Commercial Banks

Commercial banks vary greatly in size from the “money center” banks located in the nation’s financial centers that offer a broad array of traditional and nontraditional banking services, including international lending, to the smaller regional and local community banks engaged in more typical banking activities, such as consumer and business lending. Commercial banks receive revenue from many sources, including check writing, trust account management fees, investments, loans and mortgages. A growing number of banks also receives revenue from consumer use of Internet banking services.

In 2011 all but the largest banks (i.e., those with assets greater than $1 billion) reported fewer institutions when compared with 2010. There were 182 fewer commercial banks with assets less than $100 million in 2011 than in 2010. The number of banks with $100 million to $1 billion in assets dropped by 61 banks in 2011. There were 514 banks in the $1 billion to over $10 billion asset range in 2011, up from 510 in 2010. (See Concentration, page ___.)

ASSETS AND LIABILITIES

A bank’s assets and liabilities are managed in order to maximize revenues and maintain liquidity. The lending sector's susceptibility to changes in interest rates, domestic and international economies, and credit quality can make revenue streams unpredictable. Banks hold substantial amounts of U.S. Treasury and government agency obligations, which are highly liquid, although the asset mix includes equity as well as other asset classes.

 

ASSETS OF FDIC-INSURED COMMERCIAL BANKS, 2011

(End of year)

Source: Federal Deposit Insurance Corporation (FDIC).

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ASSETS AND LIABILITIES OF FDIC-INSURED COMMERCIAL BANKS GROUPED BY ASSET SIZE, 2011

($ millions, end of year)

    By asset size  
  Total
commercial
banks
Less than
$100 million
$100 million
to $1 billion
$1 billion
or more
Foreign
offices
Number of institutions 6,290 2,143 3,633 514 NA
Total assets  $12,639,738 $123,324 $1,056,078 $11,460,337 $1,794,305
Cash and due from depository institutions  1,196,329 13,920 91,130 1,091,279 251,805
     Interest-bearing balances  955,113 8,935 65,707 880,471 NA
Securities  2,541,223 30,185 235,376 2,275,662 NA
Federal funds sold and reverse repurchase agreements (1)  457,789 3,693 13,531 440,565 NA
Net loans and leases  6,531,949 68,994 649,908 5,813,046 NA
     Loan loss allowance  178,353 1,301 13,056 163,997 NA
Trading account assets (2) 713,446 3 201 713,241 382,478
Bank premises and fixed assets  111,997 2,092 19,594 90,310 NA
Other real estate owned  41,022 1,134 11,318 28,570 NA
Goodwill and other intangibles  348,210 384 5,159 342,666 NA
All other assets  697,774 2,918 29,859 664,997 NA
Total liabilities and capital  $12,639,738 $123,324 $1,056,078 $11,460,337 NA
Total liabilities  $11,216,651 $109,029 $944,295 $10,163,326 $1,820,100
     Total deposits  9,253,868 105,086 884,343 8,264,439 1,428,230
          Interest-bearing deposits  6,948,713 85,408 729,571 6,133,734 1,332,496
          Deposits held in domestic offices  7,825,638 105,086 883,552 6,837,000 NA
     Federal funds purchased and repurchase agreements (1) 438,502 594 15,885 422,023 NA
     Trading liabilities  313,802 0 26 313,776 NA
     Other borrowed funds  747,303 2,572 36,132 708,599 NA
     Subordinated debt  131,784 11 328 131,445 NA
     All other liabilities  331,392 766 7,582 323,044 NA
Total equity capital  $1,423,088 $14,294 $111,783 $1,297,011 NA
     Total bank equity capital  1,404,953 14,294 111,697 1,278,962 NA
     Perpetual preferred stock  5,117 73 967 4,077 NA
     Common stock  45,254 1,860 12,004 31,389 NA
     Surplus  1,040,331 6,742 52,315 981,274 NA
     Undivided profits  314,251 5,619 46,410 262,222 NA
     Noncontrolling interests in consolidated subsidiaries  18,135 0 86 18,048 NA

(1) Short-term agreements to sell and repurchase government securities by a specified date at a set price.
(2) The foreign office component of "assets held in trading accounts" is only available for institutions with $1 billion or more in total assets or $2 billion or more in off-balance sheet contracts.

NA=Data not available.

Source: Federal Deposit Insurance Corporation (FDIC).

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DEPOSITS

In the depository process, banks pay interest to depositors and gain income by lending and investing deposits at higher rates. Banks must balance the generation of revenue from these deposits with the maintenance of liquidity, according to FDIC guidelines. The impact of these guidelines on the banking industry is similar to that of statutory accounting practices on the insurance industry—both serve to promote solvency. 

