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Deposits at US lenders fell sharply for a second week amid financial turmoil triggered by the collapse of several banks this month.

Commercial bank deposits dropped by $125.7 billion in the week ended March 22, marking the ninth-straight period of declines, according to data released Friday by the Federal Reserve.

At domestically chartered banks, deposits fell $84 billion, reflecting a decrease at the 25 largest institutions dropped. Deposits at small banks increased.

The report, known as H.8, includes the first two weeks following the demise of Silicon Valley, and it will take time to assess the full impact of the ensuing financial turmoil and outflow of deposits from mid-size and small banks.

Figures released Thursday showed that banks reduced their borrowings from two Fed backstop lending facilities in the most recent week, a sign that liquidity demand may be stabilizing.

The biggest 25 domestic banks account for roughly three-fifths of lending, although in some key areas — including commercial real estate — smaller banks are the most important providers of credit.

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Overall lending fell by $20.4 billion to $12.15 trillion, due to a decline in commercial and industrial loans. Residential and commercial real estate loans, as well as consumer loans, increased from the prior week.

By bank size, lending dropped at larger banks and picked up at smaller firms. Lending conditions were already tightening before the banking crisis after a year of interest-rate hikes by the Fed, and economists anticipate access to credit will get even more difficult for businesses and households.
Other key data points:
  • Bank credit decreased by more than $76 billion
  • Consumer loans rose by $4 billion
  • Commercial and industrial lending — considered a gauge of economic activity — declined nearly $30 billion
  • Total assets, which includes vault cash, as well as balances due from depository institutions and the Fed, fell $123.5 billion
  • Total liabilities decreased $105.3 billion
US authorities responded to the bank failures within days to shore up confidence in the financial system, offering additional backstops for banks in need of liquidity.

Before that injection of support, the cash assets held by banks — as a share of their total assets — had fallen to the lowest levels in three years.

The Fed's report on assets and liabilities of commercial banks includes breakdowns of credit by destination — such as consumer, real estate and commercial loans — as well as categories based on bank size. For a list of banks commercial banks ranked by assets, click here.

The Fed noted in the report that figures from the week ended March 15 were revised to reflect the way FDIC bridge banks were incorporated in the small bank data.