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You Won’t Believe Where the Biggest Banks Keep Their Money

By Patrick Morris – Mar 9, 2014 at 12:33PM

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Everyone likely knows Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup are the biggest banks in the U.S., but where they store all their money may surprise you.

The four biggest banks in America are household names, but it turns out where they store all their money will likely shock you.

At last count, Bank of America (BAC -1.30%), Wells Fargo (WFC -0.77%), JPMorgan Chase (JPM 0.30%) and Citigroup (C 0.98%) had a staggering $3.5 trillion in total in deposits, representing almost 40% of the total deposits in the United States:

Source: Federal Deposit Insurance Corporation. 

If this sounds like a staggering amount of concentration in just four firms, it's because it is. The chart below shows how dramatically different the picture has changed in America over the last 20 years. In 1994, the top four banking institutions by held just 11% of total deposits, and by 2003 that number had grown all the way to 20%:

Source: Federal Deposit Insurance Corporation.

Although many have rallied against the biggest banks through Occupy Wall Street protests, critical Facebook posts and other demonstrations, the reality is Americans have been very clear in voting with their wallets where they actually want their money to sit.

Where the money goes
Yet where the banks keep that money is an altogether different story, as the areas with the greatest amount of deposits may truly surprise you:

While New York may lead the way with more than $740 billion in deposits, it may come as a major surprise Salt Lake County, U.T.and Minnehaha County, S.D., the homes of Salt Lake City and Sioux Falls, find themselves as second and third on the list.

In fact, while Wells Fargo and Citigroup are headquartered on opposite sides of the country in San Francisco and New York, it turns out their commercial banks, Wells Fargo Bank, National Association and Citibank, National Association each meet in the middle to call Sioux Falls home.  

In the early 1980's South Dakota lifted the laws governing the interest rates that can be charged on credit cards -- a move Delaware and Nevada later mimicked -- in an effort to bring Citigroup (then Citibank) to establish its credit card operations there. The move was revolutionary at the time, and the former governor of South Dakota, once said:

All of their senior people used to say it. That South Dakota saved Citibank. I believe it did. That South Dakota saved Citibank. 

The state also levies no corporate or individual income tax, and only a 4% sales tax, which also makes it attractive to the big banks.  

"South Dakota treats the banking industry very well. We bring a lot of jobs, we put a lot of money in the state treasury in franchise tax, and overall the industry from the smallest banks to largest are very good corporate citizens, and the state leaders appreciate that," noted the associate general counsel for Citibank, Dave Zimbeck in an interview with the Sioux Falls Business Journal

Check out the biggest bank in each county at Value Penguin.

Beyond South Dakota
Wells Fargo and Citigroup aren't the only outliers, as JPMorgan Chase Bank, National Association resides not in the Big Apple either, but instead the land of the buckeyes in Columbus, Ohio. And while none of the largest banks call Utah home, the commercial banks of Morgan Stanley, Ally, UBS, American Express, and GE Capital are all headquartered in Salt Lake City thanks also to the relaxation of laws in Utah since the turn of the 21st century. 

Bank of America is the only bank without any surprises, as its commercial bank, Bank of America National Association, is indeed headquartered in Charlotte, which is exactly where its corporate operations are.

While it is easy to use information like this a fuel to fire the scorn directed toward the biggest banks, it's important to remember they are likely operating and establishing themselves in ways and places in an effort minimize their costs. And while we don't know for certain, it is likely the lower costs for the banks, the lower the costs for their customers as well.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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