FDIC QUARTERLY 31

DEPOSIT GROWTH SLOWS AND OFFICE DECLINE CONTINUES

2018 Summary of Deposits 

Highlights

The 2018 Summary of Deposits Survey (SOD) showed that FDIC-insured institutions 

reported an increase in deposits and a decrease in offices over the past year.1 The decrease in 

the number of offices continues a trend that began a decade earlier. The number of offices 

operated by both community banks and noncommunity banks has decreased, but the office 

opening and closing patterns of these two types of institutions has differed markedly.2

During the year ended June 2018, currently operating noncommunity banks added offices 

through bank acquisitions but closed far more offices than they opened. In contrast, 

currently operating community banks added offices through acquisitions and opened still 

more offices, on net, during the year.

This article will describe these trends in detail and will follow up FDIC analysis that examined factors likely associated with bank office closures.3

 This article looks at the association between office closures and changes in profitability and efficiency. Analysis of Call 

Report data indicates that banks that closed offices at higher rates between 2013 and 2018 

reported improved efficiency ratios and stronger profitability. Other banks reported smaller 

improvements in efficiency ratios and profitability, with little difference between banks that 

increased offices and banks that reduced offices at a slower rate.

The decision to open or close offices reflects bank-specific factors, and the experience at one 

group of banks cannot be assumed to be relevant for other banks. The analysis presented in 

this article should be viewed as further context for the decisions that bank executives made 

to close offices.

Total Deposits of FDICInsured Institutions 

Continue to Increase

Total deposits held by FDIC-insured institutions increased from $11.81 trillion in June 2017 

to $12.26 trillion in June 2018—an increase of $450 billion or 3.8 percent (Chart 1).4 The 

rate of deposit growth over the year was slower than the 5.4 percent five-year average annual 

growth rate for the period ended in 2018.5 Deposits increased even though the number of 

institutions declined from 5,787 to 5,541 and the number of offices declined from 89,839 to 

88,053. Deposits per institution increased 8.4 percent to $2.2 billion in 2018. Deposits per 

office increased 5.9 percent from $131 million in 2017 to $139 million in 2018.

Deposits Increased in 2018, Continuing a Multiyear Trend

Total Deposits of FDIC-Insured Institutions

Source: FDIC Summary of Deposits.

9.4

12.3

0

2

4

6

8

10

12

14

2013 2014 2015 2016 2017 2018

$ Trillions

10.1

10.6

11.2

11.8

Chart 1

1 “Deposits” refers to deposits in domestic offices of FDIC-insured institutions—meaning offices located in the United States, 

U.S. territories, and possessions. U.S. offices of foreign institutions and their deposits are not included.

2 Community banks are identified using criteria in the FDIC Community Banking Study, December 2012, https://www.fdic.

gov/regulations/resources/cbi/report/cbi-full.pdf. The merger adjustment that is the basis for this statement about patterns of 

openings and closings is explained in detail in this article. 

3 See Nathan Hinton, Derek Thieme, and Angela Woodhead, “Factors Shaping Recent Trends in Banking Office Structure 

for Community and Noncommunity Banks,” FDIC Quarterly 11, no. 4 (2017): 31–40, https://www.fdic.gov/bank/analytical/

quarterly/2017-vol11-4/fdic-v11n4-3q2017-article1.pdf. 4 All figures are as of June 30 in each year and all growth rates are between SOD filings, which report data as of June 30 each year.

5 The five-year compound annual growth rate represents the average annual rate of growth that would produce the net change 

over five years. For simplicity, it will be referred to here as “five-year annual growth.”
2018 • Volume 12 • Number 4

32 FDIC QUARTERLY

Deposit Growth Slows 

at Community and 

Noncommunity Banks 

Nationally

Both community and noncommunity banks reported a decline in merger-adjusted deposit 

growth rates during the year ended June 2018.6 Year-over-year merger-adjusted deposit 

growth at community banks was 4.9 percent, slightly less than their five-year annual deposit 

growth rate of 5.1 percent. For noncommunity banks, year-over-year merger-adjusted 

deposit growth was 3.6 percent, well below their five-year annual deposit growth rate of 

5.5 percent. Between 2013 and 2018, noncommunity banks increased total deposits by 

30.8 percent from $7.988 billion to $10.445 billion, and community banks increased deposits 

28.3 percent from $1.417 billion to $1.818 billion on a merger-adjusted basis.

