Bank of America Regains Lost Ground To Become Second Largest U.S. Bank By Deposits

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Bank of America benefited from dwindling growth in deposits at rival Wells Fargo in the wake of the latter’s account opening scandal to regain the #2 position on the list of largest U.S. banks by total deposits. The diversified banking giant reported more than $1.3 trillion in deposits over the first quarter of the year – allowing it to inch ahead of Wells Fargo. Both banks, however, remain well short of market leader JPMorgan’s $1.45-trillion deposit base.

Bank of America held the position of the largest U.S. bank in terms of deposits for two decades before being surpassed by JPMorgan Chase in late 2011. With Bank of America remaining focused on cleaning up its balance sheet over subsequent years, Wells Fargo’s deposit base also swelled to a larger size by the end of 2014. But with Bank of America putting its legacy issues behind it and reporting a steady growth in loans and deposits over recent years, it has done well to regain lost ground in the U.S. banking industry.

We capture the trends in loans and deposits for each of the five largest commercial banks in the country – JPMorgan ChaseBank of AmericaWells FargoCitigroupU.S. Bancorp – through interactive dashboards, while also detailing the impact of changes in these key factors on their share price.

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Deposits across U.S. commercial banks have grown sharply since 2010 due to the prevailing low interest rate environment since the economic downturn. This is because the resulting lack of lucrative investment options led investors to shift some of their liquid assets into interest-bearing deposits – leading U.S. deposits to swell at well above 5% annually over 2012-16. With the Fed hiking benchmark interest rates since December 2015, the interest rate environment has improved – leading to a normalization in deposit growth rate over recent quarters.

Notably, total deposits for the five largest U.S. banks grew by 2.7% over the last twelve months – less than the industry-wide growth figure of 3.3%. The below-average growth can be attributed to a decline in Wells Fargo’s deposit base year-on-year, as the Federal Reserve’s enforcement order prohibiting the bank from growing its balance sheet forced it to liquidate a chunk of its non-core deposits. This, in turn, led to the total market share of the five largest U.S. banks falling to below 40% of U.S. deposit market (which includes all domestic as well as foreign deposits held across U.S. commercial banks).

Details about how changes to key Loan and Deposit parameters affect the share price of the five largest U.S. commercial banks can be found in our interactive model for JPMorgan Chase | Bank of America | Wells Fargo | Citigroup | U.S. Bancorp

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