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|  | **FYI: An Update on Emerging Issues in Banking**Subscribe    Unsubscribe
**Highlights from the 2006 Summary of Deposits Data**
October              25, 2006 
The Federal Deposit Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS) survey	  all FDIC-insured institutions annually as of June 30 to gather information on deposits and offices in	  operation. The resulting Summary of Deposits (SOD) is a valuable resource for conducting analyses of	  local and national deposit market trends and measuring market concentrations. This issue of *FYI*	  graphically highlights preliminary conclusions from the 2006 SOD data.1

**Nationwide, deposit and office growth remains strong.**		 Commercial banks and thrifts continue to consolidate into larger, more diverse entities. Although		 the number of institution charters has declined during recent years, banking organizations continue		 to expand deposits and branching networks. The number of FDIC-insured institution offices increased		 2.9 percent during the year ending June 30, 2006 (see Chart 1).2  However, the rate of increase in		 deposits (8.9 percent) considerably exceeded the growth in the number of offices. During the past		 five years, as the number of offices has expanded at a 1.9 percent compounded rate, deposits grew at	 a compounded rate of 8.3 percent.

d

**The most robust office and	   deposit growth has occurred in areas with the greatest population density.**As has been the case in past years, the volume of deposits and	   number of offices continue to expand most rapidly in the nation�s larger metropolitan	   areas, eclipsing growth in smaller micropolitan and non-metro areas (see Table	   1).3
Table         1**Most         Rapid Rates of Office Growth Have Occurred in the Nation's Larger Population         Centers**  **Other Areas****Micropolitan Areas****Metropolitan Areas** Number of OfficesDomestic Deposits       ($ billions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Number of OfficesDomestic Deposits	     ($ billions)Number of OfficesDomestic Deposits	     ($ billions)June 20019,73523811,56137264,1443,679June 20059,80426711,89043169,7135,177June 20069,85328112,05144372,1875,662       1 Year Growth Rate0.5%5.2%1.4%2.7%3.5%9.4%5 Year Compound Growth Rate0.2%3.3%0.8%3.5%2.4%9.0%Source: FDIC/OTS Summary of        Deposits Survey		Note:  Metropolitan statistical areas have urban clusters of greater than 50,000 inhabitants. Each	micropolitan statistical area has an urban cluster of between 10,000 and 50,000 inhabitants. Other	areas have less population.	See U.S. Census Bureau definitions for greater detail.	
States experiencing the most rapid rates of growth in number of branches are not necessarily those where	the volume of deposits also is expanding rapidly.  Generally, with few exceptions, deposit growth is	strongest in coastal areas, whereas office growth varies more widely across the country (see Map 1 and	Map 2).  In many cases, demographic factors, such as population, employment, and per capita income growth,	correlate well with the growth in deposits and number of offices. However, state law and specific local	market conditions also drive branching decisions. 
d

d

**The nation�s largest	  banking organizations report the most rapid rate of growth in banking offices.**Consolidated banking organizations holding more than $10 billion in deposits have reported the most rapid	  growth in the number of offices during the past five years (see Table 2). In contrast, banking organizations	  holding deposits under $1 billion have reported a small decline during this period.  Mid-size companies ($1	  billion to $10 billion in deposits) reported a moderate increase in both the number of offices and volume of	  deposits. The stronger growth rate of larger companies also reflects longer-term consolidation trends. 

