The front page of the business section is frequently splashed with news of the big banks in this country. Wells Fargo, Chase, Bank of America, and others among them are sometimes hot topics for their financial performance and their impact on the American economy. At other times, they face heat for how their practices affect everyday consumers. Consequently, some might think that these banks are the only ones in the market – people seldom read about or even notice the local community banks down the street.
So clearly, a bank’s size matters to Americans. But just how big are the “Big Banks?” The answer might surprise you.
They’ve got a LOT of assets
A bank’s size is typically measured by the amount of assets (dollars) on their balance sheets. The FDIC maintains data on each and every one of the federally insured banks, so it’s quite easy to check out the numbers. The top 4 banks in the United States each have over $1 TRILLION in assets:
- JP Morgan Chase – $1.9 trillion
- Bank of America – $1.5 trillion
- Citibank - $1.3 trillion
- Wells Fargo - $1.3 trillion
No other banks even come close
U.S. Bank, the 5th largest bank by assets is not even really in the running for America’s biggest bank. It holds assets of about $345 billion, or 27% of the amount that 4th place Wells Fargo holds.
There are plenty of well-known big banks that don’t break into the top 4, such as PNC Bank, Capital One, and SunTrust Bank. But many of these combined don’t add up to the magnitude of the banks in the “Trillionaires Club.” The next 10 largest banks in overall sum to just 39% of the biggest 4 combined. In fact, you would have to add up the assets of about 135 of the next largest banks to total the combined assets of Chase, BofA, Citibank, and Wells Fargo.
Just how small are the smallest banks in comparison?
Community banks, known for their personal touch and focus on small business lending are often defined as having assets of $1 billion or less. There are over 6,300 banks below that threshold, meaning an astonishing 90% or so of all FDIC insured banks could be considered a community bank.
The variety of options mean consumers can often find a community bank somewhere nearby, but even so these banks can find it hard to compete with the marketing and technology budgets of the big 4 and other large regional banks. At $1.4 trillion, the combined assets of the entire group of community banks is still not enough to reach Bank of America’s size.
These astonishing numbers can really put into perspective the concerns that many consumer banking advocates express. America’s biggest banks are so large that they often don’t need to offer the most competitive products or services to maintain a loyal customer base or profitability. Instead, they can rely on their nationwide presence and name brand. However, smaller local institutions may actually be the better way to go, with benefits like afree checking account, or better savings account rates,. So, if your new years resolution was to switch banks, don’t just hop from one big bank to another, research your options in the local market as well.
John Gower writes for NerdWallet, a website devoted to helping consumers save money and compare the best CD rates, credit cards, and more.