The FDIC’s recent release of deposit information as of June 30, 2011 did not contain many surprises. A second flight to quality among consumers with renewed concerns about the strength of the country’s economic recovery led to deposit growth of 7.53% year-over-year. This is similar to the 7.60% growth seen in 2009 (another time of high uncertainty) and much higher than the 1.48% growth seen in 2010. At the same time, the number of branch closures slowed significantly, with net closures of 232 in 2011 compared to 1,112 in 2010.
So what does this all mean for the branch channel in the future? As we have argued in previous posts the branch remains a viable delivery channel and the new FDIC data has not changed that opinion. The net year-over-year decline in branches was driven by closures in the Southeast and Southwest regions of the country. Both of these regions were hard hit by the recession. We expect to see continued closures in the 25 states where average annual branch growth has far outpaced household growth (shown in red below). In the remaining states, we expect to see continued changes to branch design, and staffing.