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Dennis Santiago Headshot

Ripple or Tsunami? Catching the Banking Wave

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Just how much money is in play as people contemplate moving their money? Here's the total of deposits and the breakdown of the "core deposits" into their three primary buckets. As you can see they're sizable buckets. Note in the data that deposits have grown in the past several years. You'll see the $902B of checking accounts amounting to a tenth of the deposit base mentioned in other press coverage. But personally I find the almost $6.9 trillion of savings and time-deposit accounts to be the more interesting numbers. Notice that the trend is savings are up and CD's are sort of porpoising.

Source: FDIC/IRA Bank Monitor
PeriodTotal
Deposits
Transaction
(Core)
Savings
(Core)
Time
(Core)
200909$9,166,647,920$902,768,720$4,387,601,093$2,505,086,352
200906$9,094,908,393$917,252,238$4,239,538,142$2,641,630,201
200903$9,038,154,772$859,124,401$4,141,606,048$2,751,267,905
200812$9,127,504,227$928,766,633$3,963,835,665$2,822,009,416
200809$8,810,717,166$810,913,727$3,835,193,317$2,773,205,004
200806$8,643,048,720$773,612,497$3,885,016,579$2,573,654,545
200803$8,625,969,622$779,857,677$3,869,239,594$2,624,406,021
200712$8,463,461,013$788,793,087$3,730,267,768$2,598,378,513
200709$8,181,791,161$707,981,055$3,670,552,693$2,544,805,527
200706$8,071,594,649$755,573,403$3,664,058,145$2,462,512,803
200703$7,938,676,382$775,940,987$3,659,070,750$2,470,542,332
200612$7,825,426,711$789,484,546$3,596,509,049$2,454,453,937
amounts in $1000's unless specified.

When looking at "ordinary people," industry analysts have been concentrating primarily on transaction (aka checking) accounts. These are the accounts people use for everyday living. They use debit cards to buy coffee from Starbucks, online banking to pay bills and have their paychecks direct deposited into them. Balances tend to be small because they are what businesses call an operating account. The rule of thumb with an operating account is to keep a balance sufficient to manage short-term obligations of, say, 30 to 45 days of cash flow.

Industry observers have not yet focused on the issue of the potential movement of other classes of "core deposits." These are the savings and time-deposit accounts where people accumulate their nest eggs. Amounts vary but ultimately these accounts can be sizable -- and far more meaningful -- to the banks that come to be their fiduciary custodians.

In the end, the types of accounts affected makes all the difference in the world in what could be a ripple (if it only affects a small fraction of people's checking accounts) or could be an economic sea change (if it affects the much larger base of nest egg accounts). That's the real issue.