 

DEPOSITS, INCOME AND EXPENSES OF FDIC-INSURED COMMERCIAL BANKS, 2007-2011

($ millions, end of year)

  2007 2008 2009 2010 2011
Number of institutions 7,267 7,071 6,824 6,517 6,278
Total deposits (domestic and foreign)
individuals, partnerships, corps.
$6,485,519 $7,172,298 $7,420,530 $7,689,647 $8,325,993
U.S. government 4,896 3,853 3,742 3,616 2,654
States and political subdivisions 322,662 350,854 381,077 386,069 421,229
All other 434,380 490,062 466,380 383,569 452,056
Total domestic and foreign deposits $7,247,457 $8,017,067 $8,271,729 $8,462,901 $9,201,932
     Interest-bearing 6,053,496 6,593,772 6,712,435 6,750,051 6,905,570
     Noninterest-bearing 1,193,962 1,423,296 1,559,294 1,712,850 2,296,362
Domestic office deposits          
     Demand deposits 504,432 637,804 642,505 697,085 1,019,699
     Savings deposits 3,185,618 3,495,465 4,129,680 4,589,694 5,250,719
     Time deposits 2,055,859 2,345,246 1,970,228 1,627,141 1,503,916
Total domestic deposits $5,745,909 $6,478,515 $6,742,413 $6,913,920 $7,774,334
     Transaction 695,226 839,346 892,323 952,143 1,288,101
     Nontransaction 5,050,683 5,639,169 5,850,089 5,961,777 6,486,233
Income and expenses          
Total interest income 604,690 524,607 477,336 477,657 451,559
Total interest expense 304,150 207,354 118,111 88,055 70,213
Net interest income 300,539 317,253 359,226 389,602 381,346
Total noninterest income (fees, etc.) 210,290 193,247 241,802 215,943 212,233
Total noninterest expense 312,043 328,767 371,948 355,721 373,625
Provision for loan and lease losses 56,471 151,359 229,382 145,304 68,463
Pretax net operating income (loss) 142,315 30,374 -303 104,520 151,491
Securities gains (losses) -567 -14,444 -1,412 8,268 4,864
Income taxes 42,649 6,200 4,380 33,577 45,958
Net extraordinary items -1,741 5,446 -3,841 -565 965
Net income (loss) 97,358 15,176 -10,718 78,011 110,572

Source: Federal Deposit Insurance Corporation (FDIC).

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INVESTMENTS

 

SECURITIES OF FDIC-INSURED COMMERCIAL BANKS, GROUPED BY ASSET SIZE, 2011

($ millions, end of year)

    By asset size (1)
  Total
commercial
banks
Less than
$100 million
$100 million
to $1 billion
$1 billion
or more
Securities (debt and equity) $2,541,223 $30,185 $235,376 $2,275,662
     Securities held-to-maturity (amortized cost) 187,057 3,890 18,894 164,272
     Securities available-for-sale (fair value) 2,354,166 26,294 216,482 2,111,390
By security type (2):        
     U.S. government securities 1,588,323 19,830 161,559 1,406,934
          U.S. Treasury securities 157,317 911 4,597 151,810
          U.S. government obligations 1,431,006 18,919 156,962 1,255,124
     Securities issued by states
     and  political subdivisions
206,236 9,310 62,502 134,424
     Other domestic debt securities (3) 452,828 890 9,968 441,969
          Asset-backed securities 138,269 34 616 137,619
     Foreign debt securities (3) 280,979 7 363 280,609
     Equity securities 12,857 148 984 11,725
Other items (2)        
     Pledged securities 1,070,412 10,012 97,895 962,504
     Mortgage-backed securities 1,436,547 9,112 100,248 1,327,186
          Certificates of participation in
          pools of residential mortgages
809,882 6,625 63,265 739,992
               Issued or guaranteed by the U.S. 807,288 6,606 63,221 737,461
               Privately issued 2,594 19 44 2,531
          Collateralized mortgage obligations
          and REMICs (4)
549,357 2,419 35,859 511,079
               Issued  by FNMA and FHLMC (5) 402,060 2,223 33,371 366,466
               Privately issued by GNMA (6) 147,297 197 2,488 144,613

(1) Grouped by asset size and insurance fund membership.
(2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value.
(3) Institutions with less than $100 million in total assets include “foreign debt securities” in “other domestic debt securities.”
(4) Real estate mortgage investment conduits (REMICs).
(5) Federal National Mortgage Association (Fannie Mae) and Federal Home Mortgage Corporation (Freddie Mac). Includes REMICs.
(6) Government National Mortgage Association (Ginnie Mae).