The Number of U.S. Bank 

Offices Continues to Decline

The number of offices operated by FDIC-insured institutions has declined steadily since 

June 2009. The trend continued during the year ended in June 2018 as the number of offices 

declined by 1,786 (2.0 percent) to 88,053. This is the second-fastest rate of decline in U.S. 

bank offices since the trend began and exceeds the five-year annual decline of 1.8 percent. 

The number of offices operated by FDIC-insured institutions has declined by 8,277, or 

8.6 percent, over the past five years.

The Summary of Deposits (SOD) is a unique 

source of information about the number and 

physical locations of the tens of thousands of 

bank offices across the United States. The SOD 

data also include a dollar amount of deposits 

for each bank office. Methods used by banks for 

attributing deposits to bank offices may differ 

considerably from bank to bank, as described 

below. Accordingly, researchers should be 

cautious about using SOD data to draw firm 

conclusions about the geographical distribution 

of banking activity.

The full reporting instructions for the SOD can 

be found at https://www.fdic.gov/regulations/

resources/call/sod-reporting-instructions.pdf. 

The relevant reporting instructions are to the 

right.

Institutions should assign deposits to each office in a manner consistent 

with their existing internal record-keeping practices. The following are 

examples of procedures for assigning deposits to offices:

• Deposits assigned to the office in closest proximity to the account 

holder’s address

• Deposits assigned to the office where the account is most active

• Deposits assigned to the office where the account was opened

• Deposits assigned to offices for branch manager compensation or 

similar purposes

Other methods that logically reflect the deposit-gathering activity of the 

financial institution’s branch offices may also be used. It is recognized 

that certain classes of deposits and deposits of certain types of customers 

may be assigned to a single office for reasons of convenience or 

efficiency. However, deposit allocations that diverge from the financial 

institution’s internal record-keeping systems and grossly misstate or 

distort the deposit-gathering activity of an office should not be utilized.

Using SOD Deposit Data for Geographic Research Requires Caution

6 Throughout this article, merger adjustment refers to analysis that measures the component of growth of a cohort of banks that 

is not attributable to mergers or designation changes. Community bank designations are as of June 2018, and mergers over the 

period are treated as if they had already occurred at the beginning of the period. For example, if deposit growth is being calculated 

from 2013 to 2018 and Bank A, a noncommunity bank, acquired Bank B, a community bank, in 2015, then deposits of Bank B are 

treated as noncommunity bank deposits between 2013 and the date it was acquired.
FDIC QUARTERLY 33

DEPOSIT GROWTH SLOWS AND OFFICE DECLINE CONTINUES

The Decline in the Number 

of Offices Is Slowest in 

Rural Counties

As shown in Table 1, the total number of U.S. bank offices has declined for both community 

banks and noncommunity banks and for all three county types—metropolitan, micropolitan, and rural.7

 Table 1 also shows that an overwhelming majority of U.S. bank offices—

roughly 70,000 out of 88,000—are in metropolitan counties. The 8.8 percent five-year 

reduction in the number of offices in metropolitan counties accounted for most of the total 

reduction in the number of offices in the United States.

The reduction in the number of offices operated by community banks in metropolitan 

counties has been particularly pronounced: 15.3 percent in the past five years. This does not 

mean that community banks in metropolitan counties closed 15.3 percent of offices in that 

time, but rather that 15.3 percent of their offices closed, became offices of noncommunity 

banks through mergers, or were reclassified from a community bank to a noncommunity 

bank. Banking industry consolidation among both community and noncommunity banks 

has been the primary driver of this trend. As discussed in the next section, a very different 

picture emerges when controlling for the effects of mergers and movement of banks between 

community and noncommunity bank designations.

