SIC 6029 Commercial Banks, Not Elsewhere Classified

SIC 6029

This category includes commercial banks (accepting deposits) that do not operate under federal or state charter.

NAICS CODE(S)

522110

Commercial Banking

Due to ongoing consolidation, the commercial banking industry shrank considerably during the 1990s and early 2000s. Primarily the result of mergers and acquisitions, the number of commercial banks fell to 7,598 during the first quarter of 2005, down from 8,129 in 2002 and down significantly from 18,769 at the end of 1975. Mergers and acquisitions had slowed somewhat by the mid-2000s, with 226 in 2004, down from 475 in 2000. In addition, the number of new commercial bank openings declined, from 217 in 2000 to 122 in 2004.

In general, commercial banks are involved in financing the production, distribution, and sale of goods and services by acting as a source of short-term funds for the producer. Funds are acquired by the banks from the deposits of individuals who earn interest on these deposits. National banks make up 25 percent of the commercial banking industry, but hold about two-thirds of banking assets, compared to state-chartered banks, which make up 75 percent of all commercial banks, but hold less than one-third of the industry's assets. National banks are organized under the National Bank Act of 1863 and overseen by federal agencies. State banks are organized under similar state regulations and overseen by state banking authorities. Organizations created under these regulations charter the banks and give them access to depositors' insurance.

The top five commercial banks by assets in 2004 were Bank of America, N.A. ($690.6 billion); JPMorgan Chase and Company ($648.7 billion); Citibank, N.A. ($606.2 billion); Wachovia Bank, N.A. ($364.5 billion); and Wells Fargo Bank, N.A. ($347.6 billion).

According to the Conference of State Bank Supervisors, the nation's 1,969 commercial banks maintained assets of $4.44 trillion in 2004 and state-chartered banks, which numbered 5,743 in 2004, held 3.38. For the second year in a row, in 2004, commercial banks earned in excess of $100 billion, with income up by 6.4 percent to $106.7 billion. Reflecting the overall health of the commercial banking system, only two banks failed during 2003 and three banks in 2004.

The banking industry was fueled by a growing economy and historically low interest rates, which resulted in an 11 percent increase in loans during 2004. Although rates began to rise...