Deposits are a common measure of market share in the banking markets. This chart shows the share of deposits held by the largest four banking institutions in New England. As the banking market has consolidated, this fraction has increased from 30 percent in 1990 to 43 percent in 2003. These top four spots have also changed over time as the result of various mergers and acquisitions.

Notable Merger & Acquisition Activity in New England

(1) 1991: Fleet/Norstar acquires major portions of Bank of New England Corporation.
(2) 1993: Shawmut National acquires New Dartmouth Bank and portions of Northeast Federal Corporation.
(3) 1995: Fleet acquires Shawmut National Corporation.
(4) 1995: Royal Bank of Scotland Group acquires First NH Bank.
(5) 1996: Bank of Boston Corporation acquires BayBanks, forming BankBoston Corporation.
(6) 1999: Fleet merges with BankBoston.
(7) 1999: People’s Heritage Group merges with Banknorth Group.
(8) 2003: Few mergers occured between 2000 and 2003; data do not reflect the merger between Bank of America and FleetBoston Financial, which occured in 2004.

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Note: As of June 30, 1991, total deposits were $220.5 billion. RBSG = Royal Bank of Scotland Group.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Note: As of June 30, 1994, total deposits were $200.1 billion. RBSG = Royal Bank of Scotland Group.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Note: As of June 30, 1996, total deposits were $204.8 billion. RBSG = Royal Bank of Scotland Group.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Note: As of June 30, 1997, total deposits were $214.3 billion. RBSG = Royal Bank of Scotland Group.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Note: As of June 30, 2000, total deposits were $253.3 billion.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Note: As of June 30, 2003, total deposits were $314.4 billion.
Source: FDIC and OTS Reports of Condition

last updated: July 8, 2004

Throughout the 1990s, New England’s banking industry has seen a sharp increase in the number of depository institutions with headquarters outside the region. In 1989, there were only two of these non-native institutions, but the number had grown to 21 by 2002. Some of the most notable are:

• Royal Bank of Scotland Group, Edinburgh, Scotland is the top holding company of Citizens Bank. Citizens has become one of the largest institutions in New England in the past 10 years, aided by the more than 20 acquisitions the company has made since 1990.
  
  
• Providian Corporation, Louisville, KY has gained a large share of deposits through its credit card banking operations in Tilton, NH.
  
  
• Sovereign Bancorp, Wyomissing, PA increased its regional market share by acquiring divested branches following the Fleet-BankBoston merger in 1999.
  
  
• KeyCorp, Cleveland, OH; JP Morgan, New York, NY; Mellon Bank Corporation, Pittsburgh, PA; and Wachovia Corporation, Charlotte, NC have all been able to establish a strong presence in New England. These banks consistently rank among the top 20 institutions in the region.

The variation in the breakdown of the types of loans made by commercial banks and savings institutions highlights the different business focuses of these institutions. Savings institutions concentrate primarily on loans for single- and multi-family residences. Although commercial banks also make loans for residential building, a much greater proportion of their loans are committed to non-real estate commercial and industrial activities, and other loans which include construction and land development loans, non farm-nonresidential real estate, non-real estate loans to individuals, and loans to other depository institutions. In New England, the value of loans made by commercial banks grew rapidly over the later part of the decade, while loan values were steady at savings institutions.

While the total number of depository institutions has declined across the United States in the last decade, the number of branches has increased by 13 percent. The same, however, cannot be said of New England, which has seen its number of branches drop by 15% in this period. The New England numbers are strongly affected by trends in Connecticut and Massachusetts, which combined are home to 70% of all branches in New England.

Since the early 1990s both the United States and New England have seen a dramatic decline in the number of depository institutions. The decline can be largely attributed to the vast number of mergers and acquisitions in the banking industry during the 1990s. From 1990 to 2002, at least 300 mergers took place annually in the U.S., with a peak of 726 mergers in 1997. In this period, the number of institutions shrank by 38% in the U.S. and 43% in New England. Connecticut and New Hampshire experienced the greatest declines within the region, with both states having lost more than half of their institutions by 2002.

These two charts show the breakdown between the numbers of savings institutions, or thrifts, and commercial banks. They also show the general decline in the number of depository institutions in the U.S. and New England since 1990. Traditionally, commercial banks have been the main vehicle for consumer deposits, checking accounts, and loans. In today’s environment, commercial banks also help facilitate everyday transactions between businesses and customers. Tracing their origins back to the 1700s and 1800s, savings banks were started as efforts to encourage saving among people with modest means. There are two types of thrift institutions – savings banks and savings and loan associations. The former are more prevalent in New England. Originally owned by the depositors, who received dividends, savings banks exist today in a similar mutual ownership form as publicly traded, stock owned entities. Savings and loan associations (SLA) have traditionally focused on lending for home financing, improvement, and new construction, following their roots as cooperative organizations whose members assisted one another in financing the building of their homes.

New England is home to just over 4 percent of the nation’s depository institutions, which hold 6.5% of the nation’s deposits. These charts highlight the unique composition of the region’s banking industry. Nationwide, commercial banks outnumber savings institutions by a margin of more than 5-to-1. In contrast, there were over twice as many savings institutions as commercial banks in New England. Many savings institutions sprouted up in New England and the former colonial states in the early 1800s. As the country grew, however, other types of institutions such as commercial banks began to appear in developing regions of the country, resulting in relatively a higher concentration of savings banks and thrifts in the Northeast. While saving institutions make up nearly 70 percent of the region’s banking institutions, they hold less than 30 percent of New England’s deposits. However, beginning with the creation of Negotiable Order of Withdrawal (NOW) accounts in the late 1970s, legislative changes have allowed savings institutions to offer transaction accounts with checkable deposits and a greater variety of loans, making them more competitive with commercial banks.

Return on average assets is a common measure of profitability, and shows how well a company’s management is using its assets and resources. The bulk of banks and thrifts assets are in held in loans that generate profit through interest and other fees. Between 1934 and 2000, the banking industry averaged a return on assets of 0.76.Since 1993, the return on assets for New England and U.S. financial institutions has met or exceeded this average.