A single week saw small US banks lose $109 billion in deposits

A banking crisis that caused regulators to take two lenders in short succession caused bank clients to relocate their savings from smaller American companies to larger ones.

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According to Moody's Corp. in a research study, using figures issued Friday, weekly data gathered by the Federal Reserve revealed that large banks earned $120 billion in assets while their smaller rivals lost $109 billion. The total deposits of small banks decreased 1.5% from the prior year in the week ending March 15; this was the first yearly loss since 1986.

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In a time of "very massive funding strains and payment runs at some banks following the failings of Silicon Valley Bank and Signature Bank," the most recent figures "are of specific importance as they include advancements in the income statement of the US banking system," according to Moody's analysts Jill Cetina and David Fanger.

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On March 10, Silicon Valley Bank of SVB Financial Group failed and was placed under Federal Deposit Insurance Corp. receivership. Two days later, New York's Signature Bank has become the third-largest banking collapse in American history, and Flagstar Bank of New York Community Bancorp eventually took over its deposits as well as certain of its loans. By agreeing to purchase Silicon Valley Bank on Sunday, First Citizens BancShares Inc. elevated the Raleigh, North Carolina-based company to the top 15 US banks.

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When international branches and agencies are taken into account, deposits across US lenders appear to have moved not only from banks to their larger counterparts but also to money-market mutual funds, according to the Moody's report. The 25 largest banks are included in the large corporations, while all banks rated lower are included in the small domestically chartered institutions.

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According to Moody's, non-seasonally adjusted Fed data indicate a $53 billion loss in deposits in the US banking system for the week, although Investment Company Institute data on balances in US money-market mutual funds for the same time period show an increase of $121 billion.