FYI: An Update on Emerging Issues in Banking

Branching Continues to Thrive as the U.S. Banking System Consolidates

October 20, 2004

Overview

Consolidation of FDIC-insured commercial banks and thrifts into fewer and larger companies represents a 

long-term trend with far-reaching business and regulatory implications.1 But amid charter consolidation, a 

steady expansion in the number of U.S. bank and thrift branches is also underway that is itself changing 

the face of the banking industry. Recent research published under the FDIC Future of Banking Study 

showed that while the number of commercial banks declined by 29 percent from 1994 through 2003, the 

number of bank branches increased by 15 percent over the same period to almost 67,000.2 The study

showed that despite consolidation, branches remained a valuable resource in helping banks generate fee 

income and possibly better manage their overhead expenses.

New data published today as part of the 2004 Summary of Deposits (SOD) release show that the 

expansion of bank branching continues in place.3 Further, analysis of the mid-year 2004 data provide yet 

more evidence that bank branch networks are generally associated with lower expenses, higher fee 

income, and higher profitability. At the same time, the 2004 data show that charter consolidation and outof-state branching are leading to more highly concentrated deposit markets in a number of states and 

metropolitan areas, which could restrict the ability of large institutions to acquire more branches given 

existing state and federal caps for deposit market share. 

D

The Expansion of Branch Networks Continues

While the number of both commercial banks and savings institutions has steadily declined, branch 

banking has continued to expand. In the 12 months ending June 30, 2004, the number of FDIC-insured 
institutions declined by 194 while the number of deposit offices operated by these institutions increased 

by 1,594. At the end of June, these 9,066 institutions operated 89,814 offices. 

Most of the expansion in branch banking has come from new brick and mortar offices and retail 

locations.4 Full service brick and mortar offices increased by 1,471 to 80,960 in 2004, while the number of 

full service retail offices increased by 517 to 4,728. During this same period, mobile/seasonal offices 

increased from 310 to 405. All other office types, including limited service offices, changed only slightly 

from previous year totals.

The fact that the highest percentage increase (12.3 percent) in branches during the year was observed in 

retail facilities reflects the ongoing evolution of strategies to bring the bank to the customer. Starting in the 

late 1970s, this effort was spearheaded by the proliferation of automated teller machines (ATMs), which 

increased in number from about 10,000 in 1977 to almost 175,000 in just 20 years.5 In contrast, the takeoff in bank branches located in retail facilities began in earnest only in the mid-1990s, and continues 

apace today. The SOD data show that retail branches have increased from only 302 in 1994 (0.4 percent 

of total branches) to 4,728 in 2004 (5.3 percent). This rapid increase may indicate an effort to bring a 

wider range of banking services to retail customers than can be accomplished with ATMs alone.

The pace of growth for large institutions is clearly exceeding the rate for smaller institutions. Larger banks 

have been branching out at a rate that is faster than small and new banks can grow internally. The latest 

data show that smaller institutions (defined here as those having $1 billion or less in total assets) operate 

33,191 offices (37 percent of the total). However, their trend in both number of offices and total deposits 

has been declining since at least 1994. Between June 2003 and June 2004, offices of small banks 

declined by 669 while their total deposits increased slightly from $1.118 trillion to $1.120 trillion. For larger 

institutions (assets greater than $1 billion), the trend has been just the reverse, with offices increasing 

from 54,252 to 56,623 and deposits increasing from $4.014 trillion to $4.345 trillion. Approximately $28.0 

billion of large bank deposit growth is due to mergers with small institutions, and $15.6 billion in growth 

resulted from small institutions growing to more than $1 billion in assets.6 However, even after adjusting 

for these factors, small institutions grew by more than 4 percent, while large institutions grew slightly more 

than 7 percent. 

