Commercial Banking in the United States (NAICS 522110)

A Histometrics industry primer for public- and private-market investors

1. Overview

Commercial banking is the business of taking in deposits and lending them back out at a higher rate — the spread between the two is where most of the profit lives. It is the plumbing of the U.S. economy: banks in this industry hold the checking accounts, business loans, mortgages, and credit lines that households and companies use every day. When people talk about "the banking system," this is mostly it.

Banking matters to an investor for two reasons. First, it is a large, cyclical slice of the economy that moves with interest rates and the credit cycle. Second, a bank is essentially a leveraged bet on the U.S. economy — it does well when loans get repaid and rates are favorable, and it can fail quickly when either breaks. That combination of steady cash flow and tail risk is exactly what makes the sector interesting. The central question for any bank, public or private, is whether it can turn a durable deposit base and disciplined lending into sustainable margins and returns on capital.

There are two ways to own a piece of it. The public route is deep and liquid: the biggest U.S. banks are among the most heavily traded stocks in the world, and there are exchange-traded funds (ETFs — baskets of stocks that trade like a single share) for the whole group. The private route is far larger by headcount: the roughly 3,900 U.S. commercial banks [7] are overwhelmingly small, privately held, community-owned institutions, plus U.S. subsidiaries of foreign banks and a handful of mutually owned banks. Most banks in America are not publicly traded.

2. What it is and how it is structured

The federal definition. NAICS (the North American Industry Classification System) code 522110 covers establishments "primarily engaged in accepting demand and other deposits and making commercial, industrial, and consumer loans." Commercial banks and U.S. branches of foreign banks are included [4].

What a bank actually does is financial intermediation: it raises money (deposits, wholesale borrowing, and shareholder equity), puts that money into earning assets (loans, securities, and cash), and profits from the interest spread plus fees — after absorbing credit losses, operating costs, and the cost of the regulatory capital it must hold. A bank holding company (BHC) sits on top and controls one or more banks; the bank subsidiary holds the charter, the deposits, and the regulated balance sheet. The Federal Reserve supervises the holding company even when the bank subsidiary's primary regulator is the Office of the Comptroller of the Currency or the FDIC [16].

What 522110 deliberately excludes — these are separate NAICS codes, and lumping them in overstates the industry [4]:

• Monetary authorities / central bank (521110) — the Federal Reserve's own operations.
• Savings institutions and other depository credit intermediation (522180) — thrifts and savings banks focused on time deposits and real-estate lending (this 2022 NAICS code absorbed the former "Savings Institutions" 522120).
• Credit unions (522130) — member-owned, not-for-profit cooperatives.
• Credit card issuing (522210) — monoline card banks.
• Loan brokers (522310) and payment processing / clearinghouses (522320).
• Trust, fiduciary, and custody activities (523991) — the custody and asset-servicing business.
• Investment banking, securities dealing, and asset management sit elsewhere in Sector 52 as well.

This boundary matters because the largest listed "banks" are conglomerates. JPMorgan Chase, Bank of America, and Citigroup each run a 522110 commercial bank plus large securities, card, and wealth-management arms; Goldman Sachs and Morgan Stanley are the reverse — investment banks that also own a chartered commercial bank subsidiary. When you buy the stock, you buy the whole holding company, not just the 522110 piece [16].

Ownership mix. The industry is a barbell. At one end, a handful of "universal" banks and large regionals hold most of the assets. At the other, thousands of small community banks — most under $10 billion in assets — are privately held, family- or locally-owned, and serve one town or region. A distinct third group is foreign-owned U.S. banks (for example, TD Bank, BMO, and HSBC's U.S. arm operate as chartered U.S. banks under overseas parents). Government ownership is essentially nil. The federal ground-truth statistics do not publish an ownership split, so no exact public/private percentage is stated here.

