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

Bank

A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...

 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

Market share

Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...

 of commercial bank

Commercial bank

After the implementation of the Glass–Steagall Act, the U.S. Congress required that banks engage only in banking activities, whereas investment banks were limited to capital market activities. As the two no longer have to be under separate ownership under U.S...

s and savings and loan organizations calculated by the Federal Deposit Insurance Corporation

Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...

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

Credit union

A credit union is a cooperative financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members...

s, and the cash accounts 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
  Stocks
  Stocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
  
  , bonds
  Bond (finance)
  In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
  
  , mutual fund
  Mutual fund
  A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
  
  s, and annuities. 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 accounts. These businesses are as profitable or even more so to the financial services company then 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 depositers 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, and insurance
  Insurance
  In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
  
  .

Use in anti-trust 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 (ie. sell off branches and customer accounts) enough branches to get them within the guidelines.