Fewer Banks, but More Deposits
Deposits continue to grow at a rapid pace even as the number of banks has decreased.
According to research firm Market Rates Insight, the number of insured institutions declined by 10.4% in the past five years from 8,856 in June 2005 to 7,932 in March, the MRI data showed. At the same time, the number of branches at these institutions increased 8.2% from 92,043 to 99,550, which is an average incremental increase of 2.2 branches per institution.
This trend, combined with deposit growth, increased the average amount of deposits per institution by 45% from an average of $571 million in June 2005 to $970 million in March. Average deposits per branch increased 20% over the same period, from $64 to $77 million per branch, according to MRI.
"What we are seeing is a trend toward higher concentration of deposits in fewer institutions, but spread through greater number of branches," said Dan Geller, executive vice president at MRI in San Anselmo, Calif. "Overall, this means less banking choices for consumers, but greater convenience."
Geller said MRI's analysis is based on FDIC data and pertains to banks only. He is considering doing similar analysis with credit unions later this year.