III - All Sectors

BANKING

TOP TEN BANK AND THRIFT DEALS ANNOUNCED IN 2006 (1)

($ millions)

Rank	Buyer (Location)	Target (State)	Deal value (2)
1	Wachovia Corp. (NC)	Golden West Financial (CA)	$25,473.8
2	Bank of New York Co. (NY)	Mellon Financial Corp. (PA)	16,864.4
3	Capital One Financial Corp. (VA)	North Fork Bancorp. (NY)	14,567.9
4	Regions Financial Corp. (AL)	AmSouth Bancorp. (AL)	10,060.3
5	PNC Financial Services Group (PA)	Mercantile Bankshares Corp. (MD)	6,027.1
6	Huntington Bancshares Inc. (OH)	Sky Financial Group Inc. (OH)	3,592.1
7	Bank of America Corp. (NC)	U.S. Trust Corp. (NY)	3,300.0
8	TD Bank Financial Group (Canada)	TD Banknorth Inc. (ME)	3,200.6
9	JPMorgan Chase & Co. (NY)	BONY Retail Banking Business (NY)	3,100.0
10	Banco Bilbao Vizcaya Argentaria SA (Spain)	Texas Regional Bancshares Inc. (TX)	2,164.6
(1) Deals where the entire operation of the bank or thrift is acquired by the buyer, including all property, assets and charters. At least one of the companies involved is a U.S.-domiciled company. List does not include terminated deals. (2) At announcement. Source: SNL Financial LC.

TOP TEN FEDERALLY CHARTERED AND STATE-CHARTERED BANKS BY ASSETS, 2007 (1)

($000)

Rank	Federally chartered bank	Total assets	State-chartered bank	State	Total assets
1	JPMorgan Chase Bank, National Association (2)	$1,318,888,000	SunTrust Bank	GA	$175,107,526
2	Bank of America, National Association (2)	1,312,794,218	Regions Bank	AL	137,049,763
3	Citibank, National Association (2)	1,251,715,000	State Street Bank and Trust Company	MA	134,001,964
4	Wachovia Bank, National Association (2)	653,269,000	Branch Banking and Trust Company	NC	127,698,351
5	Wells Fargo Bank, National Association (2)	467,861,000	The Bank of New York	NY	115,672,000
6	Washington Mutual Bank (3)	325,808,657	Merrill Lynch Bank USA	UT	78,133,893
7	U.S., Bank National Association (2)	232,759,503	Manufacturers and Traders Trust Company	NY	64,072,546
8	HSBC Bank USA, National Association (2)	184,491,526	Comerica Bank	TX	62,539,056
9	FIA Card Services, National Association (2)	161,691,777	Bank of the West	CA	61,829,845
10	National City Bank (3)	138,755,343	Fifth Third Bank	OH	61,450,273
(1) As of December 2007. (2) Chartered by the Office of the Comptroller of the Currency. (3) Chartered by the Office of Thrift Supervision. Source: Federal Deposit Insurance Corporation.

PROFITABILITY

In their efforts to maximize profits, commercial banks and other depository institutions must balance credit quality and future economic conditions with liquidity needs and regulatory mandates.

PROFITABILITY OF SAVINGS BANKS,
COMMERCIAL BANKS AND CREDIT UNIONS, 2003-2007

	Return on equity		Return on average assets
Year	Savings banks	Commercial banks	Credit unions
2003	13.66%	15.31%	0.99%
2004	10.87	13.74	0.92
2005	10.38	12.91	0.85
2006	8.70	13.06	0.82
2007	2.71	9.29	0.65
Source: Office of Thrift Supervision; Federal Deposit Insurance Corporation; National Credit Union Administration.

NET INCOME OF SAVINGS INSTITUTIONS,
COMMERCIAL BANKS AND CREDIT UNIONS, 1998-2007

($ millions)

(1) FDIC-insured.
(2) Federally insured state-chartered credit unions.

Source: Federal Deposit Insurance Corporation; National Credit Union Administration.

In 2007 net income for commercial banks fell 22.4 percent, following 12.5 percent growth the previous year. In contrast, net income of savings banks fell 65.0 percent, compared with a 14.4 percent decrease in 2006. Net income of credit unions fell 20.6 percent in 2007, following a 2.6 percent drop in 2006.

