FDIC: Community Banks Outpace Larger Banks in 2017 Deposit Growth

Community banks reversed a long-standing trend and reported greater deposit growth in 2017 than larger banks, according to the latest issue of the FDIC Quarterly. Reviewing figures from the latest FDIC Summary of Deposits, the article showed that community banks saw deposits rise by 6.4 percent, while non-community banks saw them grow by 4.9 percent.

Over the past five years, however, those figures are flipped, with non-community bank deposit growth outpacing that at community banks. From June 2016 to June 2017, all insured deposits nationwide rose by $570 billion, or roughly 5.1 percent. As bank consolidation continued and larger banks continued trimming their branch networks, deposits per institution rose by 10 percent and deposits per office rose by 7.4 percent.

Community banks slightly increased their numbers of branches in 2017 and over the previous five years, despite an ongoing trend in reduced branch numbers since 2008. Community bank offices grew by 0.1 percent in 2017, while branches of non-community banks fell by 3.3 percent — an accelerated pace from previous years. Since 2012, the number of non-community bank branch offices have declined by 11.5 percent.

Rural areas — where community banks hold more than two-thirds of all deposits — continue to see higher per-capita banking office penetration, with 4.7 offices per 10,000 people, compared with 2.5 in urban areas. The rate of office closures was also faster in metropolitan and micropolitan areas, where branch closures have less of an effect on the availability of financial services in those communities, and was driven by higher expenses, charter consolidation and technological improvements.