BANKING 
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.

The number of small commercial banks continues to drop while the number of larger banks grows. There were 196 fewer commercial banks with assets of less than $100 million in 2005 than in the previous year, but 63 more in the $100 million to $1 billion asset size, and 30 more in the $1 billion or more category.
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 does include equity as well as other asset classes.
ASSETS OF FDIC-INSURED COMMERCIAL BANKS, 2005



(1) Includes assets held in trading accounts, bank premises and fixed assets, other real estate owned, intangible assets and all other assets.

Source: Federal Deposit Insurance Corporation.


ASSETS AND LIABILITIES OF FDIC-INSURED COMMERCIAL BANKS
GROUPED BY ASSET SIZE, 2005


($ 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 institutions7,5273,4593,593475123
Total assets$9,039,674$180,118$1,000,883$7,858,673$1,053,392
Cash and funds due from depository institutions399,6139,37039,764350,480111,339
     Noninterest-bearing276,3076,48031,929237,897NA
     Interest-bearing123,3072,8897,834112,583NA
Securities1,572,27442,789203,2511,326,234NA
Federal funds sold and re-repos (1)443,5158,95229,728404,835NA
Loans and leases, net5,311,672110,527673,8544,527,292NA
     Plus: allowance for losses and allocated transfer risk reserve68,6731,5698,85558,249NA
     Loans and leases, total5,380,346112,096682,7094,585,541341,542
Assets held in trading accounts (2)498,9964188498,804199,373
Bank premises and fixed assets91,7103,44418,55269,713NA
Other real estate owned4,0082231,0422,743NA
Intangible assets302,9756288,031294,316NA
All other assets414,9114,18226,473384,256NA
Total liabilities, limited-life preferred stock and equity capital9,039,674180,1181,000,8837,858,673NA
Total liabilities8,127,022158,652900,5527,067,8181,307,735
Deposits, total6,073,333149,728813,6575,109,949920,632
     Noninterest-bearing1,203,76526,547138,4741,038,74550,397
     Interest-bearing4,869,568123,181675,1834,071,204870,235
Federal funds purchased and repos (1)667,5451,78324,815640,947NA
Trading liabilities251,53100251,531NA
Other borrowed money755,9415,91452,835697,19277,480
Subordinated notes and debentures122,2375713121,519NA
All other liabilities256,4351,2238,533246,679NA
Total equity capital912,65221,466100,331790,855NA
Perpetual preferred stock5,287262055,056NA
Common stock32,3553,4868,83120,038NA
Surplus529,6088,98842,177478,443NA
Undivided profits345,4028,96649,118287,318NA

(1)  Repo and re-repos are 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.

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. (See Appendix, page __.)
DEPOSITS, INCOME AND EXPENSES OF FDIC-INSURED COMMERCIAL BANKS, 2000-2004

($ millions, end of year)


 

2000

2001

2002

2003

2004
Domestic office deposits     
Net extraordinary items-32-240-6942767
U.S. government8,51312,28430,0775,1044,631
Securities gains (losses)-2,2784,4376,3925,5833,614
Number of institutions8,2978,0627,8707,7527,614
Provision for loan and lease losses29,74142,96847,81634,50125,921
Income taxes37,72936,54443,80749,06148,739
Total interest expense222,258185,702119,11994,22896,049
Net income70,27473,20588,993101,573103,483
Pretax net operating income110,313105,552126,478144,624148,541
Total noninterest income (fees, etc.)153,805157,720171,873185,878183,374
States and political subdivisions160,217172,725197,000227,377235,243
Net interest income201,886212,788234,620237,727247,119
Total noninterest expense215,636221,988232,200244,480256,032
All other275,611207,227237,502272,960295,912
Total interest income424,144398,490353,739331,955343,168
     Demand deposits526,608570,700525,908516,911540,247
     Transaction672,058737,691701,302715,974745,080
     Noninterest-bearing751,608866,888934,290951,4881,044,934
     Time deposits1,356,3151,273,3531,270,3431,231,3821,367,959
     Savings deposits1,559,6841,869,9852,197,3722,497,4882,772,510
     Nontransaction2,770,5492,976,3473,292,3213,529,8073,935,636
     Interest-bearing3,397,4123,476,4143,716,9084,034,9424,501,120
Total domestic deposits3,442,6073,714,0383,993,6234,245,7814,680,716
Total deposits (domestic and foreign) individuals, partnerships, corps.$3,704,679$3,951,067$4,186,619$4,480,989$5,010,268
Total domestic and foreign deposits4,149,0204,343,3024,651,1994,986,4295,546,054
Income and expenses

Source: Federal Deposit Insurance Corporation.