ASSETS

FINANCIAL ASSETS OF BANKING INSTITUTIONS,
1980-2007

($ billions, end of year)

Year	Commercial banking	Savings institutions	Credit unions
1980	$1,481.7	$792.4	$67.6
1990	3,337.2	1,323.0	217.2
2000	6,468.7	1,217.7	441.1
2004	8,559.9	1,649.6	654.7
2005	9,320.1	1,789.4	685.7
2006	10,202.9	1,714.9	716.2
2007	11,194.1	1,815.0	758.7
Source: Board of Governors of the Federal Reserve System, June 5, 2008.

Assets of commercial banks grew 9.7 percent from 2006 to 2007. Credit unions assets grew 5.9 percent and savings institutions assets grew 5.8 percent.

CREDIT MARKETS

Until about 1950, commercial banks dominated the credit market. While depository institutions continue to be the leading holders of credit assets, asset shares of federal mortgage pools, government-sponsored corporations and asset-based securities issuers have risen gradually over the past two decades.

CREDIT MARKET ASSET HOLDINGS, 2003-2007 (1)

($ billions, amount outstanding, end of year)

	2003	2004	2005	2006	2007	Percent of total, 2007
Total credit market assets held	$34,460.9	$37,604.5	$40,944.6	$44,814.9	$48,857.2	100.0%
By financial sectors	25,938.1	27,884.0	30,258.2	32,942.3	35,797.7	73.3
Monetary authority	666.7	717.8	744.2	778.9	740.6	1.5
U.S.-chartered commercial banks	5,390.6	5,961.8	6,469.7	7,122.7	7,638.7	15.6
Foreign banking offices in the U.S.	490.3	513.3	657.8	761.6	963.3	2.0
Bank holding companies	36.4	36.4	32.2	35.6	58.7	0.1
Banks in U.S.-affiliated areas	76.9	90.8	101.0	99.3	96.4	0.2
Savings institutions	1,293.9	1,417.4	1,616.7	1,518.6	1,584.3	3.2
Credit unions	516.6	556.4	592.6	622.7	657.9	1.3
Property/casualty insurance companies	625.2	698.8	765.8	813.5	840.0	1.7
Life insurance companies	2,488.3	2,661.4	2,765.4	2,806.1	2,890.8	5.9
Private pension funds	646.5	646.1	690.6	704.6	738.2	1.5
Public pension funds	721.1	743.5	769.4	854.0	895.9	1.8
Money market mutual funds	1,471.3	1,346.3	1,340.8	1,560.8	1,951.5	4.0
Mutual funds	1,506.4	1,623.0	1,747.1	1,932.0	2,203.1	4.5
Closed-end funds	152.6	163.6	165.1	171.8	172.0	0.4
Exchange-traded funds	4.5	8.2	15.0	20.7	33.5	0.1
Government-sponsored enterprises	2,564.2	2,613.0	2,543.9	2,590.5	2,829.5	5.8
Agency- and GSE (2)- backed mortgage pools	3,326.7	3,374.6	3,541.9	3,837.3	4,463.7	9.1
ABS issuers	2,081.5	2,497.7	3,171.3	3,897.1	4,145.7	8.5
Finance companies	1,204.9	1,419.8	1,537.1	1,626.8	1,636.6	3.3
Real Estate Investment Trusts	97.5	200.1	267.0	324.5	271.4	0.6
Brokers and dealers	424.1	394.9	477.2	583.4	803.1	1.6
Funding corporations	152.0	198.9	246.4	279.9	182.9	0.4
By domestic nonfinancial sectors	4,686.6	5,085.8	5,498.0	5,832.2	6,192.3	12.7
By the federal government	273.8	276.5	273.8	277.9	288.3	0.6
By others, foreign	3,836.1	4,634.7	5,188.3	6,040.5	6,867.2	14.1
(1) Excluding corporate equities and mutual fund shares. (2) Government-sponsored enterprise. Source: Board of Governors of the Federal Reserve System, June 5, 2008.

EMPLOYMENT IN THE BANKING INDUSTRY, 2003-2007

(000)

Year	Commercial banks	Savings banks	Credit unions	Total
2003	1,280.1	246.3	222.1	1,748.5
2004	1,280.8	243.2	227.5	1,751.5
2005	1,296.0	238.3	234.9	1,769.2
2006	1,322.9	236.7	242.4	1,802.0
2007	1,345.8	229.3	247.4	1,822.5
Source: U.S. Department of Labor, Bureau of Labor Statistics.

Within the banking industry, employment at credit unions grew fastest in 2007, up 2.1 percent from 2006.

