Hoosier Banker 49 * View page 26 of survey at: communitybanking.org/~/media/files/publication/cb21publication_2019.pdf#page=26 banks miss lending opportunities because deposits are tied up. Patience Advised As we saw during the last financial crisis, an increase in low-cost funding can incentivize some institutions to deploy their excess liquidity into riskier asset classes or into loan types that are outside a bank’s core area of expertise. Just as a liquidity shortage posed a significant challenge to banks in 2019, it’s not inconceivable that this challenge could reappear in the future. Banks that patiently assess new lending and investment opportunities and avoid unnecessary risks will likely fare better than those that chase yield. As always, appropriate match funding of assets and liabilities and risk management should be at the forefront before making any such decisions. HB Deposit Trends, U.S. and Indiana Commercial Banks and Thrifts, December 2018-June 2021 Bank Group Dec. 31, 2018-Dec. 31, 2019 Dec. 31, 2019-Dec. 31, 2020 Dec. 31, 2020-June 30, 2021 All U.S. Banks % Change % Change % Change Transaction Deposits 5.8 103.2 14.5 Nontransaction Deposits 4.5 6.0 1.6 Total Deposits 4.7 23.3 5.4 All Indiana Banks Transaction Deposits -8.4 40.4 16.4 Nontransaction Deposits 9.5 11.2 7.0 Total Deposits 6.4 21.8 12.7 SOURCE: FFIEC Reports of Condition and Income (call reports). DEPOSIT TRENDS, U.S. AND INDIANA COMMERCIAL BANKS AND THRIFTS DECEMBER 2018 – JUNE 2021 There’s lending, and there’s intelligent lending. The tools to succeed in every stage of your lending lifecycle. Learn more at spglobal.com/commercial-lending Copyright © 2020 S&P Global Market Intelligence Inc. All rights reserved. Market Insight & Lead Generation Pricing & Total Relationship Optimization Portfolio & Lender Performance Analysis Credit Surveillance & Portfolio Tracking Credit Analysis & Assessment
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