SQUARE BANK IN ROUND HOLE

From the Editors of American Banker

Deposit Drawdown Puts Squeeze on the Weakest

"Just several weeks ago, executives at several large and midsize banks were discussing the need to shrink swelling deposits in response to the lack of loan demand.

But data released by the Federal Deposit Insurance Corp. last week showed that increasing amounts have been leaving the banking industry. Domestic deposits fell in consecutive quarters for the first time and were down $29 billion at midyear, or 38 basis points, from Dec. 31. The lion's share of that, $24 billion, vanished in the second quarter — a record since the FDIC started tracking the data in 1992.

How can the numbers and the executives' comments square? "