Academic journal article ABA Banking Journal

Branch and Deposit Trends: Fact and Fiction

Academic journal article ABA Banking Journal

Branch and Deposit Trends: Fact and Fiction

Article excerpt

Some interesting changes in the U.S. branch landscape were revealed in the June 2005 annual bank branch data released by the FDIC in October. The details behind the data yield insights into facts and fictions relating to banks' most expensive, visible, and heavily utilized channel.

Nationwide, deposits grew 8.5% from June 2004 to June 2005, a rate on par with the compound annual growth rate of 8.2% since 2000. At the same time, one-year growth in the number of branches was greater than the five-year rate, at 2.5% compared to an average of 1.5% annually since 2000. Despite accelerated growth in the number of branches, the median branch deposit size has grown dramatically over the past several years, from $24.6 million in 2000 to $29.1 million in 2005.

Since 2000, the highest growth rate in deposits occurred in South Dakota, which saw a 27% increase. Runners-up were Utah and Nevada, which experienced deposit growth rates of 25% and 21%, respectively. Growth was lowest in the Great Plains (other than South Dakota), with Nebraska, Iowa, North Dakota, and Wyoming ranking as four of the lowest growth states in the country. Despite low overall deposit growth, however, the region still saw a higher rate of branch expansion than the already densely populated Northeast.

De novo activity is higher than ever: FACT

Almost 3,800 new branches were opened during the year ending June 30, 2005, compared to just over 3,600 the prior year and about 2,700 for the year ending June 30, 2003. By far the most active expander between June 2004 and June 2005 was Washington Mutual, which opened 208 offices and closed 60 from July 1, 2004 to June 30, 2005, in addition to purchasing Providian and its $14 billion in assets. The thrift undertook massive expansion efforts during the year in Florida, Illinois, and New York, with those three states accounting for a net gain of 111 offices. Meanwhile, WaMu closed offices in its old homestead markets of Oregon, Washington, and Idaho.

De novo activity is outpacing branch consolidation: FACT

Despite over a decade of robust bank consolidation, the number of branches in the U. …

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