April 7, 2017
Authored by: Robert Klingler and Jonathan Hightower
From 2006 through 2016, the number of insured depository institutions in the United States has fallen from 8,691 charters to 5,922, a decline of 2,769 charters or a 32% loss. This headline loss number is worth talking about, but is neither news nor new. The loss of charters is a frequent source of discussions around bank board rooms, stories from trade press, and chatter at banking conferences. The number of insured charters has also been in steady decline, with at least 33 years of declining numbers.
However, a deeper dive into the numbers reveals some unexpected trends below the headline 32% loss of charters.
Note: We’ve also recorded an accompanying podcast for The Bank Account on the Truth About Industry Consolidation. The podcast contains additional analysis to the numbers presented here, and is a useful addition, but not a substitute, to this content. In addition to listening to this episode, we encourage you to click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.
Links to items mentioned in the podcast, or otherwise potentially of interest on the topic:
- The State of Banking in Georgia: 2015 vs. 2005
- The State of Banking in Atlanta: 2015 vs. 2005
- Economies of Scale Encourage Continued Consolidation
- American Banker story by Allison Prang on “Why some states are losing more banks than others” (subscription required)
- Wall Street Journal story on “Why You Probably Work for a Giant Company, in 20 Charts” (subscription required)
- Jamie Dimon’s Shareholder Letter.
State of Banking Landscape as of December 31, 2016
As of December 31, 2016, we had 5,922 institutions with $16.9 trillion in total assets.
The four largest depository institutions by asset size (JPMorgan, Wells Fargo, Bank of America and Citi) hold $6.84 trillion in assets, or 40.5% of the industry’s assets.
There are 111 additional banks that have assets greater than $10 billion, holding $6.98 trillion. That’s 1.9% of the total charters, holding 81.9% of the aggregate assets.