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Stocks B / Berkshire Hathaway

URL:  https://boards.fool.com/i-may-not-of-explained-my-point-well-while-the-34053510.aspx

Subject:  Re: Maystery purchase Date:  11/4/2018  5:54 PM
Author:  Gator1984 Number:  239446 of 240601

I may not of explained my point well.

While the customer receives .01% on demand deposits, the cost to the bank is much more.

A branch system is very costly to maintain. Facility cost and staffing could exceed 100 Basis points of total average daily balances from deposits. But obviously the bank can't pay less than zero during what seems to be the ridiculously low rates of recent years. So, until the all in cost of deposits is well below market rates the banks will appropriately lag. The primary purpose of a branch system is to capture low rate deposits. Similar to the concept of float. So from where I sit, BAC and WFC net interest margins are still compressed and do not reflect the long term potential for normalized rates. Even paying .01% is too High. In this environment a start up branchless bank may have a lower cost of funds. As rates normalize, the traditional banks should flip this.
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