Deposits continue to climb at our nation’s banks, but the growth has slowed considerably since the early days of the pandemic. Deposit growth in the first and second quarters of 2020 was 7½% or better whereas second quarter of 2021 deposit growth was just 1½%.
Looking at the year-over-year numbers (from June 30, 2020 to June 30, 2021), average deposit growth for the bank industry was just shy of 10½%. The banks listed on page 7, however, each exceeded 70%. We want to take a closer look at a couple of them.
In March, we reported that 5-Star Border Bank, Fargo, ND (JRN 38:09) had acquired Union State Bank of Fargo last December. As a result of the acquisition, Border Bank’s assets went from $142 million to $846 million. Deposits grew more than 550%, but loans grew less, just 467%. That caused its loan-to-deposit ratio to drop by 10%.
This is a perfect example of why CD rates are staying so low. Bank loans are not growing anywhere near as fast as deposits. Banks simply do not need the deposits.
Every rule does have has its exception. 4-Star Barwick Banking Company, Barwick, GA—once GA’s smallest bank—saw an opportunity to expand into the lucrative Saint Augustine and Daytona Beach, FL markets. After serving a community of fewer than 400 residents through its single office and old-time ledgers since 1907, a group of investors led by veteran banker, Jim Bange (now CEO), acquired a controlling interest in December 2019.
With roots in Northeast Florida, Mr. Bange and his team made quick work of their expansion plans. A new location has already opened in St. Augustine and another is slated to open early next year in Daytona Beach. He made even quicker work of digitizing the bank. Gone are the old ledgers as a new digital day has dawned at Barwick.
Between Border and Barwick on page 7, you will find 5-Star Park State Bank, Duluth, MN. We reported in August (JRN 38:30) that the average net interest margin at our nation’s banks had contracted to its lowest level on record (2.56%) at March 31, 2021. Park State Bank was one listed that week because it far exceeded that ratio at 6.14%.
We also reported (JRN 38:18) that American Bank of the North, Nashwauk, MN, had 26% deposit growth in the last three quarters of 2020. This may look like a jigsaw puzzle, but here are how the pieces fit.
On May 22, 2021, two 5-star community banks: the $267 million asset Park State Bank , Duluth, MN and the $162 million asset Lake Bank, Two Harbors, MN merged into the $672 million 4-Star American Bank of the North. However, American Bank of the North retained the FDIC certificate # and name of Park State Bank. We are left with 5-Star Park State Bank, a $1.1 billion asset bank headquartered in Duluth (Cert #8851).
We would also like to welcome three new (de novo) banks that opened their doors in the second quarter. Two are looking for deposits.
3½-Star Climate First Bank, St. Petersburg, FL, opened its doors on June 1st with over $50 million in assets. Climate First Bank pledges 1% of its profits to environmental causes. Here, eco-conscious people and businesses can find dedicated loan options (such as solar panel retro-fitting) to help combat climate change. It is currently offering special CD rates to Florida businesses only 1Yr=0.40%; 15Mo=0.45% (727)335-0500.
Opened on April 12th, 3½-Star First Bank of Central Ohio, Worthington, OH is also offering Grand Opening CD Special rates. First Bank’s CDs are good nationwide and it has been added to our rate pages. The specials include a 12 Month CD with a rate of 0.648% and an APY of 0.65% and an 18 Month CD at 0.747%/0.75% APY, but it offers other terms as well (614)992-6700.
3½-Star Integrity Bank for Business, Virginia Beach, VA opened its doors on May 3rd. Initially it will offer lending services to local businesses and professionals. Integrity raised $23 million via pre and post opening public offerings which the local business community heartily embraced. It is not offering CDs at this time and when it does, we suspect they will be local only.
That brings the year-to-date total de novos to six with seven more in the wings that have already received FDIC approval for deposit insurance. They are:
- 59239 Agility Bank, N.A., Houston, TX;
- 59184 Bank of St. George, UT;
- 59273 Gainey Business Bank, Scottsdale, AZ;
- 59261 Highlands Banking Company, NC;
- 59204 Legacy Bank, Murietta, CA;
- 59247 OUR Community Bank, Hialeah, FL; and
- 59203 Scottsdale Community Bank, AZ.