Commercial Banks
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,260 commercial banks in the US earn money by lending money at higher interest rates than the interest they pay to depositors. They may also earn money from fees and interest on credit card services, returns on investments in securities, fees for investment services, fees for treasury management services, and other account fees.
Burden of Regulatory Compliance Costs
The banking industry is highly regulated and regulations increased significantly following the financial crisis of 2008.
Fintech Competition Forces Innovation
Banks are seeing new competition from fintech start-ups, which have received tens of billions of dollars in venture capital funding over the past five years.
Industry size & Structure
The average commercial bank has 328 employees and generates $130 million in annual revenue.
- There are 4,260 FDIC-insured commercial banks in the US. FDIC-insured banks have around 1.4 million employees, over $566 billion in annual revenue.
- The FDIC-insured commercial banks in the US hold almost $24 trillion in assets.
- There are about 4,560 FDIC-insured community banks that serve local markets and typically have less than $1 billion in assets. These community banks have over 392,700 employees and $2.5 trillion in assets.
- There are 776 FDIC-insured commercial banks with $1 billion to $10 billion in assets.
- There are 138 FDIC-insured commercial banks with $10 billion to $250 billion in assets.
- There are 13 FDIC-insured commercial banks with over $250 billion in assets. These banks are defined as systemically important financial institutions (SIFI) under the revisions to the Dodd-Frank Act and are subject to more stringent regulation.
- The largest US commercial banks by assets are JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, US Bancorp, TD Group US Holdings, and PNC Financial Services Group.
Industry Forecast
Commercial Banks Industry Growth
Recent Developments
Nov 14, 2024 - Number Of FDIC-insured Banks Increases
- The number of FDIC-insured commercial banks in the US increased in 2023, reversing for at least a year the long-term trend of decreasing bank numbers. The number of FDIC-insured commercial banks has decreased 72.19% since 1984, with mergers being the primary cause. There were 4,470 FDIC-insured commercial banks at the end of 2023, up from 4,136 a year earlier. The number of employees in the banking industry increased during the last two decades despite the decreasing number of banks during the time period.
- Net income for FDIC-insured commercial banks and savings institutions increased 11.4% from the prior quarter to $71.5 billion during the second quarter of 2024, according to the FDIC. The quarterly increase in net income was largely driven by nonrecurring items including an estimated $4 billion reduction in reported expense related to the FDIC special assessment, approximately $10 billion in one-time gains on equity security transactions, and the sale of an institution’s insurance division that resulted in an after-tax $4.9 billion gain. These nonrecurring items were partially offset by several large banks selling bond portfolios at a loss and the industry’s $2.7 billion increase in provision expense.
- Some lenders may need to increase their reserves to cover the possibility of losses on commercial real estate loans, according to a recent analysis by Moody's Ratings. A Moody's loan-by-loan analysis of 41 anonymous banks' commercial real estate portfolios found that banks' underwriting was more conservative than the ratings firm had anticipated but the higher-for-longer interest rate environment is increasing the need for banks to shore up their capital, said Stephen Lynch, vice president and senior credit officer at Moody's. Moody's found that, on average, the banks should be holding about twice the amount of reserves they currently have to cover potential office losses.
- Commercial banking industry employment decreased slightly while wages for nonsupervisory employees increased slightly during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS). Commercial banks slightly increased their prices during the first nine months of 2024, according to the BLS. Commercial banking industry sales are forecast to grow at a 3.99% compounded annual rate from 2024 to 2028, comparable to the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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