Bank-Holding Companies in the Last Decade

By Elamin, Mahmoud; Bednar, Bill | Economic Trends, September 2012 | Go to article overview

Bank-Holding Companies in the Last Decade


Elamin, Mahmoud, Bednar, Bill, Economic Trends


08.29.2012

by Mahmoud Elamin and Bill Bednar

Generally speaking, a bank-holding company (BHC) is a company that controls more than 25 percent of the voting securities of an FDIC-insured bank. One exception is if the company is holding the securities for trade. Such companies are not classified as BHCs. Below we discuss the condition of U.S. BHCs since 2001. We focus on those with assets of more than $500 million.

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BHCs have to file quarterly financial forms called "call reports" with their primary regulator, the Federal Reserve Board. These reports form the basis of our discussion. Note that we drop BHCs with assets below $500 million from the sample, since the reporting regime changed slightly and these BHCs report differently before and after 2006.

We first look at the current number of BHCs distributed across five different categories of asset size. We see that the larger the asset size class, the fewer the banks there are in it. As of June 2012, there are only six BHCs with more than $750 billion in assets and more than 450 that have between $500 million and $1 billion in assets.

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Next we look at how assets are distributed across these asset size classes. That is, we sum the total dollar amount of assets held by the BHCs in each of the size categories of the chart above. We find that almost 60 percent of total assets are held by the top 6 banks. It is no surprise that we hear constant talk about the importance of too-big-to-fail institutions.

The number of BHCs has risen steadily since 2001. Neither the recession after the dot-corn bubble nor the Great Recession has discouraged new bank-holding company starts.

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The increase in BHCs has been mainly driven by banks with assets below $10 billion. …

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