3. How big it is

Federal business statistics (our ground truth):

• Establishments: 82,989 (2023) [1]. This counts branches and offices, not banks — the ~3,900 actual banking companies each run many locations.
• Employment: 1,630,919 people (2023) [1].
• Annual payroll: $174.9 billion (2023) [1]; first-quarter payroll $61.0 billion [1].
• Firms: 4,021 (2022 Economic Census) [2].
• Receipts: $591.1 billion (2022 Economic Census) [2].
• SBA small-business size standard: $850 million in assets — below that, a bank counts as "small" for federal programs. (For depository institutions the Small Business Administration measures size by assets, not annual receipts.) [3]

The measurement caveat — read this before quoting "receipts." For banking, the Census "receipts" figure ($591 billion) badly understates the industry's economic weight, because a bank's scale is measured by its balance sheet, not its sales. The right yardstick is total assets and deposits, which the business census does not collect (nor does our ground-truth file, so the figure below comes from the banking regulator and is cited as such). By the FDIC's count, FDIC-insured institutions held about $25.3 trillion in total assets at the end of 2025 [11] — roughly 43 times the census "receipts" number. This is a case where the standard business statistics are technically correct but conceptually the wrong ruler: use assets, deposits, and net interest income, not receipts, to size a bank industry. (It is the opposite problem from industries that federal data undercounts by missing tiny sole proprietors — here the operators are large and well-measured; it is the revenue concept that misfits. County Business Patterns also excludes nonemployers and puts the central bank in a separate code, 521110.)

Concentration. On a national receipts basis the census shows the top 4 firms at 25.5% of revenue, top 8 at 36.2%, top 20 at 50.7%, and top 50 at 65.7%, with a Herfindahl-Hirschman Index (HHI, a standard concentration score) of just 241.9 [2] — statistically "unconcentrated." But that national figure is misleading in two ways. First, bank competition is regulated and assessed at the local market level, where one dominant bank in a small town faces far less competition than the national number implies. Second, measured by assets rather than receipts, concentration is stark — the four largest banking companies alone control a large share of all system assets [8][9].

4. The investable universe

Commercial banking has one of the deepest public opportunity sets of any industry — dozens of liquid, large-cap listed banks plus regionals and community names. The table shows the largest, ranked by their FDIC-insured lead-bank assets (Federal Deposit Insurance Corporation data, as of March 31, 2025) [8]. Tickers are the traded parent holding companies.

Other sizeable listed regionals and specialty banks not shown include Regions Financial (RF), First Citizens BancShares (FCNCA), Comerica (CMA), Zions Bancorporation (ZION), Old National Bancorp (ONB), Webster Financial (WBS), First Horizon (FHN), Wintrust Financial (WTFC), East West Bancorp (EWBC), and BOK Financial (BOKF). The Federal Financial Institutions Examination Council's National Information Center maintains the full holding-company universe; note that many listed parents report substantial businesses outside NAICS 522110 [16].

Private and other owners account for the long tail: roughly 3,900 U.S. commercial banks exist [7], and the vast majority are privately held community banks, mutually owned banks, or U.S. units of foreign parents that do not trade under a U.S. ticker. Notable private examples:

• First National Bank of Omaha, held through First National of Nebraska under the Lauritzen family [24].
• Arvest Bank, controlled through Arvest Bank Group and identified by the Federal Reserve as part of the Walton family group [25].
• First Bank, owned through FB Corporation and associated with the Dierberg family [26].

("Private ownership" here means the bank or its holding company is not publicly traded — not "private banking" in the wealth-management sense.) In short: the public menu is rich at the top, but by count most of the industry is not investable through a stock exchange.

5. How the money works

A bank's economics run on metrics specific to lending, not the sales-and-margin math of a normal company. The core drivers:

