Bank deposits

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When it comes to banking, there are two New Yorks. One is New York County, the major world capital of finance that is closing in on a trillion dollars in deposits. The other is New York State minus New York County, which altogether boasts less than half that amount in deposits. Over the past decade, New York County’s share of all the bank deposits in the state has increased from 54.69 percent at the end of June 2005 to 66.61 percent at the end of June this year.

Much of the state’s remaining banking deposits outside New York County, moreover, is concentrated in the rest of New York City and its inner suburban counties (Nassau, Suffolk, Westchester and Rockland), and that proportion has been increasing, leaving the upstate portion of the state with a smaller proportional market share. New York City and its inner suburbs had 84.16 percent of the state’s total deposits in the middle of 2005.

This year they reached an astounding market share of 90.01 percent of the state’s deposits. In other words, the northern remainder of the state now has one dollar in bank deposits for very nine dollars in bank deposits in New York City and inner suburbs — yet another significant indicator of the ever-growing economic disparity between the Big Apple and the rest of the state. And remember that we’re not including all the wealth tied to the New York City economy deposited in the banks of northern New Jersey and western Connecticut.

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What of the mid-Hudson area, the southern part of the northern remainder of the Empire State? Like with other indicators, Orange, Dutchess and Ulster counties are doing less well in bank deposits than those parts of the state closer to New York City but better than most other parts of upstate. The proportion of the state’s bank deposits in these three counties dropped by a third from 2005 to this year. The three counties, with almost five percent of the state’s population, could boast $8.979 billion in deposits at the end of June this year, representing only a little over one percent of total state deposits.

 

Community banks depend more on deposits for their income than do non-community banks (traditionally, community banks are defined as having a maximum asset size of a billion dollars). The bigger banks are able to generate more non-interest income from a wider variety of sources. When interest rates are very low, as they have been since 2008, the smaller banks try to shift their earning strategies, relying in many cases on greater retained earnings.

The past year presented a mixed picture for the mid-Hudson region’s banks. Some banks, big and small, national and local, increased their deposits, while the data shows others recorded flat results.

The non-community megabanks like to move their money around. Of the big three, Bank of America performed best in attracting New York State deposits this past year, Wells Fargo was second and JP Morgan Chase third best. In the three-county mid-Hudson Dutchess-Orange-Ulster region, deposits at Bank of America grew rapidly, and at JP Morgan Chase moderately. Because $668.4 million in deposits stashed away for the past few years in a Wells Fargo bank in Kingston was moved away, mid-Hudson deposits in that non-community banking company declined; statewide, however, Wells Fargo deposits still increased by $2.6 billion.

Local performance in the tier lower in the non-community bank class was decidedly mixed. Citizens Bank, M&T and Sterling National deposits contracted. Key Bank was flat, and local TD Bank, Community Bank and First Niagara deposits were up.

 

Because they’re local, community banks have limited ability — as well as limited motivations — to move their money out of their communities into other communities. That characteristic incidentally makes it easier to see which community banks have been the more successful in attracting additional deposits.

Let’s look at the performance of Ulster County’s community banks in attracting deposits over the past year despite the low-interest environment. Catskill Hudson Bank, a commercial lender, recovered well from last year’s stumble in deposits and gained from there. Sawyer Savings Bank’s deposit base grew nicely. Rondout Savings, Wallkill Valley FS&L and Empire State Bank increased their deposit bases. Close to flat or flat in Ulster County were Ulster Savings, Rhinebeck Bank and Walden Savings.

The Bank of Greene County, a formidable presence in its own county, established a new office on Miron Lane in Ulster.

From 1984 to 2011, according to an FDIC study, the share of US banking assets held by community banks fell from 38 percent to 14 percent. Still, these banks remain important both nationally and in the Hudson Valley. They remain characterized by local ownership, local control and local decision-making.

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