Meet the Author

James B. Thomson |


James B. Thomson

James Thomson is a former vice president and financial economist in the Research Department of the Federal Reserve Bank of Cleveland. He retired in February 2013.


Economic Trends

Banking Structure

James Thomson and Cara Stepanczuk

Passage of the 1994 Reigle–Neal Act, which regulates interstate banking, has spurred the consolidation of depository institutions. The number of FDIC-insured commercial banks fell from 9,972 at the end of 1995 to 7,451 at the end of the third quarter of 2006, a decline of more than 25 percent. The total number of banking offices, however, increased nearly 23 percent over that period, from 65,711 to 80,809.

Commercial Bank Offices

Source: Federal Deposit Insurance Corporation, Quarterly Banking Profile, Third Quarter 2006.

From 1995 through the end of September 2006 the number of FDIC-insured savings associations fell by more than 36 percent, from 2,030 in 1995 to 1,293. The number of savings associations’ offices also declined, but less sharply than the number of institutions (less than 15 percent, from 15,461 in 1995 to 13,220 at the end of the 3rd quarter of 2006). Over the same period, the total number of FDIC-insured depository institutions’ offices increased almost 16 percent from 81,172 at the end to 1995 to 94,029 through the 3rd quarter of 2006. This count does not include other channels for delivering banking services, such as automated teller machines, telephone banking, and online banking. Hence, the reduction in the number of insured depository institutions has not decreased the availability of bank services for most consumers.

Savings Association Offices

The effects of the banking industry’s interstate consolidation are evident: All but five states now report that more than 15 percent of depository institutions’ branches are part of an out-of-state bank or savings association. And in over half the states, 30 percent or more of all branches are offices of out-of-state depository institutions.

*Figures reflect percent of branches owned by out-of-state commercial banks and savings institutions.
Source: Federal Deposit Insurance Corporation, Quarterly Banking Profile, Third Quarter 2006.