US Banking Industry: Statistics and Benchmarking August 2013
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US banking industry has USD 14.5 Tn assets with around 7,092 institutions Number of Banking Institutions and Assets in the US, December 2012 USD 5.95 Tn, #4
USD 5.68 Tn, #105
WFC USD 1.3 Bn Capital One USD 251 Bn
Citi USD 1.3 Bn
92% **
BNY USD 282 Bn BOA USD 1.5 Bn
USD 1.50 Tn, #596
PNC Bank USD 295 Bn
JPMC USD 1.9 Tn
U.S. Bank USD 345 Bn
Top 4
Assets between USD 0-500 Mn and USD 1 Tn, #5868
USD 1.37 Tn, #6387 Assets > US$ 10 Bn*
Assets between US$ 1-10 Bn
8%
Assets between USD 500 MnUSD 1 Bn and USD 0.37 Tn, #519
Assets < US$ 1 Bn
Notes – (*): Does not include assets of top 4 banks (**): Percentage based on numbers, not assets (#): Indicates number of banks
• The top 4 banks account for 41% or USD 5.95 Tn of the total US banking assets • Apart from the top 4, there are 105 institutions that have more than USD 10 Bn in assets, with a combined asset value of USD 5.68 Tn • Of the remaining institutions, 596 have assets between USD 1 Bn and USD 10 Bn, with a combined assets of USD 1.5 Tn • Ninety per cent of US banking institutions have less than USD 1 Bn in assets, of which 92% or 5,868 have assets less than USD 500 Mn and 519 or 8% have assets between USD 500 Mn and USD 1 Bn Source: FDIC, 2012
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Community banks have better efficiency ratio than the top 5 banks of the US Efficiency Ratio of Community Banks Vs. Top 5 Banks in the US
85.6%
72%
66% 62.2% 58.5% 51.5%
50%
Average of top 200 community banks
Average of top 5 banks
JPMC
BOA
C
WFC
US Bank
Efficiency Ratio • The average efficiency ratio of the top 200 community banks in 3Q2012 was 50%, which is far better than 66%, the average efficiency ratio of the top 5 banks in the US. Among the top 5 banks, WFC and US Bank had better efficiency ratio compared to the other three banks • The efficiency ratio of a bank is calculated as: Operating Expenses/(net interest income + commission & fees received + other operating income + investment income - commission & fees paid + taxable equivalent adjustment) Source: American Banker; Annual Report; Sutherland Research
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Peer Benchmarking – Top 5 US Banks Standard Net Revenue, 2012 (USD Bn) 100
90.1
84.3
86.1
70.2
80 60 40
20.3 20 0 BOA
C
JPMC
WFC
Number of Branches in the US 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
5,690
5,530
6,333
1.2
1,066
5
1.0
5.4
4.2
0 C
JPMC
WFC
US Bank
BOA
C
JPMC
WFC
US Bank
Asset Size, 2012 (USD Tn) 3 3
1.0
0.9
18.9
7.5
10
1.2
1.1
21.3
15
3,130
Customer Deposits, 2012 (USD Tn) 1.4
25 20
BOA
US Bank
Net Income, 2012 (USD Bn)
1.8
2
0.8
2.4
2.2
1.4
2
0.6 0.4
0.3
0.2
1 0.4
1 0
0.0 BOA
C
JPMC
WFC
US Bank
BOA
C
JPMC
WFC
US Bank
Note: The financial data is standardized figures from Bloomberg, which may slightly differ from the reported figures in the bank’s annual reports
• JPMC earned more revenues and profits than its peers in 2012 • WFC had the maximum number of branches in the US at the end of 2012 Source: Annual Report; Sutherland Research
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Lower interest rates and competition are squeezing US Bank’s interest margins Net Interest Rate Margins
Commentary • Y-o-Y, net interest margins fell at most of the major banks that reported their 2013 first quarter earnings
PacWest
• Low interest rates and competition are taking a toll on the margins of banks
Westamerica PNC
• Many banks reported lower mortgage revenues, partly because they have exhausted the loans that can be refinanced and partly because they are losing on loan origination figures
Fulton Financial Huntington
• For example, Westamerica’s interest income declined due to lower yields on loan and investment securities
Boston Private Washington Federal
– Its decline can also be attributed to lower loan volume as the company is avoiding low-yielding high-risk loans
BancFirst Citi BofA 0.0%
1.0%
2.0%
1Q '13
3.0%
4.0%
5.0%
6.0%
1Q '12
Source: Company Quarterly filings 1Q2013; American Banker
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Small banks spent 8.3 Mn hours on complying with the new regulations in 1Q2013 Increasing Regulatory Burden
Rising Cost of Regulation 300
• New regulations have been resulting in huge additional costs for small banks
9
200
6
150
100
3
Time (Hrs in Mn)
Cost (USD Mn)
250
• In the first quarter of 2013, small banks with an average asset size of USD 350 Mn spent ~USD 250 Mn and 8.3 Mn hours in complying with newlyimplemented regulations • Updating policies and procedures to meet new regulations entails banks to hire expensive employees as they are rare and high in demand • Meeting regulations is more problematic for smaller banks as they usually have less infrastructure to cope with such drastic changes
50
0
0 1Q '12
2Q '12
3Q '12
Incremental cost
4Q '12
1Q '13
Hours spent
Community banks are spending an increasing amount of time and money implementing new regulations Note: Based on 6,700 banks with average of USD 350 million in assets Source: American Banker; Sutherland Research
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Thank You
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