The number of bank offices has declined the least in rural counties: 6.6 percent between 

2013 and 2018, compared with an 8.8 percent reduction in metropolitan counties and an 

8.7 percent reduction in micropolitan counties. Community bank offices have declined less 

in rural counties than in more populated areas, while noncommunity bank offices have 

declined the most in rural counties. While rural counties have had the smallest decline in 

office numbers, an office closure in a rural county is felt more keenly by a community than 

a closure in a metropolitan county, since rural bank offices are fewer in number and often 

serve large geographic areas.

Table 1

Number of U.S. Banking Offices, June 2013 to June 2018

Designation 2013 2014 2015 2016 2017 2018

% Change 

2013 to 2018

Metro

All Banks 76,302 75,035 73,893 72,728 71,058 69,568 –8.8%

Noncommunity Bank 54,272 53,816 53,082 52,666 51,807 50,910 –6.2%

Community Bank 22,030 21,219 20,811 20,062 19,251 18,658 –15.3%

Micro

All Banks 10,763 10,573 10,378 10,214 10,014 9,831 –8.7%

Noncommunity Bank 4,574 4,507 4,517 4,420 4,358 4,252 –7.0%

Community Bank 6,189 6,066 5,861 5,794 5,656 5,579 –9.9%

Rural

All Banks 9,265 9,104 8,991 8,882 8,767 8,654 –6.6%

Noncommunity Bank 2,645 2,561 2,500 2,437 2,420 2,340 –11.5%

Community Bank 6,620 6,543 6,491 6,445 6,347 6,314 –4.6%

All

All Banks 96,330 94,712 93,262 91,824 89,839 88,053 –8.6%

Noncommunity Bank 61,491 60,884 60,099 59,523 58,585 57,502 –6.5%

Community Bank 34,839 33,828 33,163 32,301 31,254 30,551 –12.3%

Source: FDIC Summary of Deposits.

Note: Counties are labeled metropolitan, micropolitan, or rural, depending on whether they are located in areas designated by the U.S. Census Bureau as 

Metropolitan Statistical Areas or as Micropolitan Statistical Areas. Metropolitan Statistical Areas have a core urban area with more than 50,000 

inhabitants. Micropolitan Statistical Areas have urban clusters with 10,000 to 50,000 inhabitants. All other areas are considered rural.

7 Counties are labeled metropolitan, micropolitan, or rural depending on whether they are located in areas designated by the 

U.S. Census Bureau as Metropolitan Statistical Areas or as Micropolitan Statistical Areas. Metropolitan Statistical Areas have 

a core urban area with more than 50,000 inhabitants. Micropolitan Statistical Areas have urban clusters with 10,000 to 50,000 

inhabitants. All other areas are considered rural.
2018 • Volume 12 • Number 4

34 FDIC QUARTERLY

Most of the offices in rural counties (73.0 percent) are operated by community banks, which 

tend to maintain their number of offices—especially on a merger-adjusted basis, as discussed 

in the next section. The difference in the five-year reductions in the total number of rural 

county bank offices—11.5 percent for noncommunity banks versus 4.6 percent for community banks—means that community banks have increased their relative prominence in rural 

counties, notwithstanding banking industry consolidation. Community banks serve an 

important purpose by providing banking services in counties with few other bank offices.

The bank office trends described in this article have implications for the location and availability of banking services. Community banks serve as the only physical banking presence in 

20.0 percent of the 3,142 U.S. counties. In contrast, noncommunity banks serve as the only 

physical banking presence in 4.6 percent of U.S. counties (Table 2). In 122 counties, there is 

only one bank office. Of these counties, 85 have a community bank office, and 97 are rural.

Table 2

Distribution of Bank Offices by County, June 30, 2018

County Description Number Percent

Counties With Community Bank and Noncommunity Bank Offices 2,339 74.4% 

Counties With Only Community Bank Offices 627 20.0% 

Counties With Only Noncommunity Bank Offices 143 4.6% 

Counties Without Offices 33 1.1% 

Total of Counties in 50 States and District of Columbia 3,142 100% 

Counties With Only One Office—Community Bank 85 2.7% 

Counties With Only One Office—Noncommunity Bank 37 1.2% 

Total of Counties With Only One Office 122 3.9% 

Source: FDIC Summary of Deposits.

