Traverse City Business News | Cash Flood: Bank, credit union deposits up 58% from COVID-relief stimulus payments

Cash Flood: Bank, credit union deposits up 58% from COVID-relief stimulus payments

Local banks and credit unions are flooded with cash from individual and business customers who socked away federal stimulus payments during the COVID pandemic.

Bank deposits in Grand Traverse County have jumped 58% since the months before the start of the pandemic, from $2.4 billion on June 30, 2019 to $3.8 billion on the same date this year. That’s according to an annual report on deposits by the Federal Deposit Insurance Corp.

There are 11 banks serving customers from 30 offices in Grand Traverse County. That’s one less bank than a year ago, the result of Columbus, Ohio-based Huntington Bank acquiring Detroit-based TCF Bank.


“Businesses have been having a good year, and the money supply is up dramatically in the pandemic,” said Norm Plumstead, president and CEO of Honor Bank. “We can thank the government for (the boost in money supply), for better or worse.”

Local credit unions also are holding record amounts of depositors’ cash. TBA Credit Union, for example, had deposits of $222.6 million on June 30, up 17% from $190.4 million on June 30, 2019.


“We’ve had tremendous deposit growth,” said TBA President and CEO Karen Browne, adding that the deposits are leveling off as enhanced federal unemployment benefits and other COVID-related programs have wound down.

But Browne and others predict they’ll see continued healthy deposit growth into the foreseeable future as the economy slowly recovers from the pandemic.

Deposits at 4Front Credit Union jumped from $466.3 million on June 30, 2019 to $754.7 million on the same date this year, a 62% increase.

“We’re just growing,” said Andy Kempf, president and CEO of 4Front. “We’ve had membership growth of 7% this year and we’ve baked in 10% deposit growth for 2022.”


Local credit union deposit information was taken from financial statements submitted to the National Credit Union Administration. The NCUA, which regulates credit unions, does not produce an annual deposit roundup report similar to the FDIC deposit report.

Deposits made in Grand Traverse County at Cincinnati-based Fifth Third Bank jumped from $547.2 million in 2019 to $734.2 million this year, a 34% increase. But unlike the 10 other banks collecting deposits in the county, Fifth Third saw deposits this year shrink from $810.1 million in 2020.

There’s some good news in that decline. Much of the deposit shrinkage is a result of Fifth Third’s business customers starting to draw down cash and fund operations as the economy improves, said Autumn Gillow, Fifth Third’s Northern Michigan market executive.

“While there is certainly a lot of excess liquidity on balance sheets, we are starting to see some movement in spending” by business customers that make up much of Fifth Third’s deposit base, she said.

Business customers typically use about 40% of their credit lines, but that fell by half during the height of the COVID pandemic, Gillow said. Credit line utilization is now about 28%, she said.

Fifth Third also has been offering customers alternative investments with higher returns than regular deposit accounts. Those investments are not included in FDIC deposit data.


Gillow said Fifth Third also has lost some business customers that were acquired by out-of-town businesses.

“Over the last 12 to 24 months we’ve seen a significant increase in merger and acquisition activity, with the acquiring company being located outside the region,” she said. “In these cases, the banking and deposits often follow the acquiring company.”

Fifth Third has been the local deposit leader for years. But last year’s acquisition of TCF Bank by Huntington Bank has toppled Fifth Third from its lofty perch. Huntington now controls 40.7% of all bank deposits in Grand Traverse County.

Fifth Third has fallen to second place, with a 19.5% deposit market share.

Huntington also cracked the billion-dollar mark with $1.53 billion in local deposits as of June 30, up 53% from $999 million in combined Huntington-TCF deposits in 2020.

The bank declined to make Scot Zimmerman, its Northern Michigan region president, available for an interview. Huntington announced in November  that Zimmerman will be leaving the bank at the end of the year when the Northern Michigan region is consolidated into the Great Lakes Bay and Mid-Michigan regions, headed by Nick Florian.

Bryan Carson, Huntington’s Columbus-based executive vice president for deposit products, cited the bank’s wide array of offerings and its number of branches, in addition to COVID impacts, for its rapid growth in northwest Michigan.

“Location still matters,” he said, despite a broad shift by consumers to online banking. “(As a result of the acquisition), (w)e have 35% of the branches in the market.”

Some of Huntington’s competitors say they’re unfazed by Huntington more than tripling its local deposit base after swallowing TCF last year.

“We provide exceptional service to our clients and we’ll continue to do that,” Gillow said. “We’re hiring new people. We’re doing what we’ve always done.”

Leaders of several smaller, independent banks said they’re attracting new customers tired of big-bank merger mania that has in some cases resulted in the loss of local decision-making on loans and other banking services.

“It’s well known that there has been­­–and continues to be–widespread customer dissatisfaction with the ongoing merger/acquisition activity,” said Doug Zernow, chief marketing officer at State Savings Bank. “After a while, customers get fed up and start looking for alternatives.

“A lot of them have found their way to us.”

State Savings Bank, which entered the Traverse City market in 2018, has tripled Grand Traverse County deposits in the past two years, from $15.9 million in 2019 to $48.1 million as of June 30.

The bank also is growing in Leelanau County, where it recently received regulatory approval to expand a loan office in Suttons Bay into a full-service branch, Zernow said.

Ludington-based West Shore Bank also expanded to Traverse City in 2018 with a single branch and is building a second, 40,000 square-foot office at the intersection of Eighth Street and Boardman Avenue.

West Shore has quadrupled Grand Traverse County deposits since 2019, from $9.7 million that year to $38.8 million on June 30.

Van Slyke

Syd Van Slyke, West Shore senior vice president and local market leader, attributed some of the increase to customers depositing their pandemic-related stimulus funds. He added that the bank also has experienced “a significant amount” of new, non-COVID-related business over the past 24 months.

“We’ve found that the changes taking place at other local institutions have left a void for good, solid full-service community bank,” Van Slyke said.

Banks need deposits to fund loans. But the explosion of deposits resulting from the COVID pandemic has left many struggling to find enough borrowers to deploy all the cash.

Auto loans, for example, are way down because of a microchip shortage that has cut auto production and left dealers with few new cars and trucks to sell.

“That’s a big part of our business,” TBA’s Browne said.

The wild card is whether recent price inflation will continue, pushing the Federal Reserve to boost interest rates. Such a move could further depress lending.

But several local financial institution leaders are forecasting little, if any, movement in rates over the next year.

Higher interest rates would hike borrowing costs for the debt-burdened federal government and hurt the U.S. economy, 4Front’s Kempf said.

“We don’t see the Fed raising rates,” he said. “They won’t be able to do it.”

Browne said the boost in bank deposits is one element in a fundamental change in the U.S. economy wrought by COVID.

“The pandemic has completely changed everything,” she said. “I thought we’d be back to normal in a short period of time, but I don’t think we’ll ever be back to what we were pre-COVID.”




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