• Net interest income (NII) and net interest margin (NIM). NII is interest earned on loans and securities minus interest paid on deposits and borrowings; NIM expresses that as a percentage of average earning assets. NIM widens when asset yields rise faster than funding costs and narrows when deposit competition bids funding costs up. The industry NIM was 3.39% in Q4 2025, its highest since 2019 [5]. A bank funded with cheap, sticky checking deposits and lending at higher rates earns a wide margin; a bank paying up for deposits earns a thin one.
• Deposit funding (the raw material). Deposits are a bank's cheapest fuel. Low-cost, loyal deposits — a "deposit franchise" — are the single most valuable asset a bank has, and the thing acquirers pay up for. Industry deposits grew for a sixth straight quarter into year-end 2025 (up $318 billion, or 1.8%, in Q4) [6].
• Fee (non-interest) income. Card fees, wealth and asset management, investment-banking fees, and service charges. This income diversifies a bank away from pure rate risk — a big reason the universal banks are steadier than pure lenders.
• Credit costs. Banks set aside a provision for credit losses to cover loans that go bad; actual losses show up as net charge-offs. The industry charge-off rate was 0.63% in Q4 2025 — low by historical standards — with past-due and nonaccrual loans at 1.56% [6]. Credit costs are the swing factor: tiny in good years, and large enough to wipe out earnings in a recession.
• Efficiency ratio. Operating expense as a share of revenue — lower is better; well-run banks sit in the 50s.
• Profitability: ROA and ROE. Return on assets (ROA) and return on equity (ROE) are the headline scorecards. The industry earned an ROA of 1.20% for full-year 2025 (1.24% in Q4) [5][6] — anything near or above 1% is considered healthy. Because banks run roughly 10x leverage, that translates into double-digit ROE.
• Capital and book value. Banks are valued heavily on book value (net worth per share) and judged on CET1 (Common Equity Tier 1 — the highest-quality regulatory capital that absorbs losses first). Investors watch tangible book value per share and the CET1 ratio closely; the stock often trades as a multiple of book rather than of earnings.

Put simply: owners make money by (1) funding cheaply with deposits, (2) lending and investing at a higher rate, (3) collecting fees, (4) keeping credit losses and operating costs low, and (5) doing it on a large, well-capitalized balance sheet. Industry-wide, banks reported $295.6 billion of net income in 2025, up 10.2% from 2024 [5].

A note on the FDIC figures used above and below: they cover all FDIC-insured institutions, a population slightly broader than NAICS 522110 alone (it also includes savings institutions), but it is the standard, most complete gauge of the commercial-banking system's health.

6. What drives demand

• Interest rates and the yield curve. The biggest lever. After holding rates high, the Federal Reserve cut three times in late 2025, bringing the target federal funds rate to roughly 3.50%–3.75% by year-end [14]. Falling short-term rates can ease deposit costs and steepen the curve (helpful for margins), but they also lower what banks earn on new loans — the net effect depends on each bank's balance-sheet mix.
• Loan demand and the credit cycle. Banks grow by lending. Total industry loans grew 5.9% in 2025 [5]. The Federal Reserve's January 2026 Senior Loan Officer Opinion Survey (SLOOS) reported tighter standards on commercial-and-industrial ("C&I") loans but stronger demand from large and middle-market businesses and stronger commercial-real-estate demand, alongside weaker demand for most residential-mortgage and auto loans; banks expected demand to strengthen across categories during 2026 [23].
• Deposit growth. More deposits mean more cheap funding to lend. Deposit flows follow household savings, the level of rates, and confidence in the bank.
• Economic growth and employment. A strong economy means more borrowing and fewer defaults; a weak one means the reverse. Banks are, in effect, a geared play on GDP.
• Housing and commercial real estate activity. Mortgage and property-lending volumes swing with rates and construction.
• Payments and treasury services. Everyday demand for accounts, settlement, card processing, and treasury management is steadier than lending and a growing source of fee income.

7. Regulation

Banking is one of the most heavily supervised industries in the country, overseen by several agencies:

• The Office of the Comptroller of the Currency (OCC) charters and supervises national banks and federal branches [19].
• The Federal Reserve supervises bank holding companies and state member banks and sets monetary policy.
• The Federal Deposit Insurance Corporation (FDIC) insures deposits (up to $250,000 per depositor, per bank, per ownership category), supervises state-chartered non-member banks, and resolves failures [18]. Its Deposit Insurance Fund (DIF) stood at $153.9 billion at end-2025, a 1.42% reserve ratio [6]. Investment products such as stocks, bonds, and mutual funds are not FDIC-insured.
• State banking departments supervise state-chartered institutions alongside their federal regulator.
• The Consumer Financial Protection Bureau (CFPB) supervises consumer-lending compliance at banks above $10 billion in assets [20].