INVESTMENT MIX

SECURITIES OF FDIC-INSURED COMMERCIAL BANKS, GROUPED BY ASSET SIZE, 2005

($ 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)$1,572,274$42,789$203,251$1,326,234
     Securities held-to-maturity (amortized cost)130,1517,12028,06294,969
     Securities available-for-sale (fair value)1,442,12435,669175,1891,231,265
By security type: (2)    
     U.S. Government securities1,057,93033,505149,978874,447
          U.S. Treasury securities53,2501,8476,59444,809
          U.S. Government obligations1,004,68031,658143,384829,638
     Securities issued by states and political subdivisions122,5427,99441,12973,420
     Asset-backed securities69,4591566568,779
     Other domestic debt securities (3)217,3469739,465206,908
     Foreign debt securities (3)91,546510791,433
     Equity securities13,4512981,90711,247
     
Other items (2)
     Pledged securities866,19816,98995,756753,452
     Mortgage-backed securities897,1418,33764,388824,417
          Certificates of participation in pools of residential mortgages595,1156,55342,023546,540
               Issued or guaranteed by the U.S.576,3746,53441,827528,012
               Privately issued18,7421819618,527
          Mortgage-backed pass-throughs    
               Issued  by FNMA (4) and FHLMC (5)544,9315,42335,906503,602
               Issued by GNMA (6)31,4431,1115,92124,411
          Collateralized mortgage obligations and REMICs (7)153,5531,64318,619133,290

(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) Fannie Mae.
(5) Freddie Mac.
(6) Ginnie Mae.
(7) Real estate mortgage investment conduits.

Source: Federal Deposit Insurance Corporation.

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, NUMBERS AND ASSETS, 2001 AND 2005

($ billions, end of year)


 

By asset size  

 


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
2001         
Number of banks4,48655.5%3,19439.5%3204.0%801.0%8,080
Total assets$221.6 3.4$819.4 12.5$915.4 13.9$4,612.8 70.2$6,569.2
Total deposits187.74.3668.415.2625.014.22,910.566.34,391.6
Return on assets0.91NA1.20NA1.31NA1.13NA1.16
Return on equity8.07NA12.24NA13.77NA13.43NA13.10
2005         
Number of banks3,45946.0%3,59347.7%3915.2%841.1%7,527
Total assets$180.1 2.0$1,000.9 11.1$1,074.6 11.9$6,784.0 75.0$9,039.7
Total deposits149.72.5813.713.4754.412.44,355.571.76,073.3
Return on assets1.01NA1.32NA1.37NA1.31NA1.31
Return on equity8.28NA13.03NA12.74NA13.07NA12.91

NA=Not applicable.

Source: Federal Deposit Insurance Corporation.

TOP 25 U.S. COMMERCIAL BANKS BY REVENUES, 2005

($ millions)


Rank

Company

Revenues
1Citigroup$131,045
2Bank of America Corp.83,980
3J.P. Morgan Chase & Co.79,902
4Wells Fargo40,407
5Wachovia Corp.35,908
6U.S. Bancorp16,596
7Capital One Financial12,085
8National City Corp.11,036
9SunTrust Banks10,886
10Bank of New York Co.8,312
11PNC Financial Services Group7,896
12BB&T Corp.7,832
13State St. Corp.7,496
14Fifth Third Bancorp7,495
15KeyCorp6,695
16Regions Financial6,124
17Mellon Financial Corp.5,728
18Marshall & Ilsley Corp.3,963
19M&T Bank Corp.3,738
20Comerica3,668
21Northern Trust Corp.3,554
22North Fork Bancorp.3,484
23Popular3,451
24Synovus Financial Corp.3,415
25AmSouth Bancorp.3,396

Source: Fortune.

TOP 25 U.S. COMMERCIAL BANKS BY ASSETS, 2005

($ millions)





Company

City, State

Assets
1Bank of America, National AssociationCharlotte, NC$1,082,243
2JPMorgan Chase Bank, National AssociationColumbus, OH1,013,985
3Citibank, National AssociationNew York, NY706,497
4Wachovia Bank, National AssociationCharlotte, NC472,143
5Wells Fargo Bank, National AssociationSioux Falls, SD403,258
6U.S. Bank National AssociationCincinnati, OH208,867
7Suntrust BankAtlanta, GA177,231
8HSBC Bank USA, National AssociationWilmington, DE150,679
9Keybank, National AssociationCleveland, OH88,961
10State Street Bank & Trust Co.Boston, MA87,888
11Bank of New YorkNew York, NY85,868
12PNC Bank, National AssociationPittsburgh, PA82,877
13Regions BankBirmingham, AL81,074
14Branch Banking and Trust Company (BB&T)Winston-Salem, NC80,227
15Chase Bank USA, National AssociationNewark, DE75,052
16Countrywide Bank, National AssociationAlexandria, VA73,116
17LaSalle Bank, National AssociationChicago, IL71,061
18National City BankCleveland, OH69,482
19Bank of America, National Association USAPhoenix, AZ62,983
20MBNA America Bank, National AssociationWilmington, DE58,517
21Fifth Third BankCincinnati, OH57,613
22North Fork BankMattituck, NY57,045
23Bank of the WestSan Francisco, CA55,158
24Manufacturers and Traders Trust CompanyBuffalo, NY54,391
25Comerica BankDetroit, MI53,577
Source: Board of Governors of the Federal Reserve System.