Regional bank failures and several large M&A deals in the past year have rocked deposit market share in the Golden State.
Total deposits in California declined by $375.31 billion, or 16.8%, between June 30, 2023, and the second quarter of 2022 — the second-largest year-over-year decline among the 50 US states and well above the US median decline of 4.8%, according to an analysis by S&P Global Market Intelligence.
Deposits have come under pressure across the country over the past year as interest rates rose rapidly and customers shopped for higher rates, but outflows were compounded in California after it was rocked by large bank failures in March and May. Moreover, several large bank deals have closed in the past year, which also contributed to the massive market share shake-up in the state.
M&A shake-up
Of the top six banks by deposit market share at June 30, 2022, three no longer exist one year after the date due to failures or M&A. As such, the 20 US banks with the most deposits in California changed dramatically year over year as a handful of large banks gained significant deposit market share in the state.
Bank of Montreal boasted the largest jump on the top 20 list, going from having no market share in the state last year to No. 9 on the list at June 30 due to its acquisition of Bank of the West.
U.S. Bancorp posted the largest year-over-year jump in total deposits, up 108.6%, and gained the second-largest deposit market share among banks on the list after its acquisition of MUFG Union Bank NA closed Dec. 1, 2022. The company jumped to No. 4 in deposit market share in the state, from No. 10 at June 30, 2022.
First Citizens BancShares Inc. also saw a huge deposit market share boost in the quarter thanks to its acquisition of Silicon Valley Bridge Bank NA. First Citizens saw a 94.9% jump in its total deposits in the state and a 156-basis-point increase in its deposit market share in the state, landing it at No. 7 on the list from No. 12 last year.
JPMorgan Chase & Co.'s acquisition of failed bank assets also boosted its position in the state. The bank acquired assets of the failed First Republic Bank, which contributed to its 14.4% increase in total deposits year over year and 489-bps gain in market share during that time period, the highest increase among banks on the list.
Market Intelligence also ran an analysis capping deposits at $1 billion per branch to limit the impact of deposits consolidated from other markets. JPMorgan landed atop that list as the bank with the most deposit market share in California, from No. 3 last year.
Banks caught in the crosshairs of the bank failures saw large declines in their total deposits in the state. Among those, Western Alliance Bancorp. dropped to No. 16 on the list of banks with the most deposits in California after it saw a 20.3% decline in its deposits in the state year over year.
Western Alliance was one of the most affected regional banks in the wake of Silicon Valley Bank's failure, with $8 billion in deposit outflows on March 13 alone. The outflows quickly normalized, however, and the company reported deposit growth of $3.5 billion in the second quarter.
Comerica Inc. saw the largest year-over-year decline in deposit balances in the state among the top 20 banks and lost 28 bps in deposit market share over the year, but the bank still moved up to No. 12 in the state from No. 13 last year.
Community banks also gain market share
All but two of the state's largest community banks recorded year-over-year deposit market share gains, even as many saw deposit balance declines.
Royal Business Bank, the bank subsidiary of RBB Bancorp, saw the largest year-over-year increase in deposit balances at 23.2%. It jumped to No. 50 in deposit market share in the state from No. 66 last year.
Meanwhile, Big Poppy Holdings Inc.'s bank subsidiary, Poppy Bank, saw the largest year-over-year market share gain at 8 bps.