Noncommunity Banks Are 

Driving the Decline in the 

Number of Offices

Table 1 shows changes in the number of offices operated by community and noncommunity banks by county type over the past five years. The changes reflect not only the effects 

of office openings or closings, but also the effects of banks acquiring other banks, and 

the effects of changes in designations between community and noncommunity banks. To 

analyze the office opening and closing patterns of the currently operating (June 2018) group 

of community and noncommunity banks, it is necessary to control for mergers and reclassification of banks between the two designations.

For example, mergers, purchases, and sales can cause an office to change designations. 

Without controlling for those effects, it may appear that community banks are closing 

offices when in fact their offices may have become noncommunity bank offices because the 

bank was merged into a noncommunity bank or the offices were purchased by a noncommunity bank. Another reason offices may change designation is that community banks may be 

reclassified as noncommunity banks, in which case their office designations would change. 

Similarly, noncommunity banks may be reclassified as community banks.
FDIC QUARTERLY 35

DEPOSIT GROWTH SLOWS AND OFFICE DECLINE CONTINUES

Bank office data can be “merger adjusted” to control for those effects. Merger adjusting data 

involves fixing community bank or noncommunity bank designations as of the most recent 

period (June 2018) and holding those designations constant through the period analyzed. 

A community bank that was reclassified as a noncommunity bank between June 2017 and 

June 2018 is treated as a noncommunity bank beginning in June 2017, and noncommunity 

banks that became community banks are similarly treated as community banks for the 

entire period. Individual offices of institutions that were acquired by a community bank 

in the year ended June 2018 are treated as community bank offices as of June 2017 and as 

noncommunity bank offices if they were acquired by a noncommunity bank. These adjustments are intended to more accurately reflect decisions by executives of currently operating 

banks to open or close offices.

This analysis reveals stark differences in the patterns of office openings and closings of 

currently operating noncommunity and community banks. During the year ended June 

2018, noncommunity banks acquired offices from other banks but closed far more offices 

than they acquired. In contrast, currently operating community banks acquired offices and 

opened more offices, on net, during the year.

Table 3

Community Banks Added Offices and Noncommunity Banks Closed Offices, June 2017 to June 2018

Designation

Offices of 

June 2018 

Bank Group 

in June 2017

Offices of 

Banks 

Acquired

Office Total 

June 2017, 

MergerAdjusted

New 

Offices 

Opened

Offices 

Closed

Net Offices 

Purchased 

or Sold

Number of 

Offices in 

June 2018

Community Banks 29,832 619 30,451 585 500 15 30,551

Noncommunity Banks 57,886 1,481 59,367 404 2,254 –15 57,502

Total 87,718 2,100 89,818 989 2,754 0 88,053

Source: FDIC Summary of Deposits.

Table 3 shows that between June 2017 and June 2018, community banks opened 585 new 

offices, purchased 15 offices from noncommunity banks, and closed 500 offices. On net, the 

June 2018 group of community banks added 100 offices during the year in addition to the 

619 individual bank offices that they acquired through mergers. The aggregate decline in 

the total number of community bank offices during the year was a result of the acquisition 

of community banks by noncommunity banks or the reclassification of community banks 

as noncommunity banks by the FDIC. In short, community banks active as of June 30, 2018, 

increased their total number of offices during the year. In contrast, the June 2018 group 

of noncommunity banks closed far more offices than they purchased, acquired through 

mergers, or opened, and reduced their net number of offices by 1,865.8

8 An additional 21 offices were closed without an acquisition or were acquired by nonbanks, and are not included in the offices of 

either community banks or noncommunity banks as of June 2018. The total change in the number of offices is –1,865 (change for 

noncommunity banks) + 100 (change for community banks) – 21 (offices of institutions that left the banking industry), or –1,786.
2018 • Volume 12 • Number 4

36 FDIC QUARTERLY

Most Community and 

Noncommunity Banks 

Report No Change in Their 

Number of Offices

A greater percentage of noncommunity banks changed the number of offices they operated 

between June 2017 and June 2018 than did community banks. On a merger-adjusted basis, 

55.5 percent of noncommunity banks reported the same number of offices in both periods, 

11.7 percent reported an increase in offices, and 32.9 percent reported a decrease in offices. 

