Deposits at Federal Deposit Insurance Corp. (FDIC)-insured banks were down for the fifth straight quarter in the period ended June 30, while net income fell by double digits, the FDIC’s latest Quarterly Banking Profile showed.
- Deposits at FDIC-insured banks fell almost $100 billion in the quarter ended June 30, after a record $472 billion decline in the first quarter amid the banking crisis.
- Declines were mostly driven by uninsured deposits, or those exceeding the FDIC’s $250,000 insurable limit.
- The results point to a banking industry that’s still reeling from turmoil earlier this year, but is less exposed to some of the riskiest deposits.
Total deposits for more than 4,600 FDIC-insured banks fell $98.6 billion in the second quarter after plunging by $472 billion in the first quarter amid this year’s banking crisis. The second-quarter drop marked the biggest quarterly decline on record.
Meanwhile, net income across the industry fell by $9 billion, or 11.3%, to $70.8 billion for the quarter ended June 30, down from a peak of nearly $80 billion in the preceding quarter. The average net interest margin—a key profitability metric for U.S. banks—fell 3 basis points (bps) to 3.28%, after declining 7 bps in the first quarter.
The decline was mostly driven by uninsured deposits, or those that exceed the FDIC’s $250,000 insurable limit. These fell $180.6 billion, or 2.5%, after tumbling more than half a trillion dollars in the previous quarter. Uninsured deposits were a key driver of this year’s banking crisis, as the banks that failed—Silicon Valley (SVB), Signature, and First Republic—had the highest exposure to uninsured deposits as a percentage of the total.
By contrast, insured deposits in the second quarter were up nearly $85 billion, or 0.8%, from the previous quarter. The decline in total deposits was partly offset by higher wholesale funding, which is the issuance of loans for money market securities like Treasury bills, commercial paper, and certificates of deposit (CDs). Wholesale funding increased $80 billion, or 1.5%, from the previous quarter.
The results point to a banking industry that’s still reeling from turmoil earlier this year, but one that’s less exposed to some of the riskiest deposits that could trigger a future crisis.
“Despite the period of stress earlier this year, the banking industry continues to be resilient,” FDIC Chair Martin Gruenberg said in a press release.