Key rules and frameworks: the post-2008 Dodd-Frank Act (stress tests and "living wills" for the biggest banks); Basel III capital and liquidity standards; the Bank Secrecy Act / anti-money-laundering (BSA/AML) reporting regime [21]; and the Community Reinvestment Act (CRA), which obliges banks to help meet local credit needs and factors into merger approvals [22]. For large holding companies the Federal Reserve's capital framework layers a 4.5% minimum CET1 ratio, a stress capital buffer of at least 2.5%, and, for global systemically important banks (G-SIBs), a surcharge of at least 1.0% [17]. The unfinished "Basel III endgame" capital rules were re-proposed by the Fed, OCC, and FDIC in March 2026 in a lighter form than the 2023 version — the agencies now expect overall system capital to "modestly decrease" while staying well above pre-crisis levels [12]. Small community banks operate under simplified rules; charters, mergers, branches, and changes in control all require regulatory approval [19].

For an investor, regulation cuts both ways: capital and liquidity rules cap how much a bank can lever up and return to shareholders, but they are also why the system is far sturdier than it was in 2008 — and they are a real barrier to entry that protects incumbents.

8. Competitive dynamics and consolidation

The defining structural trend is long-run consolidation. The number of U.S. commercial banks has fallen for decades — from over 8,000 around 2000 to roughly 3,900 today [7] — as small banks merge to spread rising technology and compliance costs. In the third quarter of 2025 alone, 38 institutions merged into others and four were sold [7]. The bank count keeps falling even as system deposits climb into the tens of trillions — fewer, bigger banks.

Competition plays out on several fronts: the megabanks compete on scale, technology, and reach; regionals compete locally and on relationships; and non-bank fintechs (financial-technology firms), digital banks, and private-credit funds increasingly compete for both deposits (high-yield accounts) and loans (direct lending). The receipts-based census concentration data — top 4 at 25.5%, top 50 at 65.7%, HHI 241.9 [2] — describe the national revenue universe, not the local deposit markets or antitrust markets where mergers are actually judged; a bank can be nationally small but locally powerful. The marquee 2025 deal was Capital One's ~$35 billion acquisition of Discover (completed May 2025), creating the largest U.S. credit-card issuer and vaulting Capital One up the asset rankings [10]. Expect more regional-bank mergers as the sub-$100 billion tier seeks scale — though CRA performance and supervisory approval remain gating factors for any deal [22].

9. Risks

• Interest-rate risk. A bank that funds long-dated, fixed-rate assets with short-term deposits gets squeezed when rates move against it. This is what sank Silicon Valley Bank in 2023 — it held long bonds funded by flighty deposits and took heavy paper losses as rates rose [13]. The industry still carried $306 billion of unrealized losses on securities at end-2025 (down from prior peaks) [6]; those losses hurt only if a bank is forced to sell.
• Deposit runs. The flip side of the SVB episode: in the digital age, deposits — especially large uninsured balances — can leave in hours. Confidence is a bank's most fragile asset, and a sudden loss of funding combined with weak capital or uncertain asset values is the classic path to failure.
• Credit risk, especially commercial real estate (CRE). Office and other CRE loans are a live concern, with a wall of loans maturing and needing to refinance at higher rates. Mid-sized banks ($10–100 billion in assets) carry the highest CRE exposure relative to capital (roughly 199%) [13]. A CRE downturn would hit regionals harder than the diversified megabanks.
• Operational and cyber risk. Fraud, outages, cyberattacks, and third-party technology failures are a growing threat as banking goes digital.
• Regulatory and political risk. Capital rules, stress-test severity, and consumer-protection enforcement shift with each administration and directly change how much capital banks must hold and can return.
• Cyclicality. Bank earnings are geared to the economy; a recession raises loan losses and cuts loan demand at the same time.
• Competitive erosion. Fintechs and private credit are steadily taking share of lending and payments.
• For private investors specifically: illiquidity, limited disclosure, transfer restrictions, and the need for regulatory approval to buy, sell, or exit a controlling stake.

