U.S. bank deposits declined in the second quarter, with major banks unexpectedly suffering the largest dropoffs. The four largest U.S. banks by assets: Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, lost $262 billion in deposits compared to the previous year. In contrast, many regional banks gained deposits.
This development is a reversal of the trend seen in the first three months of the year. Following the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank, account holders withdrew their funds from regional banks en masse in favor of depositing with the largest players in the banking sector.
Now that concerns of failure are subsiding, CFRA equity analyst Alexander Yokum feels that depositors are heading to those banks that pay the highest rates. “The regionals are winning the deposit battle right now because they’re willing to pay the most.”
“Ironically,” Yokum added, “the deposit outflows from the big banks is “actually a sign of strength”. For the week ending July 12, deposits at the largest U.S. banks fell by $78 billion; the largest drop since the week ending March 22.