Deposits Continue to Grow
The growth rate of deposits has exceeded the growth rate in total offices in each of the past 10 years. This is true even if deposit growth is adjusted for the effects of inflation over the same period using the gross domestic product price index, as in Chart 2. As of 1995, there were just $3.2 trillion in deposits held by 80,473 offices.
Most New Offices Were Full-Service Locations
Growth in Offices Has Been Fastest in Metropolitan Areas
As in previous years, metropolitan areas were the drivers of growth in offices during the year. The numbers of offices in metropolitan areas increased 3 percent during the year, and have risen by 15 percent since 1995 (see Table 1). Areas designated under the new micropolitan area definition showed a 1 percent increase in offices for the year, which was consistent with their 10-year average rate of growth. By contrast, other non-metro counties showed no appreciable growth in offices since 2004 and just a 6 percent increase since 1995.
Metropolitan areas also outpaced micropolitan and non-metro areas in terms of deposit growth (Table 2). Deposits grew by 9 percent in metropolitan areas during the most recent year (a rate similar to their annual average since 1995), while deposit growth in micropolitan areas was 5 percent. As was the case for growth in the number of branch offices, non-metro areas also lagged the nation in terms of deposit growth, registering an increase of just 3 percent for the year.
The headquarters location of new charters may also indicate what types of markets are attractive locations for banks and thrifts. During the year ending in June, there was an increase of 147 new charters, of which 127, or 86 percent, were headquartered in metropolitan areas. Micropolitan areas gained 11 new charters and other non-metro counties picked up the remaining nine.
Mergers Have Shifted Deposits Between Markets
Charter mergers tend to skew the results because of shifts in main office deposit-taking activities, such as large corporate deposit operations.6 One way to compensate for the geographic shifts induced in the SOD data by mergers is to restrict analyses of changes across time to branch offices only and omit all headquarters offices. Removing main offices from the analysis reduces the total number of offices by 10 percent and the level of total deposits by 27 percent. The remaining branch offices showed deposit growth of almost 10 percent for the year. While this is higher than the 8-percent increase in total office deposits, much of the difference can be explained by the fact that some 351 main offices were converted to branches during the year.
To access the full capabilities of the Summary of Deposits data, please consult the SOD main page on the FDIC web site at: http://www2.fdic.gov/sod/
2 The FDIC published a series of studies analyzing consolidation and other long-term banking trends in its 2004 Future of Banking study, available at: http://www.fdic.gov/bank/analytical/future/
3 Offices here include those in the 50 states and the District of Columbia but not those in U. S. territories. The SOD database captures domestic deposits only, and for convenience we refer to these as deposits in this report.
4 Full-service home banking offices are operations centers where a customer can access their accounts through a phone, PC or web site to apply for loans, make fund transfers, and other types of electronic transactions.
About the Author
Timothy Critchfield is a Senior Financial Analyst in the Data Management Section of the Division of Insurance and Research, FDIC.
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FYI is an electronic bulletin summarizing current information about the trends that are driving change in the banking industry, plus links to the wide array of other FDIC publications and data tools.
The views expressed in FYI are those of the authors and do not necessarily reflect official positions of the Federal Deposit Insurance Corporation. Some of the information used in the preparation of this publication was obtained from publicly available sources that are considered reliable. However, the use of this information does not constitute an endorsement of its accuracy by the Federal Deposit Insurance Corporation.
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