FDIC: Largest Deposit Decline Ever
The Federal Deposit Insurance Corporation recently published its latest "FDIC Quarterly Banking Profile," which says "The net interest margin (NIM) of 3.31 percent was 7 basis points lower than the prior quarter as the average cost of deposits rose more than the average yield on loans. The NIM was 77 basis points higher than the year-ago quarter and, despite the quarterly decline, above the pre-pandemic average of 3.25 percent. The average cost of deposits increased 43 basis points from the prior quarter to 1.42 percent. The increase in the average cost of deposits was slightly lower than the 46 basis-point increase reported in the prior quarter but higher than the 34 basis-point increase in third quarter 2022. The average cost of deposits increased for all Quarterly Banking Profile (QBP) asset size groups relative to the previous quarter." It explains, "Total deposits declined $472.1 billion (2.5 percent) between fourth quarter 2022 and first quarter 2023. The quarterly decline is the largest reduction reported in the QBP since data collection began in 1984. This was the fourth consecutive quarter that the industry reported lower levels of total deposits. A reduction in estimated uninsured deposits (down $663.3 billion, or 8.3 percent) was the primary driver of the quarterly decline. Estimated insured deposits continued to increase (up $255.1 billion, or 2.5 percent) during the quarter. The decline in total deposits in first quarter 2023 was offset by increased wholesale funding (up $661.0 billion, or 14.4 percent) from the previous quarter. Wholesale funding as a percentage of total assets rose from 19.5 percent in fourth quarter 2022 to 22.2 percent in first quarter 2023." Under "Aggregate Condition and income Data, All FDIC-Insured Institutions," the quarterly shows deposits at $18.742 trillion for Q1'23, $19.215 trillion for Q4'22 and $19.932 trillion for Q1'22, an annual decline of -6.0%. The "Insurance Fund Balances and Selected Indicators" table shows estimated insured deposits Q1'23 at $10.481 trillion, Q4'22 showed $10.224 trillion, and Q1'22 showed $10.169T. Uninsured deposits as of Q1'23 was $7.391, Q4'22 $8.058T and Q1'22 was $8.704, a -15.1% change over the past year. See the press release, "FDIC-Insured Institutions Reported Net Income of $79.8 Billion in First Quarter 2023" and FDIC Chairman Martin Gruenberg's comments. See also, The Wall Street Journal's, "Online Banks Are Winning the Deposit War."
