Whenever discussing bank charter types, I’m reminded of a comparison made by Walt Moeling. Walt would always say that the bank charter choice is like choosing between a Ford and a Chevy truck. There are strong, die-hard advocates for the superiority of one over the other. But either one is functionally adequate, and will enable you to get from location a to b. Of course, neither is going to be confused for a Lamborghini or a Maserati either.
Looking at the breakdown of charters as of the beginning of 2019, while the majority of all U.S. banks are state, non-member banks (i.e. with primary federal supervision by the FDIC), each charter choice appears to continue to have its advocates.
The Office of the Comptroller of the Currency, the primary federal prudential regulator for national banks, has earned a reputation as the regulator of the largest banks, but the underlying data doesn’t necessarily support that viewpoint. While all of the four largest U.S. banks are national banks, in all asset classifications, there remains a variety of bank charter, showing that no one charter type is necessarily better based purely on asset size.
Federal Regulator by Asset Size
| |
National
(OCC) |
State,
Non-Member
(FDIC) |
State
Member
(Fed) |
Federal
Thrift
(OCC) |
State
Thrift
(FDIC) |
| Over $10B |
39% |
26% |
25% |
7% |
3% |
| $1 – $10B |
17% |
45% |
21% |
6% |
11% |
| $500M – $1B |
17% |
50% |
18% |
5% |
10% |
| < $500M |
14% |
63% |
13% |
7% |
4% |
| Total |
15% |
58% |
15% |
6% |
6% |
While national banks represent a plurality of the largest depository institutions (and thus the OCC is the most likely regulator of the largest banks), given the overall landscape of the U.S. banking industry in which smaller institutions absolutely dominate the number of institutions, each of the federal regulators predominantly regulates smaller institutions.
Asset Size of Regulated Institutions
| |
National
(OCC) |
State,
Non-Member
(FDIC) |
State
Member
(Fed) |
Federal
Thrift
(OCC) |
State
Thrift
(FDIC) |
| Over $10B |
6% |
1% |
4% |
3% |
1% |
| $1 – $10B |
13% |
9% |
17% |
11% |
23% |
| $500M – $1B |
14% |
10% |
15% |
9% |
22% |
| < $500M |
67% |
79% |
64% |
77% |
54% |
Thus while the OCC may be the most likely to have dealt with an issue for one of the largest banks in the United States, the majority of banks supervised by the OCC are less than $500 million in assets (with over 80% having less than $1 billion in assets).
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