BUSINESS LENDING BY LOAN SIZE AND SIZE OF BANK, 2008 (1)

	Value of loans ($ millions)
Size of loans ($000)	Large banks (2)	Small banks
$3 to $99	$1,584	$1,255
$100 to $999	7,128	2,814
$1,000 to $9,999	12,994	2,120
$10,000 and over	16,103	560
(1) Based on a sample of 348 domestically chartered commercial banks, as of May 5-9, 2008. (2) As of March 31, 2003, assets of large banks were at least $3.7 billion. Source: Board of Governors of the Federal Reserve System.

COMMUNITY DEVELOPMENT LENDING

The Federal Community Reinvestment Act requires commercial banks and savings institutions with total assets of $1 billion to report data regarding their small business and small farm lending and community development lending. In 2006 a total of 1,028 lenders reported on their originations and purchases of small business and small farm loans. In 2006 these institutions originated or purchased about 12.6 million small business loans, totaling $306 billion, and almost 209,000 small farm loans, totaling almost $12.5 billion.

COMMUNITY DEVELOPMENT LENDING, 2006 (1)

($ billions)

	Size of loans						All loans		Loans to firms with revenues of $1 million or less
	$100,000 or less		$100,001 to $250,000		More than $250,000
	Total	Per-cent	Total	Per-cent	Total	Per-cent	Total	Per-cent	Total	Per-cent
Originations	$131.7	41.8%	$47.4	15.1%	$135.7	43.1%	$314.8	100.0%	$143.1	45.5%
Purchases	0.9	26.6	0.5	16.1	1.9	57.2	3.4	100.0	0.4	10.6
Total	$132.6	41.7%	$47.9	15.1%	$137.6	43.2%	$318.1	100.0%	$143.5	45.1%
(1) As per the Community Reinvestment Act, enacted in 1977 to encourage banks to help meet the needs of the communities in which they operate, including low and moderate income neighborhoods. Source: Federal Financial Institutions Examination Council.

BANK BRANCHES

Consolidation has substantially reduced the number of commercial banks but has not reduced consumers’ access to their deposits as banks continue to add branches and the number of ATMs continues to grow. However, there are fewer savings institutions than in 1995, both in terms of institutions and branches, and the number of credit unions dropped by 29 percent from 1995 to 2007.

ASSETS OF FOREIGN BANKING OFFICES IN THE UNITED STATES, 2003-2007 (1)

($ billions, end of year)

	2003	2004	2005	2006	2007
Total financial assets	$750.2	$632.7	$781.5	$785.2	$1,003.9
Reserves at Federal Reserve	0.9	0.7	0.9	0.6	1.0
Total bank credit	599.2	606.3	792.1	946.8	1151.4
U.S. government securities	86.7	79.6	78.8	81.9	87.5
Treasury	33.7	27.8	27.9	27.1	30.6
Agency- and GSE (2)-backed securities	53.0	51.8	50.9	54.8	56.9
Corporate and foreign bonds	159.8	182.2	262.8	292.5	369.5
Total loans	352.8	344.5	450.6	572.3	694.4
Other bank loans	225.7	234.0	294.7	361.8	466.8
Mortgages	17.5	16.9	20.8	24.9	39.0
Security credit	109.5	93.7	135.1	185.6	188.6
Customers’ liability on acceptances	0.6	0.7	0.8	0.4	0.5
Miscellaneous assets	149.5	25	-12.3	-162.6	-149.0
(1) Branches and agencies of foreign banks, Edge Act and Agreement corporations and American Express Bank. (2) Government-sponsored enterprise. Source: Board of Governors of the Federal Reserve System, June 5, 2008.

FINANCIAL LITERACY PROGRAMS

The Consumer Bankers Association periodically surveys U.S. banks on their programs aimed at improving the financial literacy of their clients and the American public at large. In 2005 there were 46 respondents, 56 percent of which had assets of over $20 billion.

FINANCIAL LITERACY PROGRAMS BY TYPE, 2003-2005 (1)

(Percent)

Type of program	2003	2004	2005
General financial literacy	98%	100%	100%
Mortgage/homeownership financial literacy	96	96	96
Targeting predatory lending issues	72	78	70
College-based	26	50	36
(1) Based on respondents to annual surveys by the Consumer Bankers Association. Source: Consumer Bankers Association.

The average financial literacy budget for banks was $5.4 million in 2004; the median budget was $31,500.