Table 1 

FDIC/OTS 2004 Summary of Deposits Change in Offices by Bank Service Type

Bank Service Type

Number 

of Offices 

2004

Number of 

Offices 

2003

Change in 

Number of 

Offices

Change in 

Number of 

Offices (%)

Full - Brick and Mortar Office 80,960 79,489 1,471 1.9 

Full - Home Banking 156 150 6 4.0 

Full - Retail Office 4,728 4,211 517 12.3 

Limited - Drive-Through/Facility 3,109 3,161 -52 -1.6 

Limited - Military Facility 26 29 -3 -10.3 

Limited - Mobile/Seasonal Office 405 310 95 30.6 

Other 430 870 -440 -50.6 

Total 89,814 88,220 1,594 1.8 

Source: FDIC/OTS Summary of Deposits

Branching Is Generally Related to Better Financial Performance

Table 2 below breaks down FDIC-insured institutions into groups according to how extensive a branch 
network each institution maintains. Within these groupings, simple averages were calculated for several 

financial ratios that can reflect how an institution’s branch network contributes to income, expenses and 

profitability. Based on these calculations, shown in Tables 2A, 2B and 2C, extensive branch networks are 

generally associated with higher noninterest income, lower interest and noninterest expenses, and higher 

returns on equity (ROE). Moreover, these relationships are especially evident among community banks, 

which are less profitable on average than larger institutions. These results suggest that maintaining a 

branch network may be one way in which smaller institutions can close the profitability gap with their 

larger rivals.

Table 2A 

FDIC/OTS 2004 Summary of Deposits 

Selected Measures for FDIC-Insured Institutions and Offices

All Institutions 

Numbe

r of 

Offices

Total 

Institution

s

Total 

Office

s

Total 

Deposits

(Dollars in 

thousands) 

Averag

e ROE

NonInteres

t Income*

Net 

Noninteres

t Expense*

Total 

Interest 

Expense

*

Net 

Expense*

*

1 2,545 2,545 284,518,043 8.53 2.00 4.46 1.34 5.80 

2 - 3 2,790 6,763 410,513,460 10.29 1.03 3.24 1.41 4.65 

4 - 10 2,712 15,834 592,716,887 11.52 0.91 3.08 1.39 4.47 

11 - 30 714 11,610 490,258,274 12.12 1.22 3.14 1.37 4.51 

>30 275 52,451 3,637,818,61

7 13.90 1.73 3.16 1.27 4.43 

Totals 9,036 89,203 5,415,825,28

1 

Table 2B 

FDIC/OTS 2004 Summary of Deposits

Selected Measures for FDIC-Insured Institutions and Offices

Large Institutions (Total Assets > $1.0 billion)

Numbe

r of 

Offices

Total 

Institution

s

Total 

Office

s

Total 

Deposits

(Dollars in 

thousands) 

Averag

e ROE

NonInteres

t Income*

Net 

Noninteres

t Expense*

Total 

Interest 

Expense

*

Net 

Expense*

*

1 51 51 154,575,284 19.45 7.49 6.60 1.33 7.93 

2 - 3 24 56 177,536,928 15.42 3.32 3.23 1.43 4.66 

4 - 10 51 400 75,384,864 14.46 1.12 2.53 1.36 3.89 

11 - 30 191 3,863 263,532,344 12.94 1.35 2.92 1.39 4.31 

>30 257 51,696 3,627,049,75

8 13.95 1.37 2.84 1.28 4.12 

Totals 574 56,066 4,298,079,17

8 

Table 2C 
FDIC/OTS 2004 Summary of Deposits

Selected Measures for FDIC-Insured Institutions and Offices

Smaller Institutions (Total Assets < $1.0 billion) 

Numbe

r of 

Offices

Total 

Institution

s

Total 

Office

s

Total 

Deposits

(Dollars in 

thousands) 

Averag

e ROE

NonInteres

t Income*

Net 

Noninteres

t Expense*

Total 

Interest 

Expense

*

Net 

Expense*

*

1 2,494 2,494 129,942,759 8.30 1.89 4.42 1.34 5.76 

2 - 3 2,766 6,707 232,976,532 10.25 1.01 3.24 1.41 4.65 

4 - 10 2,661 15,434 517,332,023 11.46 0.91 3.09 1.39 4.48 

11 - 30 523 7,747 226,725,930 11.82 1.17 3.22 1.36 4.58 

>30 18 755 10,768,859 13.20 6.89 7.82 1.11 8.93 

Totals 8,462 33,137 1,117,746,10

3 

*Four Quarters, Percentage of Average Assets

**Total Interest Expense plus Net Noninterest Expense, Four Quarters, Percentage of Average Assets

***Excludes 30 institutions in Puerto Rico and U.S. Territories, and 13 other institutions for which income data 

was not reported.