10. How to invest and the outlook

Public routes.

• Individual stocks — from the megabanks (JPM, BAC, WFC, C) for scale and diversified fee income, to super-regionals (USB, PNC, TFC) and smaller regionals for more leverage to the local credit cycle. Banks are traditional dividend payers; investors value them on price-to-book (P/B) and price-to-earnings (P/E), read alongside NIM, deposit costs, credit losses, capital ratios, ROE, and management's acquisition record. A low P/B can signal opportunity — or expected losses and weak returns.
• Preferred stock and subordinated debt of bank holding companies, for income-oriented exposure that sits above common equity in the capital stack.
• ETFs — the simplest diversified exposure. The Invesco KBW Bank ETF (KBWB) holds ~25 large national and regional banks; the SPDR S&P Bank ETF (KBE) and SPDR S&P Regional Banking ETF (KRE) offer broad and regional-tilted baskets respectively [15]. Regional-bank ETFs are the higher-beta, higher-risk way to play a recovery or a rate-driven margin expansion.

Private routes. Because most banks are privately held, private capital plays through community-bank equity, private placements, bank acquisitions, preferred capital or subordinated debt, and de novo (new-bank) formations — and, increasingly, through private credit, which competes directly with banks by making the loans they are pulling back from. These require specialized diligence on the charter, deposit base, asset quality, capital, governance, and exit rights. Owning a stake in a well-run community bank is a classic, if illiquid, private investment.

Near-term drivers to watch (forward-looking). The setup entering 2026 is constructive but not without hazards. Margins are near multi-year highs and could widen further if the Fed's gradual cuts lower deposit costs faster than loan yields fall [5][14]; credit quality is still strong [6]; and the softer Basel endgame re-proposal points to lighter capital rules and bigger buybacks and dividends if adopted [12]. The offsetting risks are commercial-real-estate losses concentrated in regionals [13], the ever-present danger of a rate or confidence shock, and slowing loan demand if the economy cools. The best investments are selected as deposit-and-credit franchises — sticky funding, conservative underwriting, efficient technology, diversified fees, and spare capital — not merely as high-yielding or fast-growing financial stocks. Broadly, expect the diversified megabanks to be the steadier holding and the regionals to be the higher-risk, higher-reward end — and expect the multi-decade consolidation of the industry into fewer, larger banks to continue.

