Over the last year, several banks have paid up to attract deposits — a strategy that appears to be paying off.
At JPMorgan Chase & Co., U.S. branch deposits as of June 30, 2019, were down 0.4% from the previous year, according to recently released data from the Federal Deposit Insurance Corp., the bank's first decline since the 2000 release. However, the bank has seen significant growth in foreign deposits, and the FDIC data was significantly affected by a corporate restructuring. The FDIC does not account for intra-company transactions in the data, and the bank merged its credit card unit, Chase Bank USA NA, which had $42 billion of deposits last year, into its parent company in May 2019. Looking at all deposits reported on a GAAP basis, the bank reported 5.0% year-over-year deposit growth in the second quarter.

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Still, JPMorgan and the two other banks with national retail networks — Bank of America Corp. and Wells Fargo & Co. — appear to be losing ground to banks that have paid aggressive rates to attract deposits. Per the FDIC data, all three national banks saw declines in their market share, led by JPMorgan's 46-basis-point dip, followed by a 25-basis-point decline for Wells Fargo and a 12-basis-point slip for Bank of America.
By contrast, bank holding companies that sought to win deposit share with market-leading rates appeared to have accomplished their goals. Goldman Sachs Group Inc., which has found success with its direct-to-consumer Marcus brand, reported 9.6% year-over-year growth. Other high-rate payers reported growth in excess of 10% with Ally Financial Inc. at 17.6% and Synchrony Financial at 11.1%.
Several large banks reported strong growth. Citigroup Inc., which has more than $1 trillion in assets like the national banks but does not have the national branch footprint, reported a robust 8.0% year-over-year increase in its branch deposits. And Capital One Financial Corp. appears to have found success with its above-average rates and a cafe-style approach to some of its branches, booking a 7.9% year-over-year increase in deposits.
The national banks appear content to keep their rates near zero and rely on technology offerings to maintain core deposits. A Sept. 16 research note from analysts at Jefferies Group LLC showed the national banks — especially Bank of America — have been able to grow transaction accounts that pay depositors only nominal amounts for the funds. The report showed that Bank of America grew its negotiable order of withdrawal and other transaction accounts by $60.9 billion year over year as of the second quarter. JPMorgan increased such accounts by $18.3 billion, and Wells Fargo posted $2.4 billion of growth in the category. The Jefferies note also shed additional light on the mismatch between JPMorgan's decline in U.S. branch deposits despite growing total deposits: foreign deposits posted the most growth of any category, up $38.0 billion from the previous year.
Geographically, New York was the state with the most deposits in the nation with $1.74 trillion of branch deposits, up 3.1% from the previous year. South Dakota posted the largest increase as branch deposits jumped 14.7% over the previous year. Banks can consolidate deposits at branches irrespective of the depositor's location, so geographic trends can be skewed by credit card companies or other banks with national footprints but few branches such as Goldman Sachs, which has just six offices.
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