The deposit market share is a way of measuring the size and performance of a

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

in the United States

Definition

In the simplest sense of the phrase, "deposit market share" is defined as the amount on deposit at a particular bank divided by the total amount on deposit at all banks. In practice however, the term "deposit market share" is used to refer to the deposit market share of

commercial bank A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with co ...

s and savings and loan organizations calculated by the

Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures cr ...

(FDIC). The FDIC calculations do not include money deposited at

credit union A credit union, a type of financial institution similar to a commercial bank, is a member-owned nonprofit organization, nonprofit financial cooperative. Credit unions generally provide services to members similar to retail banks, including depo ...

s, and the

cash account In business practice, cash account refers to a business-to-business or business-to-consumer account which is conducted on an immediate payment basis i.e. no credit is offered. In accounting practice, "cash account" or "cash book" refers to a da ...

s at brokerage firms.

Importance of this metric

This metric is considered by many to be an important banking performance measure although many regard it as is misleading for the following reasons: *FDIC insured deposits have been for the past twenty years growing smaller and smaller as bank customers have elected to put their funds into stocks, bonds,

mutual fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...

s, and

annuities In investment, an annuity is a series of payments made at equal intervals.Kellison, Stephen G. (1970). ''The Theory of Interest''. Homewood, Illinois: Richard D. Irwin, Inc. p. 45 Examples of annuities are regular deposits to a savings account, m ...

. The amount in mutual funds is double the amount in bank accounts, the amount of money in Money Market Funds is the same as in

checking account A transaction account, also called a checking account, chequing account, current account, demand deposit account, or share draft account at credit unions, is a deposit account held at a bank or other financial institution. It is available to the ...

s. These businesses are as profitable or even more so to the financial services company than normal bank accounts, so if customers are moving money from a particular bank's normal bank accounts to bank-owned mutual funds, the bank does not lose anything. If one was only looking at deposit market shares however, it would appear to shrink. *Deposit market share does not include credit unions. *Deposit market share gives no indication as to how many other financial products and services a particular bank's depositors might be buying from that bank. For example, Bank X might have a 10% deposit market share, yet if all those depositors simply have checking accounts and nothing else with that Bank, it would make nowhere near as much money as Bank Y in the same market, who might have 2% deposit market share yet successfully sell mutual funds,

mortgages A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any ...

, and

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

Use in antitrust proceedings

When two banks merge, a survey is done to ensure that the combined deposit market shares will be no larger than 25% in a particular state, or 10% nationally. If one or both of those percentages are higher than allowed, the banks can elect to still do the merger but they would need to divest (i.e. sell off branches and customer accounts) enough branches to get them within the guidelines. {{DEFAULTSORT:Deposit Market Share Bank deposits