Loan Growth Trends for Large Banks and Community Banks Diverge

With the most recent H.8 reporting by the Federal Reserve Bank, we continue to see divergence between loan growth at the largest 25 banks and community banks and all other banks into January 2018.

Large banks continue to show flat line loan growth recently while the remaining banks - including community banks - continue to show solid growth.

With the economy entering its 104th month in this current economic expansion, the expansion is within 2 months of the second longest in recent history and 16 months shy of the longest expansion. With no near term signs that the expansion will halt, it is expected to continue moving toward that record.

However, bank lending is showing some near-term flattening, especially among the largest banks - not unusual for this point in an economic expansion. It remains to be seen how the tax cuts will impact such lending activities as the benefits of the tax cuts begin to kick in over the next few quarters.

Below is our summary of key categories of the banking industry balance sheets as sourced from the Fed's H.8 "Assets and Liabilities of Commercial Banks in the United States". Note that in future periods, the Large Bank figures will begin to be impacted by the balance sheet size limitation imposed on Wells Fargo through the enforcement action of the Federal Reserve Bank (Wells Fargo enforcement action) as Wells Fargo accounts for approximately 18 percent of this group.

On the deposit front, deposit growth is flat at the largest banks with community and other banks showing moderating trends.