Table         2**The         Largest Companies Have Reported the Greatest Deposit Growth**  **Small Organizations****Mid-Size Organizations****Large Organizations** Number of OfficesDomestic Deposits       ($ billions)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Number of OfficesDomestic Deposits	     ($ billions)Number of OfficesDomestic Deposits	     ($ billions)June 200132,37799916,78480436,2793,679June 200531,6231,10717,50396742,2815,177June 200631,6441,13518,1351,04044,3125,662       1 Year Growth Rate0.1%2.5%3.6%7.5%4.8%10.8%5 Year Compound Growth Rate-0.5%2.6%1.6%2.6%4.1%2.6%Source: FDIC/OTS Summary of        Deposits Survey. Excludes institutions in U.S. territories.	Note:  	Small = organizations with consolidated deposits less than $1 billion	 Medium = organizations with consolidated deposits of $1 billion to $10 billion	 Large= organizations with consolidated deposits greater then $10 billion    The number of charters included in "small organizations" has dropped from    8,726 in 2001 to 7,735 in 2006; the number of "mid-size" charters declined    from 721 to 744, and "large" charters dropped from 292 to 271.	
**The drive-up	    facility is fading in popularity as offices in retail establishments are	    becoming more common.**Increased use of locations in retail space, such as supermarkets and department stores, continues to be a	key trend in the expansion of banking offices. Although the pace of growth slowed during the past year, more	banking offices were established in retail space than in any other office type during the past five years	(see Table 3). At the same time, use of limited service drive-up facilities has declined steadily. The	number of standard brick and mortar banking offices continues to grow and remains the most common type of	office location. 
Table         3**The          Number of Retail Banking Offices Has Risen Sharply During the Past          Five Years** Brick and Mortar OfficesRetail          OfficesDrive-Through FacilitiesOther Office TypesTotalJune 200164,0333,5103,17283271,547June 200568,8974,5832,95796077,397June 200671,2674,6362,9171,00979,829      1 Year Growth Rate3.4%1.2%-1.4%5.1%3.1%5 Year Compounded Growth Rate2.2%5.7%-1.7%3.9%2.2%      Source: FDIC/OTS Summary        of Deposits Survey	  Note: Commercial banks only.  Retail banking offices are full service offices located in a retail facility such as a supermarket or department store. 
**Branch networks have	expanded more rapidly than the population has increased.**	Nationwide, the number of FDIC-insured institution offices has expanded more	rapidly than the population has increased since 2000 (see Chart 2). However,	these offices continue to attract domestic deposits. Annual	growth in total domestic deposits averaged 8.3 percent between 2001 and 2005,	compared with 5.4 percent between 1996 and 2000. These trends may imply a more	aggressive retailing strategy as banks seek to provide	a greater level of service to customers. 
d

**The pace of industry consolidation continues to slow.**The number of FDIC-insured commercial banks and savings institutions dropped 1 percent during the year ending	June 30, 2006 (currently a total of 8,778 institutions), the slowest decline since the mid 1980s. Merger and	acquisition activity is affected by general economic conditions, trends in equity markets, and national and	state laws, such as the nationwide concentration limits mandated by the Riegle-Neal Act. No banking	organizations, even the largest, most geographically diverse, have a presence in all 50 states (see Table 4). 
Table         4**A Fifty State Banking Company Does Not Yet Exist**Name of        CompanyNumber of States with Deposit OfficesReported Number of Deposit OfficesDomestic Deposits($ billions)BANK OF AMERICA CORPORATION315,789590.6JPMORGAN CHASE & CO.262,721462.3U.S. BANCORP262,526117.4WELLS FARGO & COMPANY233,216309.0WACHOVIA CORPORATION *223,447370.0BNP PARIBAS2072441.3NORTHERN TRUST CORPORATION179113.4DICKINSON FINANCIAL CORPORATION171693.1FIRST HORIZON NATIONAL CORPORATION1624021.7WASHINGTON MUTUAL GROUP152,195210.7REGIONS FINANCIAL CORPORATION151,39757.2Source: FDIC/OTS Summary of        Deposits Survey	*Proforma after 10/1/06 acquisition of Golden West Financial Corporation	See SOD instructions for definition of deposit offices. http://www2.fdic.gov/sod/pdf/SODINST2006.pdf
**Fifteen	      of the top twenty-five	markets are �moderately concentrated.�**Market concentration is an	important competitive factor considered by bank regulatory agencies and the	Department	of Justice (DOJ) in the analysis	of proposed mergers and acquisitions. Although the number	of	banking offices continues to grow in many large metropolitan areas, none	of the top 25 metropolitan areas	(ranked by population) meets the DOJ�s definition	of �highly concentrated,� implying	an active and competitive environment in the largest metropolitan areas (see	Table 5).4
Table         5**None of the Largest Cities Is Characterized as a "Highly Concentrated" Market	(Top 25 metropolitan areas by population as of June 30, 2006)**Metropolitan AreaHerfindahl-Hirschman Index(1)Population Estimate (2) (millions)5 Year Compounded Growth Rate in Offices5 Year Compounded Growth Rate in DepositsDallas-Fort Worth-Arlington, TX1,6485.87.719.7Cincinnati-Middletown, OH-KY-IN1,6402.11.70.6Minneapolis-St. Paul-Bloomington, MN-WI1,5683.13.44.8Cleveland-Elyria-Mentor, OH1,5512.11.04.6Pittsburgh, PA1,5332.40.36.3Phoenix-Mesa-Scottsdale, AZ1,5163.96.910.4Atlanta-Sandy Springs-Marietta, GA1,4324.94.913.2Detroit-Warren-Livonia, MI1,4274.52.65.3San Francisco-Oakland-Fremont, CA1,3574.20.58.5Portland-Vancouver-Beaverton, OR-WA1,3312.12.08.7Seattle-Tacoma-Bellevue, WA1,3303.21.49.3Houston-Baytown-Sugar Land, TX1,1605.36.06.3Tampa-St. Petersburg-Clearwater, FL1,1392.62.46.7New York-Northern New Jersey-Long Island, NY-NJ-PA1,11218.72.810.7Baltimore-Towson, MD1,0302.71.16.6San Diego-Carlsbad-San Marcos, CA9812.92.79.2Boston-Cambridge-Quincy, MA-NH9484.41.25.5Riverside-San Bernardino-Ontario, CA9163.94.110.9Philadelphia-Camden-Wilmington, PA-NJ-DE-MD8605.81.314.1Denver-Aurora, CO8522.44.88.3Miami-Fort Lauderdale-Miami Beach, FL8335.42.19.8Washington-Arlington-Alexandria, DC-VA-MD-WV8335.22.112.9Los Angeles-Long Beach-Santa Ana, CA74612.92.28.3St. Louis, MO-IL6492.81.45.0Chicago-Naperville-Joliet, IL-IN-WI6129.45.65.6Source: FDIC/OTS Summary of        Deposits Survey, Moody's Economy.com	Note: (1) The Herfindahl-Hirschman Index (HHI), a commonly accepted measure of market concentration, is	calculated by squaring the market share of each firm competing in the market and then summing the resulting	numbers. Markets in which the HHI is between 1000 and 1800 points are considered to be "moderately	concentrated," and those in which the HHI is in excess of 1800 points are considered to be "highly	concentrated." For more information, please refer to the joint U.S. Department of Justice and Federal Trade	Commission website at http://www.usdoj.gov/atr/public/testimony/hhi.htm   (2) 2005 population estimates from	Moody's Economy.com.
**About  the Summary of Deposits Data**.  The FDIC�s SOD Web site at http://www2.fdic.gov/sod/index.asp has raw SOD data  available as well as various summary charts and tables. Additionally, the user  can find tools to help identify and analyze information on deposits andbranching activities of FDIC-insured institutions in specific markets. 

