Every year, the Federal Deposit Insurance Corporation updates data for all FDIC-insured banks to show the amount of deposits each bank holds. Although the data is just a look at one point in time during the year, it does provide good insight into how successful banks are in the ever-intensifying war for deposits, and how they have grown -- or not grown -- over a one-year period. Deposits are one of the key characteristics that bank investors examine closely, and while sheer deposit growth is not everything, it is still important to watch.
Let's take a look at which large U.S. bank grew deposits most and also picked up the most market share during a year when deposits absolutely flooded into the banking system.
Who grew the most?
Since the pandemic began in early 2020, trillions of dollars have flooded into the banking system in an unprecedented liquidity event. When the pandemic began, many people pulled money out of various investments and the stock market to avoid a potential downturn and recession.
During the pandemic, the personal savings rate jumped to extremely high levels. Then, the federal government infused trillions of dollars into the economy, not to mention quantitative easing by the Federal Reserve; all of which contributed to more deposits in the banking system, especially in the largest banks.
The one thing to keep in mind is that all of this liquidity may normalize at some point, especially with the Fed thinking about tapering its bond purchases, with spending levels getting back to normal, and with less federal intervention as the economy normalizes. With that said, here is deposit growth for the country's largest banks from June 30, 2020 to the same day in 2021.
|Bank||Deposits 2020 (Trillions)||Deposits 2021 (Trillions)||Deposit Market Share 2020||Deposit Market Share 2021|
|JPMorgan Chase (JPM 0.17%)||$1.71||$2.01||10.94%||11.67%|
|Bank of America (BAC -4.26%)||$1.73||$1.87||11.09%||10.86%|
|Wells Fargo (WFC -0.60%)||$1.46||$1.47||9.4%||8.51%|
It was a great year for JPMorgan, who in 2020 lagged behind Bank of America in terms of total deposits and market share. Since then, the country's largest bank has surpassed $2 trillion in deposits and now holds a decent lead over Bank of America in terms of deposit market share.
Bank of America didn't have a bad year, growing deposits $140 billion in that time period. It's a bit tough to tell if JPMorgan is truly stealing market share from Bank of America. Yes, they are now leading by a good amount, but again, with all of the liquidity that flooded the system, it will be interesting to see how these banks stack up once things normalize a bit.
It will also be interesting to see if Wells Fargo is able to take back some market share if and when the Federal Reserve lifts the $1.95 trillion asset cap placed on the bank for its phony-accounts scandal. The bank hasn't been able to grow its balance sheet in years, but historically was a very good deposit gatherer and had one of the largest branch networks.
One thing to keep in mind is that JPMorgan is more than halfway into a five-year plan to launch 400 new branches in markets the bank hasn't historically had a retail presence in. That initiative has been going very well, and the bank will be in all lower 48 U.S. states this year.
If you're a JPMorgan shareholder, you've got to feel great about what you're seeing. The bank has grown deposits tremendously and has taken the lead in terms of overall deposit market share from Bank of America.
I wouldn't get too down on Bank of America, though, which still grew deposits very strongly during the most recent 12-month period that data is available. The big variables here are how much of these new deposits stick around once some of the excess liquidity leaves the banking system, and how effective Wells Fargo will be at building up its deposit position once the bank is free of the asset cap. But make no mistake, JPMorgan looks like the big winner from the recent FDIC report.