Bank Investors, This Is Going to Hurt

Deposit Growth

On a positive note, the surviving big banks are gaining deposit market share as investors begin to dump their deposits into what are perceived as safer banking institutions.

Organic retail bank deposits at BofA rose $21 billion -- which excludes the $35 billion in deposits the bank gained from its Countrywide acquisition -- during the third quarter. The bank estimates the gain was "almost three times the industry average," it said.

BofA management "believes that the strong deposit growth seen in the [third quarter] and over the first few days of the [fourth quarter] was the result of a flight to safety by depositors and that this shift is producing faster-than-[expected] organic growth in both retail and commercial customers, " Whitney writes in a note discussing BofA's earnings release.

Indeed, from Sept. 15 through Sept. 25, the day WaMu was seized by regulators, the Seattle-based thrift had deposit outflows of $16.7 billion, according to the Office of Thrift Supervision.