**Endnotes**

1				This *FYI* reflects updates in the Summary of Deposits data as of				October 16, 2006. All FDIC-insured institutions that operate branch offices				beyond their home office and that are				required to file a financial report with one of the Federal Financial				Institutions Examination Council agencies must submit responses to SOD surveys				to the FDIC or the OTS. ATMs are				not considered offices for the purposes of the survey. Call Report				information on unit banks (banks with a single headquarters office) have				been combined with branch office data to form the				SOD database which can be accessed at www.fdic.gov.

2Offices here			include those in the 50 states and the District of Columbia, but not those in U.S. territories. The			SOD data include domestic deposits only, and they are referred to in this report as deposits.			

3 Metropolitan			statistical areas are characterized by urban clusters of greater than 50,000 inhabitants. Each			micropolitan statistical area has an urban cluster of between 10,000 and 50,000 inhabitants. Other			areas have less population. 

4Under the DOJ			guidelines, markets with a Herfindahl-Hirschman Index (HHI) of less than 1000 are considered			�unconcentrated;� those with an HHI between 1000 and 1800 are considered �moderately concentrated;�			and those with an HHI greater than 1800 are considered �highly concentrated.� For more details,			access the joint Federal Trade Commission (FTC) and DOJ Web site on �Horizontal Merger Guidelines�			at http://www.usdoj.gov/atr/public/guidelines/horiz_book/hmg1.html.			
**About      the Author**Ronald Spieker is Chief of the Regional Programs Section, Division of Insurance and Research, FDIC.**Comments      and Inquiries**Send      comments or questions on the *FYI* to Ronald Spieker [email protected]      Send feedback and technical questions about the *FYI* series to:[email protected]      All media inquiries should be addressed to: David Barr, FDIC Office of Public      Affairs, [email protected]**About      *FYI****FYI*      is an electronic bulletin summarizing current information about the trends      that are driving change in the banking industry, plus links to the wide      array of other FDIC publications and data tools. **Disclaimer**The views      expressed in *FYI* are those of the authors and do not necessarily      reflect official positions of the Federal Deposit Insurance Corporation.      Some of the information used in the preparation of this publication was      obtained from publicly available sources that are considered reliable. However,      the use of this information does not constitute an endorsement of its accuracy      by the Federal Deposit Insurance Corporation.FYI      Home    Subscribe    UnsubscribeLast Updated	10/25/2006[email protected]**Home    Contact Us    Search    Help    SiteMap    Forms**Freedom of Information Act (FOIA) Service Center    Website Policies    USA.govFDIC Office of Inspector General                                 |
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