On the other hand, 86.9 percent of community banks reported the same number of offices 

in both periods, 8.1 percent reported an increase in offices, and only 5.0 percent reported a 

decrease in offices. Because community banks make up the majority of banks, more banks 

industry-wide increased offices (463 banks) than reduced offices (397 banks). However, 

banks that reduced offices shed more than 2,000 of them, while the banks that increased 

offices did so by only 610, resulting in a decline in total offices nationally. Of the 397 banks 

that reduced offices, 10 banks accounted for a loss of more than 1,000 offices.

Average Efficiency and 

Profitability Improved at 

Banks That Reduced 

Number of Offices

As mentioned, the trend of net declines in the number of offices of FDIC-insured institutions continued in 2018. The FDIC Quarterly previously reported that population migration, improved mobile technology, mergers, and effort by management to reduce premises 

expenses are possible reasons for the decline in the number of bank offices.9 This section 

further analyzes the association between reductions in offices and subsequent changes in the 

efficiency and profitability of institutions.

The direct effect of closing offices is that institutions have lower fixed costs and fewer 

expenses, which implies that profitability and efficiency will improve as long as nothing else 

changes. However, closing offices may cause a bank to lose customers who are inconvenienced 

by the closing. The loss of customers could reduce revenue, profitability, and efficiency.

This analysis looks first at the efficiency ratio of institutions over time on a merger-adjusted 

basis.10 Institutions that generate more revenue while incurring a given amount of noninterest expense are considered more efficient than institutions that generate the same level of 

revenue while incurring more noninterest expense.Therefore, a lower efficiency ratio indicates greater efficiency. Chart 2 shows that institutions that closed more offices than they 

opened improved their efficiency ratios on average. Overall, institutions that reduced offices 

by more than 25 percent over the past five years reduced their efficiency ratios more than 

other institutions. Closing offices reduces premises expenses, which are a component of total 

noninterest expense, so reducing office counts would lead to improved efficiency as long as 

revenue does not fall following the closures.

Importantly, this result does not mean that any institution that reduces its number of 

offices will improve its efficiency—it indicates only that, for those particular institutions, 

reducing the number of offices over this five-year period has been associated with improved 

efficiency ratios.

9 See footnote 3.

10 In this case the data needed to be adjusted for mergers because otherwise the number of offices of institutions would be highly 

affected by merger activity, as all of the offices of acquired institutions would typically be reported as belonging to the acquiring 

institution immediately after the merger. The efficiency ratio is total noninterest expense (not including amortization or 

impairment of goodwill or other intangible assets) divided by noninterest income plus net interest income, multiplied by 100. 

For example, if a bank had $1.1 million in noninterest expense, $100,000 in impairment losses and amortization of intangible 

assets, $1 million in net interest income, and $1 million in noninterest income, its efficiency ratio would be (($1.1 million – 

$100,000)/($1 million + $1 million)) x 100, or 50.
FDIC QUARTERLY 37

DEPOSIT GROWTH SLOWS AND OFFICE DECLINE CONTINUES

Institutions With Greater Declines in O
ce Count Had Greater Improvement in E
ciency Ratios

Sources: FDIC Summary of Deposits, Call Report Data, June 2013 and June 2018. Institutions in the highest and lowest 1 percent of eciency ratio 

changes were removed to control for the e ect of outliers.

Percent

-8

-7

-6

-5

-4

-3

-2

-1

0

Average Change in Eciency Ratio, June 2013 to June 2018 

Decreased

Oces More

an 25%

Decreased

Oces 25%

or Less

Oce

Count

Unchanged

Increased

Oces 25%

or Less

Increased

Oces More

an 25%

-7.14

-5.29

-3.38

-2.76 -3.16

Chart 2

Efficiency and profitability are not the same. Analyzing (on a merger-adjusted basis) the 

association between office closures and changes in pretax return on assets (ROA) is one 

way to evaluate the effect of office closures on profitability. Pretax ROA shows the amount 

of an institution’s income divided by its asset base, which controls for the fact that larger 

institutions generate more total income than do smaller institutions.11 Income is measured 

before taxes to make comparisons of all FDIC-insured institutions more meaningful, 

because tax rates vary from year to year, across states, and by tax status (such as the tax 

status of an S-corporation).12 Higher pretax ROA indicates higher profitability. Chart 3 

shows that pretax ROA increased the most at institutions that closed the largest percentages 

of offices.

