1. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. CHAPTER 12 Commercial Banking Structure, Regulation, and Performance

2. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. FDIC-Insured Banks, March 31, 2001 DepositsAssets Number of(in Billions(in Billions Banksof Dollars)of Dollars) Total domestic banks8,237$5,764.57$6,310.81 National charter2,2013,134.043,440.22 State charter6,0362,630.532,870.59 Fed member 9801,540.251,666.83 Non-Fed member5,0561,090.281,203.76 SOURCE: Federal Deposit Insurance Corporation.

3. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. Regulatory Responsibilities FDIC:Regulates state-chartered, insured non-Fed members and insured branches of foreign banks Comptroller of Regulates national banks that are not bank holding companies and federally the Currency:chartered branches of foreign banks Fed:Regulates state-chartered, insured members of the Fed, all bank holding companies, all financial holding companies, and branches of foreign banking organizations operating in the United States and their parent bank States:Regulates state-charted, non FDIC-insured banks that are not Fed members SOURCE: Federal Deposit Insurance Corporation

4. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. Bank Failures since the Inception of the FDIC, 1934-2001 Number of Failures, 1934-2001 SOURCE: Federal Deposit Insurance Corporation

5. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. Size Distribution of FDIC-Insured Banks as of June 30, 2001 $100 million4,68557.357.3$228.03.5%3.5% $100 million – $1 billion3,10137.995.2 789.812.4 16.3 $1-$10 billion 313 3.899.0 899.614.1 30.4 >$10 billion 79.999.9*4,442.869.8100.2* Total8,178100%100%$6,360.2100%100% *Percents may not sum to 100% because of rounding. SOURCE: Federal Deposit Insurance Corporation. Percent of Total Percent of Total* Cumulative Percent* Total Assets Cumulative Percent Asset Size Number of Institutions

6. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. Allowable Activities for Bank Holding Companies (Federal Reserve Regulation Y- Revised January 1, 2001) Making, acquiring, brokering, or servicing loans, issuing and accepting letters of credit Real estate and personal property appraising Commercial real estate equity financing Check-guaranty services Collection agency services Credit bureau services Asset management, serving, and collection activities Acquiring debt in default Real estate settlement services Leasing personal or real property Operating nonbank depository institutions Performing trust company functions Financial and investment advisory activities Providing feasibility studies Agency transactional services Investment transactions as principal including underwriting and dealing in government obligations, money market instruments, foreign exchange, forward contracts, options, futures, option on futures, swaps, and similar contracts Management consulting and counseling activities Courier services Printing and selling checks, deposit slips, etc. Insurance agency and underwriting Community development activities Issuing money orders, savings bonds, and traveler’s checks Data processing SOURCE: Federal Reserve System, http://www.federal reserve.gov/regulations/default.htm

7. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. The Giants: Banks and Bank Holding Companies 1.Bank of America, National AssociationCharlotteNC584,284,000 2.Citibank, N.A.New YorkNY382,106,000 3.Chase Manhattan Bank, TheNew YorkNY377,116,000 4.First Union National BankCharlotteNC231,837,000 5.Morgan Guaranty Trust Company of New YorkNew YorkNY185,762,000 6.Fleet National BankProvidenceRI166,281,000 7.Wells Fargo Bank, National AssociationSan FranciscoCA115,539,000 8.Bank One, National AssociationChicagoIL101,228,538 9.Suntrust Bank, Inc.AtlantaGA 99,528,008 10.U.S. Bank National AssociationMinneapolisMN 82,023,123 11.HSBC Bank USABuffaloNY 80,121,433 12.Keybank National AssociationClevelandOH 77,760,463 13.Bank of New York, TheNew YorkNY 74,266,429 14.Firstar Bank, National AssociationCincinnatiOH 72,593,533 15.Wachovia Bank, National AssociationWinston-SalemNC 69,187.160 16.State Street Bank and Trust CompanyBostonMA 64,643,911 17.PNC Bank, National AssociationPittsburghPA 63,185,903 18.Wells Fargo Bank Minnesota, National AssociationMinneapolisMN 53,117,860 19.La Salle Bank, National AssociationChicagoIL 48,852,837 20.Branch Banking and Trust CompanyWinston-SalemNC 46,991,799 21.Southtrust BankBirminghamAL 45,170,172 22.Bankers Trust CompanyNew YorkNY 44,324,000 23.Regions BankBirminghamAL 43,528,061 24.Merrill Lynch Bank USASalt Lake CityUT 43,171,125 25.Mellon Bank, N.A.PittsburghPA 41,974,315 SOURCE: Federal Financial Institutions Examination Council at the Internet site http://www.ffiec.gov/. Banks Ranked by Total Assets as of March 31, 2001 RankName CityStateTotal Assets (K)

8. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. The Giants: Banks and Bank Holding Companies Banks Ranked by Total Assets as of March 31, 2001 RankName CityStateTotal Assets (K) 1.Citigroup, Inc.New YorkNY953,427,000 2.J. P. Morgan Chase & Co.New YorkNY712,702,000 3.Bank of America CorporationCharlotteNC625,524,000 4.Wells Fargo & CompanySan FranciscoCA289,758,000 5.Bank One CorporationChicagoIL272,412,000 6.First Union CorporationCharlotteNC245,941,000 7.Taunus CorporationNew YorkNY216,513,000 8.FleetBoston Financial CorporationBostonMA202,113,000 9.U.S. BancorpMinneapolisMN165,156,000 10.ABN AMRO North America Holding CompanyChicagoIL164,699,748 11.HSBC North America Inc.BuffaloNY107,445,340 12.Suntrust Banks, Inc.AtlantaGA100,822,534 13.National City CorporationClevelandOH 95,247,453 14.KeycorpClevelandOH 85,522,573 15.Bank of New York Company, Inc., TheNew YorkNY 76,831,453 16.Wachovia CorporationWinston-SalemNC 74,828,414 17.State Street CorporationBostonMA 70,317,345 18.PNC Financial Services Group, Inc., ThePittsburghPA 70,034,428 19.Fifth Third BancorpCincinnatiOH 69,833,640 20.BB&T CorporationWinston-SalemNC 64,733,769 21.Comerica IncorporatedDetroitMI 49,494,169 22.Southtrust CorporationBirminghamAL 46,534,992 23.Regions Financial CorporationBirminghamAL 45,392,788 24.Mellon Financial CorporationPittsburghPA 43,705,445 25.MBNA CorporationWilmington DE 40,418,814 SOURCE: Federal Financial Institutions Examination Council at the Internet site http://www.ffiec.gov/.

9. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. The Declining Number of Banks *As of June 30, 2001 SOURCE: Federal Deposit Insurance Corporation. Institutions 19801985199019952001 15000 12000 9000 6000 3000 0

10. Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. Commercial Banks’ Declining Share of Intermediation *As of June 30, 2001 SOURCE: Budget of the U.S. Government-Fiscal Year 1993: “Modernizing the Financial Services Sector,” U.S. Government Printing Office (1992): 259. Figures for 1995 are from Flow of Funds Account, Z1, Fourth Quarter 1995 (March 8, 1996): 72 and Flow of Funds Accounts, Z1, Second Quarter, 2001 (September 18, 2001): 58. Share of All Intermediary Assets 19501970199119952001* Year 100% 80% 60% 40% 20% 0 6% 52% 22% 20% 38% 20% 28% 31% 13% 47% 26% 12% 53% 23% 7% 63% 6% 14% 9% 7%