Washington area residents are keeping more money in the bank as looming government budget cuts add to economic uncertainty.
Deposits at Washington area banks rose to $157.2 billion, a 10.5 percent increase over last year, according to data released last week by the Federal Deposit Insurance Corp.
The data mirror a national trend in which Americans are saving more money even as interest rates hit record lows. The total amount of money in savings accounts rose about 5 percent to $6.9 trillion earlier this year, according to data released by the Federal Reserve.
Bert Ely, a banking expert based in Alexandria, said the increase in savings doesn’t necessarily mean Americans are better off now than they were last year.
“I think a lot of it is that people are getting more liquid, even as household net worth has declined,” Ely said. “Maybe they’re taking money out of the stock market or they’re selling assets.”
Capital One, which reported $28.77 billion in deposits as of June 30, ranked first in the Washington area following its $9 billion purchase of ING Direct in February. The McLean-based bank, which has 205 local branches, held 18.3 percent of the area’s deposits.
Wells Fargo, based in San Francisco, posted $21.76 billion in deposits and accounted for 13.8 percent of market share. Bank of America ($20.23 billion in deposits), SunTrust Bank ($16.42 billion) and BB&T ($13.15 billion) all maintained a strong footing in the region.
The growth in the Washington area outpaced the nation, where deposits rose about 8 percent to $8.95 trillion. Some analysts attributed the increase to consumers putting off big-ticket purchases for fear the economy could suddenly turn sour.
“People are not spending money,” said Lew Sosnowik, a banking analyst at Koonce Securities in Bethesda. “Instead of buying that refrigerator, they’re putting their money in the bank.”
Meanwhile, the number of branches in the area fell for the first time in eight years as banks looked to cut costs by consolidating locations. There were 11 fewer branches in the metropolitan area this year than there were last year, with 1,761 branches in the District, its Maryland and Virginia suburbs, and Jefferson County in West Virginia.
Bethesda-based Eagle Bank, which logged the region’s 10th largest share of deposits, was the highest-ranking community bank on the list. Deposits at the bank rose 29 percent in the past year to total $2.52 billion.
“I really think it’s due to the strength of our local economy,” said Michael T. Flynn, executive vice president and chief operating officer of the bank’s holding company. “Deposits are really just a reflection of the cash that’s flowing through the system here.”