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 4,706 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 276 employees and generates $106 million in annual revenue.

    • There are 4,706 FDIC-insured commercial banks in the US. FDIC-insured banks have over 1.3 million employees, over $500 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
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Jan 10, 2024 - Banking Fees Increase
                                  • Commercial banks slightly increased their prices during 2023. Industry employment decreased slightly during the period while wages for nonsupervisory employees increased slightly. Commercial banking industry sales are forecast to grow at a 4.33% compounded annual rate from 2023 to 2027, comparable to the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
                                  • About 19.6% of office space in major US cities wasn’t leased as of Q4 2023, according to Moody’s Analytics, up from 18.8% a year earlier. That is slightly above the previous records of 19.3% set in 1986 and 1991 and the highest number since at least 1979, which is as far back as Moody’s data go. Building owners that borrowed money to finance their properties are being squeezed by high interest rates and vacant offices as workers opt to work from home. Weak demand for offices could trigger a wave of borrowers to default on their loans and put pressure on banks and other lenders, which are hoping to avoid selling loans at significant discounts, according to Reuters news service.
                                  • The commercial real estate industry is bracing for trouble as the midsize banks that service it become less willing to lend, according to The New York Times. Used car loans are already more expensive, and a recent survey by the Federal Reserve Bank of Dallas showed a sizable share of banks in the region reporting stricter credit standards. Federal Reserve data on the banking system that was released on April 7 suggests that commercial and industrial lending and real estate lending both declined meaningfully through late March.
                                  • Some banks are increasing their savings account and CD interest rates to incentivize customers to stay put or to attract new money, according to analysts including Ken Tumin, founder of DepositAccounts.com, which tracks bank savings and CD rates. Online banks in particular have increased deposit rates because it’s easier for their customers to move money to competitors, Tumin says. Some banks may simply be trying to snare a share of the deposits ricocheting through the banking system rather than stem the loss of funds, one analyst counters. “I think banks are being opportunistic and seeing this….as a good opportunity to capture a customer relationship,” says Garry Zimmerman, founder of MaxMyInterest.com, a platform that lets consumers move money among banks that pay the highest rates.
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