Source: Federal Deposit Insurance Corporation (FDIC).

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CONCENTRATION

As a result of consolidation over the past two decades, small banks are dropping in number and in percentage of assets and deposits held. A large share of the nation’s banking business is held by a relatively small number of big banks.

 

COMMERCIAL BANK CONCENTRATION BY ASSET SIZE, 2007 AND 2011

($ billions, end of year)

  Less than $100 million Percent of total $100 million to $1 billion Percent of total $1 billion to $10 billion Percent of total Greater than $10 billion Percent of total Total banks
2007                  
Number of institutions reporting 3,065 42.1% 3,706 50.9% 425 5.8% 86 1.2% 7,282
Total assets $162.9 1.5 $1,062.1 9.5 $1,112.7 10.0 $8,838.4 79.1 $11,176.1
Total deposits 133.8 1.8 854.8 11.7 792.0 10.8 5,528.4 75.6 7,308.9
Return on assets 0.82% NA 1.06% NA 1.08% NA 0.92% NA 0.95%
Return on equity 6.00 NA 10.34 NA 9.47 NA 9.22 NA 9.29
2011                  
Number of institutions reporting 2,143 34.1% 3,633 57.8% 429 6.8% 85 1.4% 6,290
Total assets $123.3 1.0 $1,056.1 8.4 $1,100.7 8.7 $10,359.6 82.0 $12,639.7
Total deposits 105.1 1.1 884.3 9.6 853.9 9.2 7,410.6 80.1 9,253.9
Return on assets 0.59% NA 0.61% NA 0.88% NA 0.94% NA 0.90%
Return on equity 5.03 NA 5.91 NA 7.52 NA 8.36 NA 8.06

NA=Not applicable.

Source: Federal Deposit Insurance Corporation (FDIC).

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TOP TWENTY U.S. COMMERCIAL BANKS BY REVENUES, 2011 (1)

($ millions)

Rank Company Revenues
1 Bank of America Corp. $115,074
2 J.P. Morgan Chase & Co. 110,838
3 Citigroup 102,939
4 Wells Fargo 87,597
5 Morgan Stanley 39,376
6 Goldman Sachs Group 36,793
7 American Express 32,282
8 U.S. Bancorp 21,399
9 Capital One Financial 18,525
10 PNC Financial Services Group 15,820
11 Bank of New York Mellon Corp. 15,804
12 Ally Financial 13,642
13 State Street Corp. 10,207
14 BB&T Corp. 9,998
15 SunTrust Banks 9,602
16 Discover Financial Services 8,550
17 Regions Financial 7,427
18 Fifth Third Bancorp 6,673
19 CIT Group 4,855
20 KeyCorp 4,780

(1) Based on an analysis of companies in the Fortune 500.

Source: Fortune.

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TOP TWENTY-FIVE U.S. COMMERCIAL BANKS BY ASSETS, 2011

($ millions)

Rank Company City, State Assets
1 JPMorgan Chase Bank, National Association Columbus, OH $1,811,678
2 Bank of America, National Association Charlotte, NC 1,451,969
3 Citibank, National Association Sioux Falls, SD 1,288,658
4 Wells Fargo Bank, National Association Sioux Falls, SD 1,161,490
5 U.S. Bank, National Association Cincinnati, OH 330,471
6 PNC Bank, National Association Wilmington, DE 263,310
7 Bank of NY Mellon New York, NY 256,205
8 State Street Bank & Trust Company Boston, MA 212,293
9 HSBC Bank USA, National Association McLean, VA 206,010
10 TD Bank, National Association Wilmington, DE 188,913
11 Suntrust Bank Atlanta, GA 171,292
12 Branch Banking and Trust Company Winston-Salem, NC 168,868
13 FIA Card Services, National Association Wilmington, DE 167,005
14 Capital One, National Association McLean, VA 133,478
15 Regions Bank Birmingham, AL 123,368
16 Chase Bank USA, National Association Newark, DE 121,749
17 Fifth Third Bank Cincinnati, OH 114,540
18 RBS Citizens, National Association Providence, RI 106,941
19 Goldman Sachs Bank USA New York, NY 103,790
20 Northern Trust Company Chicago, IL 99,831
21 BMO Harris Bank, National Association Chicago, IL 97,264
22 Union Bank, National Association San Francisco, CA 88,968
23 Keybank, National Association Cleveland, OH 86,199
24 Ally Bank Midvale, UT 85,332
25 Manufacturers & Traders Trust Company Buffalo, NY 76,887

Source: Board of Governors of the Federal Reserve System.

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