According to new Federal Deposit Insurance Corporation (FDIC) data released Wednesday, US banks saw a 2.5% decline in total deposits in the first quarter of the year.
It was the largest recorded outflow the FDIC had registered since such data first began being collected in 1984.
During the January to March period, US banks saw $472 billion in deposit outflows, making it the fourth quarter in a row of industry outflows. Uninsured funds made up the bulk of the decline according to the FDIC, which noted that there was actually a $255.1 billion increase in insured deposits, despite the recent failures of several regional banks.
FDIC chair Martin Gruenberg said, “The more lasting effects of the industry’s response to that stress may not become fully apparent until we’ve received the second-quarter results.”
The report did not include First Republic Bank, which became the third major lender to collapse this year when it fell, on May 1st.
The FDIC also noted that its “problem list” of banks which were under closer observation had increased by four to 43 banks, and that the amount of total assets held by those banks increased to $58 billion.
Gruenberg warned that inflation, rising rates, and other economic pressures such as the decline in commercial real estate properties, continued to pose risks to the US banking sector.
On Wednesday, the S&P 500 bank index fell 2.6% after the report came out, hitting its lowest reading in two weeks. The DOW Jones Industrial Average fell 0.4%, or 130 points, as the Nasdaq fell 0.6%.