Source: FDIC/OTS 2004 Summary of Deposits, Call Reports, and Thrift Financial Reports 

Branch networks appear to help generate higher levels of noninterest income. As was previously 

demonstrated in the FDIC Future of Banking Study, institutions with multiple banking offices in June 2004 

reported higher average ratios of noninterest income to average assets as the number of offices 

increased. Statistical means tests between institutions having two or three offices and those having more 

than 30 offices show a significant difference in levels of noninterest income, interest expense and ROE.7

Breaking down the industry by asset size further identifies differences in noninterest income ratios at 

community banks (those holding less than $1 billion in total assets). Community banks with 11 to 30 

offices reported average noninterest income that was 16 percent higher than those with only 2 to 3 

offices, while those with more than 30 offices reported noninterest income that was more than six times 

higher.8 Although more study is needed as to the source of this earnings advantage in fee income, it 

seems reasonable to conclude that branches are effective engines in generating fees from retail and/or 

business borrowers.

Not surprisingly, branching networks seem to be associated with lower interest expense ratios, with the 

advantages being more pronounced in the case of community banks. For the industry as a whole, 

institutions with 30 or more offices reported interest expenses as a percentage of average assets that 

were 10 percent lower than the average ratio for institutions with only 2 or 3 offices. Again, statistical 

means tests show a significant difference between these two groups. Among small banks, this cost 

advantage, also statistically significant, averaged 21 percent. It is clear that branches are generally 

effective in helping institutions gather up low-cost core deposits, helping to keep overall interest expenses 

at a minimum.

The 2004 data show that, for all institutions, branch networks may be associated with lower noninterest 

expenses. For example, institutions with more than 30 offices report average noninterest expense of 3.16 

percent compared with 3.24 percent for those having 2 to 3 offices. However, when a separate 

comparison is made for large and small institutions, this marginal advantage is less apparent. Neither 

large nor small institutions appear, on average, to enjoy a statistically significant benefit.

The net contribution of branching networks to the bottom line is reflected in the fifth column of Table 2, 

which compares average ROE for each group. While the contribution of branch networks to larger banks’ 

profitability is somewhat inconclusive, it seems clear that among community banks, branching networks 
are associated with higher ROE ratios. In fact, for community banks with networks of 11-30 offices, 

average reported ROE was 15 percent higher than the ratio for institutions with only 2 or 3 offices. This 

result is also statistically significant. 

Geographic Patterns of Growth 

Over the past decade, deposits have tended to grow faster at branches that were located within the 

boundaries of U.S. Metropolitan Statistical Areas (MSAs) compared with growth in non-metro areas.9

Deposits at branches located within MSAs grew by 78 percent between 1994 and 2004, while deposits in 

branches located outside MSAs were up 30 percent. But the gap between metro and non-metro areas 

was smaller when measured in terms of growth in the number of offices. Between 1994 and 2004, the 

number of offices located in MSAs grew 11 percent, which was only slightly higher than the rate of 8 

percent for non-metro areas.

Table 3 shows the 10 states with the largest percentage increase in offices between 1994 and 2004. The 

largest percentage increase occurred in the state of Colorado, where the number of offices increased 

from 856 to 1,419 (66 percent). The 10-year increase in total deposits in these states ranged from 50 

percent in Oklahoma to 733 percent in Utah. Not surprisingly, these patterns of growth in offices and 

deposits across the states roughly mirror the long-term growth of the state economies; of the 10 states 

listed in Table 3, five were also among the 10 states with the largest net addition of payroll jobs over the 

period. 

Table 3 

FDIC/OTS 2004 Summary of Deposits for Selected States*

States With Greatest Percentage Change in Deposits

States 

Number of 

Offices 

2004 

Number of 

Offices 

1994 

Change in 

Number of 

Offices 1994 -

2004 (%) 

Deposits 2004 

(Dollars in 

thousands) 

Deposits 1994 

(Dollars in 

thousands) 

Change in 

Deposits 

1994 -2004 

(%) 