By definition, pretax ROA increases when the ratio of total pretax income to total assets 

increases. Consequently, pretax ROA could rise as a result of higher pretax income, a decline 

in total assets, or a combination of the two. Offices are part of the premises and fixed assets 

component of bank balance sheets. In addition to reducing premises expense, closing offices 

may involve the sale of land and buildings owned by the bank, allowing the proceeds to be 

invested in assets that potentially earn a greater return.

11 For example, two institutions with the same amount of pretax income could have different values of pretax ROA. If institutions 

A and B each have $1 million in pretax income, and institution A has $10 million in total assets, while institution B has 

$100 million in total assets, then pretax ROA is 10 percent ($1 million / $10 million) for institution A and 1 percent ($1 million / 

$100 million) for institution B.

12 S-corporations do not pay federal taxes at the business level; all income is passed through to the owners and then taxed as 

individual income. Institutions with other corporate structures pay tax at the business level.
2018 • Volume 12 • Number 4

38 FDIC QUARTERLY

Institutions With Greater Declines in O
ce Counts Experienced Greater Improvement 

in Pretax ROA

Sources: FDIC Summary of Deposits, Call Report Data, June 2013 and June 2018. Institutions in the highest and lowest 1 percent of pretax ROA 

changes were removed to control for the eect of outliers.

Percent

Average Change in Pretax ROA, June 2013 to June 2018 

Decreased

Oces More

an 25%

Decreased

Oces 25%

or Less

Oce

Count

Unchanged

Increased

Oces 25%

or Less

Increased

Oces More

an 25% 

0.27

0.21

0.16

0.14 0.13

0

0.05

0.10

0.15

0.20

0.25

0.30

Chart 3

The preceding analysis suggests that banks that closed more offices than they opened 

reduced their fixed expenses and fixed assets without sacrificing income, on average. Again, 

this does not suggest that any bank will increase its efficiency and profitability by closing 

offices. Charts 2 and 3 show that the institutions that increased their office networks by 

more than 25 percent did not necessarily sacrifice efficiency or profitability by doing so—

there was little or no difference between changes in efficiency or profitability of institutions 

that increased offices by more than 25 percent and changes in the efficiency or profitability 

of institutions that had no increase in the number of offices. Further, institutions may add 

offices as a result of high efficiency or high profitability. Some successful institutions may be 

more willing or more able to reach new customers, or offer better service, by expanding their 

office networks, which could explain why the differences in changes in efficiency and profitability were relatively small between institutions that increased their number of offices and 

institutions that maintained the same number of offices over the five-year period.

Importantly, the decision to change the number of offices is one of many decisions made 

by bank executives that that can affect profitability. This analysis suggests a relationship 

between office closures and improved profitability, but further analysis is needed to definitively establish a direct relationship, since many factors could affect bank profitability.

Conclusion The decline in the number of bank offices that began during the year that ended in 

June 2010 continued during the year ended in June 2018. The number of offices declined 

more slowly in rural counties, which tend to have fewer bank offices, than in more densely 

populated counties. Noncommunity banks, which tend to operate in more densely populated 

areas, closed offices at a faster rate than did community banks. Many factors, including a 

careful comparison of costs and benefits, influence decisions by bank executives to open or 

close offices.
FDIC QUARTERLY 39

DEPOSIT GROWTH SLOWS AND OFFICE DECLINE CONTINUES

Authors:

Joseph R. Harris III

Economic Analyst

Division of Insurance and Research

Derek K. Thieme

Economic Analyst

Division of Insurance and Research

Angela N. Woodhead

Economic Analyst

Division of Insurance and Research