Bank deposits rose slightly in first quarter despite noise around regional banks: S&P

By Steve Gelsi

The sector has seen four banks fail since early March

Although more than two dozen U.S. banks saw their deposits decline by more than 5% in the first quarter, collectively all banks posted a tiny sequential increase despite concerns from investors, according to data released Monday by S&P.

Although the sector has seen four banks fail since early March, publicly traded U.S. banks reported a median sequential increase in deposits of 0.1% in the first quarter, according to S&P.

However, 24 banks reported deposit declines of 5% or more during the first quarter, as turmoil enveloped some banks in the weeks following the demise of Silicon Valley Bank, which was taken over by the the Federal Deposit Insurance Corp. and sold to First Citizens Bancshares Inc. (FCNCA). (See chart below.)

Despite the liquidity crunch that led to the failures of Silicon Valley Bank, Signature Bank of New York, Silvergate Bank and First Republic Bank, the collective increase of 0.1% is a "sign that many institutions navigated the environment relatively well," S&P said.

First Republic had a first-quarter deposit decrease of 40.8%, while PacWest (PACW) lost 16.9% of its deposits in that quarter. Eagle Bancorp Inc. (EGBN) saw a 14.3% drop, Western Alliance Bancorp (WAL) saw an 11.3% reduction and Macatawa Bank Corp. (MCBC) saw a 10.9% drop.

Since March 31, some of the banks, including PacWest and Western Alliance, have issued updates about the health of their deposit base, signaling that depositors remained faithful after the initial few weeks of troubles in the banking sector.

In another sign of stability, bank borrowing from the U.S. Federal Reserve fell sharply in the past week once First Republic was removed from the picture by the FDIC and sold to JPMorgan Chase & Co. (JPM).

Also read:PacWest shares jump after lender says it's 'fundamentally sound' but will reduce its dividend

-Steve Gelsi

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05-09-23 0806ET

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