Colorado 1,419 856 65.8 64,469,655 35,115,581 83.6 

Wyoming 205 136 50.7 7,882,896 5,100,901 54.5 

Texas 5,480 3,833 43.0 310,346,403 173,080,061 79.3 

Montana 365 257 42.0 11,911,022 7,791,176 52.9 

Nevada 474 345 37.4 40,738,192 13,074,291 211.6 

Arkansas 1,341 1,004 33.6 38,682,129 25,229,147 53.3 

Illinois 4,394 3,363 30.7 281,924,653 186,739,410 51.0 

Idaho 488 376 29.8 14,105,372 9,284,641 51.9 

Utah 600 468 28.2 102,377,839 12,291,634 732.9 

Oklahoma 1,242 991 25.3 46,322,095 30,790,663 50.4 

*Excludes Puerto Rico and U.S. Territories 

Source: FDIC/OTS Summary of Deposits 

More Institutions Are Branching Across State Lines 

In keeping with the overall trend of charter consolidation, the number of institutions that operate across 

state lines has increased every year since 1993.10 The total number of institutions with offices in two or 

more states increased from 539 in 2003 to 553 in 2004. The total assets and deposits held by multi-state 

institutions have been increasing as well, although at a somewhat slower rate. This trend is also reflected 

in data that measure the number of out-of-state branches located in each state and the market shares of 

those branches. States leading the nation in terms of total deposits in branches owned by out-of-state 
companies include Florida (70.6 percent), Arizona (84 percent), Oregon (76.2 percent), and Texas (52.6 

percent). 

Market Concentration and Regulatory Ceilings 

Consolidation and interstate branching have also led to an increase in the number of cases where an 

institution holds a share of deposits in one or more states that either approaches or exceeds the marketshare cap for that state. The implication is that such institutions may face regulatory constraints to further 

acquisitions within that state. Table 4 shows 14 cases where an institution is nearing or already 

exceeding the applicable Riegle-Neal cap or state limit for total market share. Two institutions with 

interstate operations in two states already exceed deposit caps, with banks in Alaska, Arizona, and the 

District of Columbia rapidly approaching the cap.

11 A larger number of institutions have market share in 

excess of 20 percent of state deposit totals. These banks are thus restricted in their ability to grow where 

mergers with other institutions would exceed the state cap.

Table 4 

FDIC/OTS 2004 Summary of Deposits 

Banks or Holding Companies With Market Share Near Riegle-Neal or State Limits 

State 

Statewide Deposit 

Cap on Branch 

Acquisitions 

Institution 

Total Deposits 

(Dollars in 

thousands) 

Market 

Share 

(%) 

AK 50% WELLS FARGO & COMPANY 2,667,414 44.9 

AZ 30% BANK ONE, NATIONAL ASSOCIATION 16,419,000 26.9 

CA 30% ** BANK OF AMERICA CORPORATION 140,254,162 22.2 

CT 30% BANK OF AMERICA CORPORATION 16,971,358 20.8 

DC 30%** WACHOVIA CORPORATION 4,977,718 27.8 

FL 30%** BANK OF AMERICA CORPORATION 62,018,922 21.0 

HI 30%* BNP PARIBAS SA 6,830,683 30.4 

ID 30%** WELLS FARGO & COMPANY 3,304,823 24.1 

MA 30% BANK OF AMERICA CORPORATION 38,336,299 22.3 

MO 13% U.S. BANCORP 10,715,940 12.4 

NM 40% WELLS FARGO & COMPANY 4,063,283 22.6 

OR 30%** U.S. BANCORP 8,877,628 22.6 

SD 30%** WELLS FARGO & COMPANY 39,428,281 74.2 

WA 30%*** BANK OF AMERICA CORPORATION 19,377,642 22.6 

* Federal cap applies unless waived by Commissioner 

** State instituted no deposit cap, therefore federal law of 30% applies (Riegle-Neal Act) 

*** Owned either by a foreign or non-bank holding company 

**** Waived in certain circumstances 

Note: Excludes Puerto Rico and U.S. Territories 

Sources: FDIC/OTS Summary of Deposits. State deposit caps provided by Conference of State Bank 

Supervisory (CSBS). 

Beyond the question of branch expansion or acquisition, market concentration is also an important factor 

in the competitive analysis of proposed mergers and acquisitions that is routinely conducted by both 

federal bank regulatory agencies and the Department of Justice (DOJ). Since 1982, DOJ has based its 

merger guidelines on the Herfindahl-Hirschman index of concentration (HHI), although this is only one of 

several factors taken into consideration.12 Under these guidelines, markets with an 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.”

