Commercial Banks
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 5,001 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 $107 million in annual revenue.
- There are 5,001 FDIC-insured commercial banks in the US. FDIC-insured banks have over 1.3 million employees, $500 billion in annual revenue and almost $22 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
Coronavirus Update
Apr 27, 2022 - High Forgiveness Rate As PPP Winds Down
- Businesses and other organizations that received Paycheck Protection Program (PPP) loans can still apply for forgiveness of the loan amount. Borrowers can apply for forgiveness anytime up to the maturity date of the loan. About 96% of 2020 PPP loans and 81% of the 2021 PPP loans have been fully or partially forgiven as of April 24, 2022, according to the latest Small Business Association Forgiveness Platform Lender Submission report. The vast majority of businesses waiting for forgiveness have loans under $150,000.
- Commercial and multifamily mortgage delinquencies declined in the fourth quarter of 2021, according to the Mortgage Bankers Association (MBA). "Commercial and multifamily mortgage performance continues to normalize, with delinquency rates down or flat for every major investor group," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Delinquencies for some sectors appear to remain elevated for one of two reasons. For some, lenders and servicers continue to work-out loans that were hard hit by the pandemic. For others, the method of reporting may classify forborne or other loans as delinquent, even when they are back on track. Delinquency rates are back down to at or near their pre-pandemic levels in the other sectors."
- The Paycheck Protection Program (PPP) is inching toward conclusion as 90% of two years’ worth of loans to small businesses nationwide have been forgiven. As of March 20, $708 billion has been forgiven, meaning that the recipients don’t have to repay the money, according to the latest data from the US Small Business Administration which manages PPP. Of that total, $209 billion — more than three-fourths, or 77% — of the $270.6 billion in PPP granted in 2021, the program’s second round — has been forgiven. That percentage stood at 63% in late December.
- The window to apply for Small Business Administration (SBA) COVID-19 Economic Injury Disaster Loan (EIDL) loans, Targeted Grants, and Supplemental Targeted Grants closed on December 31, 2021. The SBA had $11.8 billion in funds remaining across all of its programs as of December 24, 2021, according to The Business Journals. The SBA has been making billions of loans a week, which means the money could run out soon. The SBA will continue processing loan applications received before the deadline, including requests for reconsideration, and Targeted EIDL Advance (grant) applications, including requests for reconsideration. Small business owners who are still struggling with pandemic-related problems will have to look strategically for other grants and COVID-19 relief programs. Options may include private small business grants, state and local government grants and relief programs, and traditional SBA loans.
- Some businesses that took PPP loans in 2020 but don't apply for forgiveness soon will need to start making payments on the loan plus interest. The PPP loans will automatically convert to a standard loan at 1% interest if a small business does not apply to the SBA for forgiveness within 10 months of the end of the covered period under which they had to spend the money. For some businesses that received a loan when the PPP launched in April 2020, there was an eight-week covered period, which would put the forgiveness application deadline in the middle of July. For most loans operating under the more popular 24-week covered period, that meant a deadline in September 2021.
- Employment in the commercial banking industry decreased 2.2% year over year in March.
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