super regional and money center banks had not yet regained the deposits lost during the downturn. Reciprocal deposits played a notable role in community banks’ deposit growth, representing $46 billion or 21% of their $222 billion increase during the industry growth period. … Which Drove Increases in Community Bank Market Share Community banks also gained market share during the decline and recovery. Before the pandemic, they held 14.8% of total domestic deposits. That share remained steady through the surge years but rose during the decline as larger banks lost ground and continued rising during the recovery. As of Q2 2025, community banks hold 16.6% of total domestic deposits. What Explains These Results, and Where Is Deposit Growth Going? Several factors likely contributed to the outperformance of smaller banks: • Product Promotion: Many community banks may have promoted more competitive deposit products, such as time deposits, to a greater extent than larger institutions. • Customer Relationships: Stronger ties with local customers may have helped them retain deposits. • Deposit Betas: Larger banks may have customers who are more sensitive to rising rates and did not raise their rates as fast as other alternatives, such as money market mutual funds. While these factors warrant further study, the data suggests that community banks, often assumed to be at a structural disadvantage, have proven more nimble in responding to shifting depositor behavior. Can Community Banks Hold Their Gains? Future outperformance isn’t a given. Larger banks could respond with aggressive pricing, digital strategies or other tactics to win back deposits. Indeed, 93% of respondents to IntraFi’s most recent quarterly survey of bank executives, the vast majority of which are community bankers, expect deposit competition to stay the same or intensify over the next 12 months.1 The institutions that come out ahead will be those attuned to how and why depositors move. Community banks, having gained ground during a period of heightened volatility, must try to sustain this momentum in a marketplace shaped by trust, convenience and evolving customer expectations. 1. Q2 2025 IntraFi Bank Executive Business Outlook Survey Since its founding over 20 years ago, IntraFi has been chosen by over 3,000 financial institutions. IntraFi’s deposit network is the largest of its kind, and its tested, trusted services help its network members acquire high-value relationships, fund more loans and seamlessly manage liquidity needs. IntraFi invented reciprocal deposits and is the No. 1 provider of deposit placement solutions, offering the largest per-depositor, per-bank capacity. 15 Colorado Banker
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