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Bank of America's Deposits Shrink, Bucking Big Bank Growth Trend

The company's total number of branches (including acquired Merrill Lynch branches) declined to 5,401 as of June 30 from 5,660 in June 2012 and 6,202 in June 2008. That is a very significant decline in branch count, perfectly illustrating the effect of the cost-cutting program.

BAC's total deposits declined by 1.6% over the 12-month period ended June 30 to $1.147 trillion. That's still a huge number, increasing 48% from five years earlier. That growth in part reflects movement of brokerage clients' cash to insured deposits, and also the incredibly high level of overall liquidity brought about by Federal Reserve policy.

Most of the recent headlines on monetary stimulus policy have focused on the Fed's monthly bond purchases of $85 billion, and the eventual "tapering" of the purchases, which have been meant to hold-down long-term interest rates. But the central bank's main policy tool is the short-term federal funds rate, which has been held in a range of zero to 0.25% since late 2008. With money market funds paying next to nothing, customers have little incentive to park their cash outside of banks.

Bank of America is continuing its long, slow climb to a decent level of profitability, and the continued recovery in home prices, together with the "Project New BAC" have the company finding favor with investors.

Bank of America's shares closed at $14 Thursday and traded for 10.3 times the consensus 2014 earnings estimate of $1.36, among analysts polled by Thomson Reuters. That's the same forward P/E as Wells Fargo, which has been the most profitable among the big four over the past five years.

Wells Fargo

Wells Fargo was in second place with a 10.3% U.S. deposit market share as of June 30, increasing from 9.96% in June 2012 and 10.19% in June 2008 (which includes Wachovia's deposits). The company's total deposits of $971.940 billion as of June 30 were up 9% from a year earlier and 36% from June 2008 (again, including Wachovia).

Meanwhile, Wells Fargo lowered its branch count to 6,297 as of June 30, from 6,316 in June 2012, and a total of 6,741 Wells Fargo and Wachovia Branches, in June 2008.
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