Insights | 05.02.19
Share of Banks Providing Investment Services Dips, But More Credit Unions Jump In
Since Kehrer Bielan started publishing the Annual Industry Checkup in 2012, we have been accustomed to reporting that the share of financial institutions offering investment services has grown again. That string was broken last year, as the percentage of banks selling investments slipped for the first time since 2008. On the other hand, the number of credit unions where members could invest continued to climb.
The number of banks offering investment services has been declining steadily, according to FDIC data; 1,399 banks reported revenue from investment sales in 2018, down 40% from 2007. But, the number of chartered banks has been shrinking faster, as the industry continues to consolidate. There were 5,486 chartered banks in the United States at the end of 2018 — 43% fewer than in 2007.
The share of banks offering investment services hovered around 25% during the 2000s, but started inching up in 2012, peaking at just under 28% in 2017. Last year, the share of banks where customers could invest dropped back to the one-fourth level of the 2000s.
Although the number of banks selling investments has shrunk, they are getting much bigger. Last year, the core deposits of banks with investment sales revenue was $8.6 trillion, up 87% from $4.6 trillion in 2007.
Credit unions are also consolidating — the number of federally chartered credit unions fell from 7,806 in 2008 to 5,436 in 2018 — but the number of credit unions offering investment services has actually increased during the past few years. The share of credit unions selling investments was stagnant at around 12% during the 2000s and has increased markedly since 2012. Today members can invest in over 19% of all credit unions.
The Annual Industry Checkup has been conducted by Kehrer Bielan Research and Consulting every year since 2012. The firm draws on regulatory filings and its own proprietary surveys of banks, credit unions and third-party broker/dealers to monitor the health of the financial institution insurance and securities industry. This year’s study was based on data from 2,329 financial institutions and their 11,089 advisors, and was sponsored by CUSO Financial Services and Sorrento Pacific Financial.
CUSO Financial Services, L.P. and Sorrento Pacific Financial, LLC (Members FINRA/SIPC) are subsidiaries of Atria Wealth Solutions. Established in 1997, they specialize in placing investment programs inside credit unions and banks, providing customized investment and insurance solutions to more than 200 financial institutions throughout the country, with $30+ billion in AUA. Headquartered in San Diego, with branch offices nationwide, both broker/dealers are SEC Registered Investment Advisers, with expertise in key areas including retirement services, wealth management, advisory solutions and insurance products for individuals and business customers.
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