Uniquely declining

Another way to look at consolidation is by examining unique firms.

A single bank holding company, for example, can have many individually chartered banks as subsidiary organizations, which is common with large bank holding companies that do a lot of acquisitions. It's also common for a bank to have individual charters in separate states.

So a count of head offices (or charters) in a region or state can overestimate the number of truly unique firms that operate within those borders, given that all subsidiaries (and their profits) report back to the holding company. For example, until recently Wells Fargo had charters in 32 states but consolidated 19 of those charters—including those in five district states—into a single national charter located in Sioux Falls, S.D.

The general trend line looks the same as with head offices, only a bit more subdued. The number of unique banking firms operating in individual district states—with a single firm including all branches and separately chartered head offices—fell from 955 in 1990 to 744 in 2003. If you look at the district as a whole (rather than state by state), unique firms went from 939 to 707 during this period.

At the state level, most district states experienced roughly comparable trends, seeing declines of roughly 20 percent to 30 percent, with the exception of the Upper Peninsula of Michigan and the northwestern section of Wisconsin that lies in the district (see chart).

In some respects, consolidation resembles a reshuffling of deck chairs for the consumer. Fewer head offices and unique firms might represent no real change in local service because often the head office of an acquired bank simply becomes a branch office, offering the same customer services as before, though the office might have fewer behind-the-teller corporate duties.