US banks big and small see deposit outflows continue, small bank loan growth slows

It’s late on a Friday afternoon, after a total collapse in the First Republic (which probably saw massive deposit outflows today, as stocks tumbled into the low single digits), and we can get a hint of how badly this chaos was headed as The Fed’s L’H.8 (commercial bank deposit data) just came down.

After yesterday’s report showed the Fed’s balance sheet shrinking but the use of bank bailout facilities rising, total US commercial bank deposits rose $21 billion for the week which ended on 4/19…

Source: Bloomberg

Despite this, US commercial bank deposits (formerly large term deposits) continued their free fall (during the weekend of 4/19), falling $10.4 billion (less than last week) to the lowest level since April 2021…

Source: Bloomberg

On a non-seasonally adjusted basis, US commercial bank deposits (formerly time deposits) fell $174 billion (also at its lowest level since April 2021)…

Source: Bloomberg

Yesterday’s reported resumption of money market fund inflows points strongly to ongoing outflows from commercial bank deposits

Source: Bloomberg

Two things are key to remember: 1) deposit data lags MM flow data by one week and 2) tax time and total deposit outflows are likely driven by tax payment demands of societies…

Both large and small US banks saw exits last week as foreign banks saw inflows…

Source: Bloomberg

Small banks saw the biggest outflows

Big banks: $2.43 billion

Small banks: $7.94 billion

Foreign banks + $0.728 billion

Source: Bloomberg

And on the other side of the ledger, Commercial bank lending increased by $15.08 billion during the period after rising $13.8 billion the previous week on a seasonally adjusted basis. On an unadjusted basis, loans and leases rose $20.9 billion after two weeks of loan contractions.

Source: Bloomberg

Bank loan growth slowed markedly with only $4.04 billion lent (compared to $10.4 billion the previous week) while large bank lending accelerated again

Source: Bloomberg

Finally, for those who think the crisis is over (and FRC and SVB were outliers), there is just one more thing. Wondering why regional banks can’t capture any kind of reasonable offer?

Source: Bloomberg

It’s simple, as we detailed earlier (since November) As long as we are above the reserve restriction level for small banks, there is stability thanks to the Fed’s massive injection of reserves.

Source: Bloomberg

Small banks seem to be moving back towards the critical level, and the closer we get to that level, the greater the risk of bank failures and Fed panic.

Finally, we remind readers that this data does not include this week’s potential problems (as deposit and loan data are delayed by a week).

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