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Sources

1. U.S. Census Bureau, County Business Patterns: 2023, NAICS 522110 (establishments, employment, payroll). https://www.census.gov/data/datasets/2023/econ/cbp/2023-cbp.html
2. U.S. Census Bureau, 2022 Economic Census — Concentration of Largest Firms for the United States, NAICS 522110 (firms, receipts, CR4/CR8/CR20/CR50, HHI). https://data.census.gov/table/ECNSIZE2022.EC2200SIZECONCEN?g=010XX00US
3. U.S. Small Business Administration, Table of Size Standards, 2023 (NAICS 522110, $850 million, asset-based for depositories). https://www.sba.gov/document/support-table-size-standards
4. U.S. Census Bureau, 2022 North American Industry Classification System Manual — 522110 Commercial Banking (definition and exclusions). https://www.census.gov/naics/reference_files_tools/2022_NAICS_Manual.pdf
5. FDIC, "FDIC-Insured Institutions Reported Net Income of $77.7 Billion in Fourth Quarter 2025" (ROA, NIM, net income, loan growth), press release, 2026. https://www.fdic.gov/news/press-releases/2026/fdic-insured-institutions-reported-return-assets-124-percent-and-net
6. FDIC, Quarterly Banking Profile — Fourth Quarter 2025 (community banks, charge-offs, past-due rate, unrealized losses, deposit growth, Deposit Insurance Fund). https://www.fdic.gov/news/speeches/2026/fdic-quarterly-banking-profile-fourth-quarter-2025
7. FDIC / Statista, "Number of FDIC-insured U.S. commercial banks, 2000–2024," and FDIC Q3 2025 Quarterly Banking Profile (bank-count decline, mergers). https://www.statista.com/statistics/184536/number-of-fdic-insured-us-commercial-bank-institutions/
8. MX Technologies (FDIC data as of March 31, 2025), "Largest U.S. Banks by Asset Size (2025)" (lead-bank total assets). https://www.mx.com/blog/biggest-banks-by-asset-size-united-states/
9. S&P Global Market Intelligence, "50 largest US banks by total assets, Q4 2025," 2026 (holding-company assets). https://www.spglobal.com/market-intelligence/en/news-insights/articles/2026/3/50-largest-us-banks-by-total-assets-q4-2025-99048938
10. LegalClarity, "The Biggest Regional Banks in the United States" (U.S. Bancorp, PNC, Truist, Capital One assets; Capital One–Discover acquisition, May 2025). https://legalclarity.org/the-biggest-regional-banks-in-the-united-states/
11. FDIC, Quarterly Banking Profile data tables, Q4 2025 (total industry assets ≈ $25.3 trillion). https://www.fdic.gov/quarterly-banking-profile/quarterly-banking-profile-q4-2025
12. Federal Reserve Board / OCC / FDIC, "Agencies request comment on proposals to modernize the regulatory capital framework" (Basel III endgame re-proposal), March 19, 2026. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260319a.htm
13. FDIC, 2025 Risk Review, and Congressional Research Service, "Commercial Real Estate and the Banking Sector" (CRE exposure, maturity wall, SVB interest-rate lesson), 2025. https://www.fdic.gov/analysis/2025-risk-review.pdf
14. Congressional Research Service, "Federal Reserve Cuts Interest Rates in Late 2025" (federal funds rate 3.50%–3.75%), 2025. https://www.congress.gov/crs-product/IN12635
15. Invesco, "KBW Bank ETF (KBWB)," and State Street Global Advisors, "SPDR S&P Bank ETF (KBE)" and "SPDR S&P Regional Banking ETF (KRE)," 2025. https://etfdb.com/etf/KBWB/
16. Federal Financial Institutions Examination Council, Institution Types and Large Holding Companies (BHC structure and universe). https://www.ffiec.gov/npw/Help/InstitutionTypes
17. Federal Reserve Board, Large Bank Capital Requirements (CET1 minimum, stress capital buffer, G-SIB surcharge), 2026. https://www.federalreserve.gov/supervisionreg/large-bank-capital-requirements.htm
18. FDIC, Deposit Insurance FAQs ($250,000 limit; investment products not insured), 2023. https://www.fdic.gov/resources/deposit-insurance/faq
19. Office of the Comptroller of the Currency, Charters & Licensing and Financial Institution Lists, 2026. https://www.occ.treas.gov/topics/charters-and-licensing/index-charters-licensing.html
20. Consumer Financial Protection Bureau, Institutions Subject to CFPB Supervisory Authority (banks above $10 billion), 2026. https://www.consumerfinance.gov/compliance/supervision-examinations/institutions/
21. Financial Crimes Enforcement Network, The Bank Secrecy Act, 2026. https://www.fincen.gov/resources/statutes-and-regulations/bank-secrecy-act
22. FDIC, Community Reinvestment Act (consumer-compliance examination manual), 2025. https://www.fdic.gov/consumer-compliance-examination-manual/xi-1-community-reinvestment-act
23. Federal Reserve Board, January 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices, 2026. https://www.federalreserve.gov/data/sloos/sloos-202601.htm
24. First National Bank of Omaha / First National of Nebraska, About Us (Lauritzen family ownership), 2026. https://www.fnbo.com/about-us
25. Federal Reserve Board, Actions under Delegated Authority (Arvest Bank Group / Walton family group), 2022. https://www.federalreserve.gov/releases/H2/20220507/delactions.htm
26. First Bank / FB Corporation, CEO Message (Dierberg family ownership), 2026. https://www.first.bank/About/CEO-Message