Tables 5A and 5B below show the 10 states with the highest and lowest HHIs, respectively, as of midyear 2004.13 Based on the concentration guidelines that are generally applied in the analysis of banking 

mergers, some 34 states would currently be considered unconcentrated, while 10 states and the District 

of Columbia would be considered moderately concentrated and 6 other states considered highly 

concentrated. These results indicate that there may still be considerable capacity for expansion through 

mergers and acquisitions.

Table 5A 

FDIC/OTS 2004 Summary of Deposits

Herfindahl-Hirschman Index (HHI) of Concentration for Selected States*

States With Highest HHI Concentration in 2004

States Number of Institutions 2004 HHI 1994 HHI HHI Change 1994-2004 

South Dakota 89 5,534 891 +4,643 

Utah 72 2,971 1,511 +1,461 

Alaska 9 2,786 2,600 +186 

Rhode Island 22 2,415 2,058 +357 

Hawaii 10 2,194 2,010 +184 

North Carolina 123 2,175 852 +1,323 

New Hampshire 37 1,664 657 +1,007 

Arizona 69 1,612 2,163 -551 

Delaware 39 1,604 916 +689 

District of Columbia 27 1,600 1,426 +174 

*Calculations are made on the holding company level. 

Source: FDIC/OTS Summary of Deposits 

Table 5B 

FDIC/OTS 2004 Summary of Deposits

Herfindahl-Hirschman Index (HHI) of Concentration for Selected States*

States With Lowest HHI Concentration in 2004

States Number of Institutions 2004 HHI 1994 HHI HHI Change 1994-2004 

Kansas 359 235 313 -78 

Iowa 348 241 211 +31 

Kentucky 225 326 310 +15 

Arkansas 149 341 371 -30 

Oklahoma 266 365 231 +134 

Illinois 676 385 237 +148 

North Dakota 94 417 561 -144 

Indiana 197 429 394 +35 

Missouri 345 446 631 -185 

Texas 648 446 395 +52 

*Calculations are made on the holding company level. 

Source: FDIC/OTS Summary of Deposits 
Table 5C 

FDIC/OTS 2004 Summary of Deposits

Herfindahl-Hirschman Index (HHI) of Concentration for Selected States*

States With Greatest Change in HHI Concentration 

States Number of Institutions 2004 HHI 1994 HHI HHI Change 1994-2004 

South Dakota 89 5,534 891 +4,643 

Utah 72 2,971 1,511 +1,461 

North Carolina 123 2,175 852 +1,323 

New Hampshire 37 1,664 657 +1,007 

New York 227 1,266 492 +773 

Delaware 39 1,604 916 +689 

Minnesota 421 1,519 909 +609 

Louisiana 172 933 476 +457 

Vermont 24 1,391 1,016 +376 

Massachusetts 211 837 489 +349 

*Calculations are made on the holding company level. 

Source: FDIC/OTS Summary of Deposits 

But market concentration has clearly risen in some states over the past decade. Table 5C lists the 10 

states with the highest increase in their HHI since 1994.14 Based on these changes, three of the states 

(South Dakota, Utah, and North Carolina) would currently be considered highly concentrated, although 

only one of them (Utah) would have even been considered moderately concentrated a decade ago.

Concentration has also increased in a number of MSAs (Tables 6A, 6B and 6C). The Stockton, California 

MSA has experienced the largest increase in its HHI of any U.S. metropolitan area since 1994, and by 

this measure is currently the second-most highly concentrated deposit market in the nation. But it is by no 

means the only metro area where the deposit market could be considered concentrated. As of June 30, 

some 90 MSAs (including Stockton) could be highly concentrated, 221 could be considered moderately 

concentrated, and only 58 MSAs could be considered unconcentrated.15

Table 6A

FDIC/OTS 2004 Summary of Deposits 

Herfindahl-Hirschman Index (HHI) of Concentration for Selected Metropolitan Statistical Areas*

MSA With Highest HHI Concentration in 2004

MSA 2004 1994 Change 1994-2004

Sioux Falls, SD 7,504 3,184 +4,320

Stockton, CA 6,974 970 +6,004

Columbus, IN 6,752 3,439 +3,313

Bloomington-Normal, IL 5,744 1,593 +4,151

Hinesville-Fort Stewart, GA 5,439 5,239 +201

Charlotte-Gastonia-Concord, NC-SC 4,673 1,411 +3,262
San Germán-Cabo Rojo, PR 4,525 4,685 -160

Columbus, GA-AL 4,234 2,027 +2,208

Monroe, MI 4,006 3,326 +679

Laredo, TX 3,680 3,211 +559

*Calculations are made at the holding company level. 

