By Wayne Heilman
Deposits in Colorado Springs-area financial institutions declined for a second consecutive year as consumers continued to spend some of the stimulus payments they received and saved during the COVID-19 pandemic, industry officials say.
The 1.8% drop in deposits for the year ended June 30 followed a 5.4% fall in the previous year, the largest in data available from the Federal Deposit Insurance Corp. and National Credit Union Administration. During the past two years, area deposits have declined by $1.35 billion, or 7.1%, to $17.7 billion, but deposits are still $4.2 billion higher than pre-pandemic levels, reflecting significant growth even after adjustments for increased population.
“There has been a drawdown in pandemic [-related] excess savings,” says Bill Craighead, director of the University of Colorado, Colorado Springs Economic Forum. “But median household income continues to show healthy growth.”
Deposits in financial institutions in the area, statewide and nationwide surged during the pandemic as government stimulus payments fueled double-digit percentage growth during both 2020 and 2021. That growth slowed in 2022, and deposits began declining last year as the pandemic became a memory and consumers resumed spending on restaurant meals, entertainment and travel as well as purchasing homes and vehicles.
The same trend has been happening statewide as bank deposits grew by $62.6 billion from 2019-22 to a record $205.3 billion and have since fallen by $22.3 billion, or 10.9%, in the past two years. U.S. bank deposits recovered with a 0.9% gain to $17.4 trillion after a 4.9% drop in the previous year. Much of the previous year’s national decline occurred in deposits above the $250,000 per account federal deposit insurance limit in the wake of three large bank failures.
Jim Swanson, president of Bank Strategies, a Golden-based bank consulting firm, says many banks haven’t been aggressive in retaining deposits amid weak loan demand, prompting consumers to shift funds to higher-yielding investments such as money market mutual funds. Investors also may have moved some funds into the stock market — the widely followed Dow Jones industrial average surged 13.7% during the 12 months ended June 30.
The largest decline in area and statewide deposits came at Wells Fargo, the largest bank in the area and the state. Wells Fargo has lost more than $700 million in area deposits and nearly $8 billion in statewide deposits during the past two years. Federal regulators last month ordered the California-based banking giant to tighten its efforts to combat money laundering and other illegal transactions as the bank continued to face increased scrutiny after a 2016 fake accounts scandal.
Wells Fargo is the second-largest area financial institution after Ent Credit Union, which boosted area deposits 4.6% to $5.5 billion in the 12 months ended June 30, the most growth of any of the area’s 10 largest institutions, as measured by deposits.
The area numbers do not include data on area deposits from Navy Federal Credit Union, which declined to provide a total for its three Colorado Springs branches. Two credit unions operating in the area merged with other institutions in the 12 months ended June 30 – Aventa Credit Union merged Feb. 26 with Blue Federal Credit Union, based in Cheyenne, Wyoming, and Harrison Federal Credit Union merged with Air Academy Credit Union on July 1, 2023.
