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PCBB Banc Investment Daily December 09, 2016
Banc Investment Daily
December 09, 2016

Thinking Big In Banking

No matter your politics, you might be interested to note that Donald Trump is credited with saying "You have to think anyway, so why not think big?" Speaking of big thinking and all things big, when it comes to banking, one must look at asset size.
On this front, recently SNL Financial did some interesting work around the asset size of the largest 50 banks and thrifts in the US. The analysis included proforma for recent mergers and acquisitions. We looked at that data and found some interesting things we thought you might like to know.
First, JPMorgan remains the largest bank in the country at $2.5T in assets. The interesting thing here isn't that JP is so large, but rather that Bank of America at #2 is only $2.2T. We say only because at that level, believe it or not, BofA is 13% smaller than JP. Put another way, the difference is $326B or slightly larger than the 10th largest bank.
As you ponder that, we go to our second tidbit. Here we find that the difference between the largest bank (JP) and the smallest of the top 50 (EverBank Financial, FL) is huge. Remember that these are the Top 50 largest banks in the country after all. Yet, EverBank at #50 is only about 1.1% the size of JP - despite having $28.7B in assets in its own right.
Next, the data shows a jarring difference between US Bank as the 5th largest in the US vs. JP just four slots above it in size. This is because JP is at $2.5T and US Bank is only at $454B. That means US is about 18% the size of JP or it would take more than five US Banks to be the size of just one JP.
Further, while on the subject of US Bank, consider that even if they bought up the next five banks rounding out the top 10 (Bank of New York Mellon, PNC Financial, TD Group, Capital One and HSBC North America) they would be only slightly larger than BofA with $2.21T (vs. $2.20T) in the #2 position and would still be well behind JP.
The next point is that JP by itself represents 17% of total cumulative assets of the entire group of 50. Additionally, the top four players (JP, BofA, Wells and Citigroup) control a whopping 58% of the total assets ($8.48T) of the entire group of the 50 largest ($14.69T).
On a name by name basis, you might be interested to note that BB&T is larger than SunTrust, USAA is ranked #19, American Express is much larger than Discover, and Synchrony Financial is larger than Zions. On a quirkier note, 11% of this group's assets are controlled by the nine foreign banks operating in the US.
Finally, while geographic locations don't really matter much when your bank is this big, we were intrigued to see what was going on here anyway. By count, the top five states are NY (13 banks); CA (5); TX (4); IL, NC, OH (3 each) and CT, GA, MA and PA (2 each). Meanwhile, by assets the five states with the most were: NY ($5.9T), NC ($2.5T), CA ($2.3T), PA ($398B), MA ($395B), and OH ($380B).
As we leave you this morning to ponder all of this, here is one more factoid to consider. The top three largest US banks (JP, BofA, Wells) last reported a total of 104.9mm active online or digital customers. When you consider there are about 242.5mm adults in the US as of the latest Census report, that means they have somewhere around a 40%+ marketshare probably - crazy.
We hope you have enjoyed this "yuge" discussion today.