Source: FDIC/OTS Summary of Deposits

Table 6B

FDIC/OTS 2004 Summary of Deposits 

Herfindahl-Hirschman Index (HHI) of Concentration for Selected Metropolitan Statistical Areas*

MSA With Lowest HHI Concentration in 2004

MSA 2004 1994 Change 1994-2004

Kansas City, MO-KS 477 434 +43

Huntington-Ashland, WV-KY-OH 525 603 -78

Davenport-Moline-Rock Island, IA-IL 554 557 -3

Chicago-Naperville-Joliet, IL-IN-WI 609 224 +385

Peoria, IL 611 858 -247

Oklahoma City, OK 640 574 +66

St. Louis, MO-IL 675 640 +35

Madison, WI 700 762 -62

Springfield, MO 707 857 -149

Poughkeepsie-Newburgh-Middletown, NY 729 612 +117

*Calculations are made at the holding company level. 

Source: FDIC/OTS Summary of Deposits

Table 6C

FDIC/OTS 2004 Summary of Deposits

Herfindahl-Hirschman Index (HHI) of Concentration for Selected Metropolitan Statistical Areas*

MSA With Greatest Change in HHI Concentration

MSA 2004 1994 Change 1994-2004

Stockton, CA 6,974 970 +6,004

Sioux Falls, SD 7,504 3,184 +4,320

Bloomington-Normal, IL 5,744 1,593 +4,151

Columbus, IN 6,752 3,439 +3,313

Charlotte-Gastonia-Concord, NC-SC 4,673 1,411 +3,262

Columbus, GA-AL 4,234 2,027 +2,208

Salt Lake City, UT 3,562 1,383 +2,180

Terre Haute, IN 3,195 1,612 +1,583

San Antonio, TX 2,277 880 +1,396

Fayetteville-Springdale-Rogers, AR-MO 2,042 730 +1,312
*Calculations are made at the holding company level. 

Source: FDIC/OTS Summary of Deposits

Conclusion 

Branch banking continues to expand, even as the overall number of banking institutions continues to 

decline. Large institutions in particular continue to branch out geographically, and, by far, new brick and 

mortar offices account for most of this new expansion. Still, the manner in which banks are attempting to 

reach their customers continues to evolve, as the fastest growing types of branches are those located in 

retail establishments.

Bank branching continues to thrive because it appears to offer clear financial advantages, at least to 

certain classes of banks. For small institutions, non-interest income, interest expense and ROE improves 

with larger branch networks. While similar advantages may accrue to larger institutions, their sparser 

population makes it difficult to determine whether their branch networks provide them with clear 

advantages.

The branching data also reflect an increase in deposit market concentration, both at the state level and in 

certain metropolitan areas. While a number of banks are approaching their market share caps in certain 

states, there still appears ample room for institutions to grow through merger and acquisition activity. 

About the Summary of Deposits (SOD) Data 

The FDIC’s SOD website provides a number of useful tools to define geographic markets, identify which 

institutions operate in a specific market, and determine pro forma market share for competitive analysis 

and potential mergers. Those interested in more detail on this topic are encouraged to visit the site at 

https://www5.fdic.gov/sod/sodInstBranch.asp?barItem=1 to explore the various resources that are 

available. 

1 Banking consolidation and market share is the subject of two recent studies published under the FDIC 

Future of Banking Study. See “The Declining Number of U.S. Banking Organizations: Will the Trend 

Continue?” and “The Evolving Role of Commercial Banks in U.S. Credit Markets.

2 This study only included commercial banks. See “Bank Branch Growth Has Been Steady -- Will It 

Continue?”

