wvbankers.org 24 West Virginia Banker The Battle for Deposits Is Heating Up: Are You Ready? By Achim Griesel and Dr. Sean Payant, Haberfield Core deposits, especially low-cost ones, have long been the key driver for franchise value in the financial services industry. That said, with the start of the pandemic and the ensuing influx of cash from stimulus checks and increased personal saving rates, financial institutions saw so much excess liquidity that bankers began to question the value of any deposits, including low-cost core deposits. Total deposits in FDIC-insured banks grew by over five trillion from the end of 2019 to the end of 2021. In the two years prior, Source: U.S. Bureau of Economic Analysis (fred.stlouisfed.org) deposits had grown just over one trillion. These same trends on a smaller scale held true for credit unions. Peak deposit growth happened in 2020. By September 2021, the personal saving rate was back at pre-pandemic levels. Deposits at financial institutions continued to grow, but at a much slower rate than in 2020. Finally, starting in March 2022, the data showed that personal checking account balances dropped for the first time since Q3 2021.
RkJQdWJsaXNoZXIy ODQxMjUw