How Deposit Flows Are Reshaping the U.S. Banking Landscape By Tim Groth, Vice President, Data Analytics, IntraFi D eposit flows aren’t just a reflection of customer preferences; they also drive profitability, financial stability and lending capacity. When deposits move, they can affect balance sheet growth, increase credit availability and reshape the competitive landscape. It’s therefore notable that over the past five years, historic volatility has redistributed deposits among banks, with the smallest gaining the largest share. Deposit Growth Has Reaccelerated to a More Normalized Growth Path Following a Post‑COVID Stimulus Trough … As the accompanying chart shows, total domestic deposits surged during the pandemic and then declined sharply during the Fed’s tightening cycle. In late 2024, deposits began flowing back into banks as the Fed began softening its interest rate policy. By Q2 2025, after 100 basis points of cuts to the Fed funds rate, domestic deposits had grown by roughly $900 billion. … and Is Now Tracking Historical Growth Periods, Albeit at a Higher Starting Level This recovery has followed a stable trajectory, with a compound annual growth rate (CAGR) of approximately 3%, far more sustainable than the 16% CAGR during the pandemic and closer to the 5% CAGR seen before 2020. The aggregate deposit level has settled at $1.7 trillion above the pre-pandemic trend line. Punching Above Their Weight: Across Recent Periods, Community Banks Outperformed Their Larger Peers … While all bank size groups have grown deposits since the Q3 2023 bottom, community banks have gained the most relative to their size on a merger-adjusted basis. For instance, by Q2 2025, community and regional banks had fully recovered and posted net deposit gains, while Colorado Banker 14
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