3 Current and historical Summary of Deposits (SOD) data can be accessed through the FDIC's website at 

https://www5.fdic.gov/sod/sodInstBranch.asp?barItem=1. For more information on the annual SOD 

Survey, see the Survey Forms and Instructions at 

https://www5.fdic.gov/sod/sodInstBranch.asp?barItem=1

4 Full service brick and mortar offices operate normal hours with a full time staff and may be owned or 

leased by the institution. Retail offices are those branches that are located in a retail facility such as a 

supermarket or department store. Mobile/seasonal offices are open for a limited period of time during the 

week and do not have a fixed location. 

5 See Congressional Budget Office, “Competition in ATM Markets: Are ATMs Money Machines?” July 

1998. www.cbo.gov/ftpdocs/6xx/doc666/atmcomp.pdf 

6 The 2004 SOD data now reflects deposit balances in escrow accounts. These balances were not 

reported for OTS institutions in the survey prior to June 30, 2004 . 

7 Using Satterthwaite tests of unequal variances. 
8 This result was not statistically significant, primarily because there are only 18 small institutions that 

have more than 30 branches. On the other hand, note that there are only 24 large institutions having 2 to 

3 branches. These smaller sample sizes that result for certain categories when the data are divided into 

large and small groups occasionally make it difficult to obtain significant results.

9 The Office of Management and Budget establishes and maintains the definitions of Metropolitan and 

Micropolitan Statistical Areas and other geographic definitions for the purpose of facilitating consistent 

geographic breakdowns of government statistical data. See 

www.census.gov/population/www/estimates/metroarea.html 

10 More complete statistics on interstate branching can be found on the FDIC's SOD website at: 

https://www5.fdic.gov/sod/sodInstBranch.asp?barItem=1.

11 The Riegle- Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle- Neal ) generally 

prohibits the approval of any interstate merger using the authority of section 44 of the FDI Act, 12 U.S.C. 

§1831u, if the resulting bank and its affiliates would control 30 percent or more of the total deposits in the 

state. However, Riegle- Neal would not prohibit an institution from exceeding this limit through organic 

(internal) growth. States may override the Riegle- Neal state caps by establishing their own caps either 

above or below the Riegle- Neal limits. Additional Call Report data is required to calculate the Riegle-Neal 

10 percent national market share cap. 

12 The HHI is measured as the sum of squares of the market shares in a particular geographic market. It 

can range from zero in a market having an infinite number of institutions to 10,000 in a market having just 

one institution (with a 100 percent market share). 

13 HHI is calculated from SOD data, and both the tables and the SOD web application weight all deposits 

at 100 percent. The HHI is considered in both Riegle-Neal interstate mergers and intrastate mergers. 

While Tables 5A, 5B, and 5C list the HHIs for entire states, actual merger analyses focus on the relevant 

geographic markets of the merging institutions and are often much smaller areas. 

14 South Dakota has experienced the greatest increase and has the highest 2004 index value, again due 

primarily to the move by Wells Fargo. 

15 Deposit market shares for all MSAs can be referenced at the FDIC's SOD homepage at: 

https://www5.fdic.gov/sod/sodInstBranch.asp?barItem=1. 

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. 

Last Updated 10/20/2004
Chart 1: Offices Operated by FDIC-Insured Institutions

Date All 

Institutions 

All 

Branches

All 

Offices

31-Dec-84 17,914 68,552 85,127 

31-Dec-85 18,043 68,590 84,392 

31-Dec-86 17,887 69,221 84,383 

31-Dec-87 17,345 69,011 83,499 

31-Dec-88 16,561 68,505 85,066 

31-Dec-89 15,828 68,529 84,357 

31-Dec-90 15,191 69,162 84,353 

31-Dec-91 14,516 68,925 83,441 

31-Dec-92 13,890 67,212 81,102 

31-Dec-93 13,260 67,315 80,575 

31-Dec-94 12,640 68,553 81,193 

31-Dec-95 12,001 69,349 81,350 

31-Dec-96 11,479 71,099 82,578 

31-Dec-97 10,946 72,725 83,671 

31-Dec-98 10,484 74,172 84,656 

31-Dec-99 10,240 75,893 86,133

31-Dec-00 9,920 76,147 86,067 

31-Dec-01 9,630 76,984 86,614 

31-Dec-02 9,369 77,968 87,337 

31-Dec-03 9,194 79,385 88,579 

30-Jun-04 9,048 80,133 89,181 

Source: FDIC/OTS 2004 Summary of Deposits