Financial Services: the Variety of Finance Activities
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Financial Services: The Variety of Finance Activities Contributions to the Economies Ohio’s Finance Industry: 2017 GDP (in millions) • Ohio's finance industry (NAICS 521-3, 5) provided ser- 525: Total: $32,015 Funds,Trusts, vices valued at $32 billion in 2017. This was 5.0 percent 523: etc., $209, 1% of Ohio’s total Gross Domestic Product (GDP) and close Securities, to 3.5 percent of the U.S. industry total. By comparison, etc., $4,042, Ohio’s total GDP was 3.3 percent of U.S. GDP, indi- 12% cating the finance industry is concentrated here. • 86.7 percent of finance services – close to $27.8 billion – were provided by the Federal Reserve Bank (521) and two types of credit organizations: depository ones (5221) – commercial banks, saving-and-loans and credit unions (the last are non-profit cooperatives), and non-depository 521-2: Banking, etc., ones (5222) providing only credit and financing; others $27,764, 87% (5223) provide support services. These were 4.3 per- cent of Ohio’s total GDP and 4.5 percent of the two U.S. subsectors’ combined total – and specify the source of the finance industry’s concentration here. • $4.25 billion in services – 0.7 percent of Ohio’s total Source: U.S. Bureau of Economic Analysis, 2019 GDP – were provided by firms in the securities and funds subsectors (523 and 525, gray and blue). Ohio Finance Industry Employment (in thousands) 521: The Distribution of Industry Employment in Ohio 523, 5: Cleveland Securities, FRB, 1.0, 1% • 139,600 people worked in Ohio’s finance industry in 5223: etc., 17.7, 13% 2017 according to the Census Bureau. About 91,400, or Processing, etc., 12.0, 65.5 percent, worked for depository institutions such as 9% commercial banks (52211, 76,100), savings-and-loans or credit unions (5221R, close to 15,300). An additional 17,400, or 12.5 percent, worked for non-depository in- 5222: stitutions (5222) providing credit and financing, while Financing 12,000 – 8.6 percent – worked in processing, clearing, & Credit, 52211: 17.4, 12% Banks, 76.1, loan brokerage, etc. (5223). Altogether, 120,800 – 86.6 54% percent – worked in private sector credit intermediation (green slices). 5221R: S&Ls, CUs, • 17,700, or 12.7 percent, worked in the securities sub- 15.3, 11% sectors (523, 5, gray). 6,300-plus of these were at Finance Total: 139.6 brokerages (52312); 9,100-plus worked at establish- ments providing portfolio management or investment advice but no brokerage services (52392-3). 1,100-plus Source: U.S. Census Bureau, 2019 worked in investment banking (52311); i.e., for establish- ments raising capital, underwriting new securities, or Ohio’s Share of U.S. Employment in Selected providing advice regarding such purchases. Financial Industries Share Ohio’s Shares of the Industry Employment NAICS Code: Title of U.S. Private sector total (except farms & railroads) 3.7% • Parts of the finance industry are concentrated in Ohio, 521-3, 5: Finance industry total 3.7% judging by employment. The general concentration of credit intermediation (522, 4.2 percent of the U.S.) re- 521: Cleveland Federal Reserve Bank 5.2% flects the concentration of employment in specific con- stituent industries: commercial banks, savings-and- 522: Credit intermediation & related activities 4.2% loans, credit card issuing, and transaction processing, 52211: Commercial banks 4.9% which ranged from 4.7 to 11.3 percent of the U.S. 52212: Savings-and-loans 6.5% 52221: Credit card issuing 11.3% 52232: Financial transactions processing, etc. 4.7% • Also noteworthy are the 1,000 workers at three Cleve- land Federal Reserve Bank establishments (521), which, 523: Securities, etc. 2.0% in addition to finance industry regulation, provide ser- 525: Funds, trusts, etc. 0.4% vices to regional depository institutions; they comprised Source: U.S. Census Bureau, 2019 5.2 percent of the System in 2017. Financial Services: Finance Trends & Projections GDP Trends in Ohio Ohio GDP Trends (in billions, standardized on 2012) • Industry services in Ohio contracted 2 percent, drifting $35.0 4.8% 4.5% 4.5% 4.5% 5.0% from $25.8 to $22.7 billion after adjusting for inflation 4.4% 4.4% 4.0% (NAICS 521-3, 5, green and gray column figures sum- $30.0 4.3% med) according to the latest GDP figures from the U.S. Bureau of Economic Analysis (BEA). $25.0 $2.7 3.6% $3.4 $3.6 $3.1 $2.8 $3.1 $3.2 • The chart at right shows the industry trend is due to the $20.0 2.9% contraction in the banking, etc. subsector (521-2, green columns), which decreased 15.2 percent from $23.0 to GDP $15.0 2.1% $19.5 billion. However, the portion of U.S. subsector $23.0 $21.7 activity in Ohio (green dots) remained nearly constant $10.0 $20.6 $21.0 $20.9 $20.0 $19.5 1.4% after 2012, suggesting changes seen here were part of Banking as Percent of U.S. nationwide changes. $5.0 0.7% • Services provided by the securities-and-funds subsector $0.0 0.0% (523 and 525 combined, gray) have fluctuated around $3 2011 2012 2013 2014 2015 2016 2017 billion, with the portion of such from Ohio holding steady 521, 2: Banking, etc. 523, 5: Securities, etc. at 1.4 percent of the national total. Banking as Percent of U.S. Source: U.S. BEA Employment Trends in Ohio Ohio Employment Trends (in thousands)^ • Total industry employment has fluctuated between 160.0 128,700 and 143,300, a range of 14,600. The changing 143.3 139.6 140.0 137.1 136.4 137.7 levels are reflected in the percentage U.S. employment 132.8 16.5 128.7 17.3 16.4 18.8 17.7 here, which ranged from 3.8 in 2013 to 3.5 in 2015. 18.8 120.0 8.9 18.1 9.5 9.4 11.1 12.0 9.2 24.7 9.5 • The bulk of variation was seen in the coinciding expan- 100.0 20.1 21.9 17.4 17.6 18.4 sions and contractions of two groups: banks-savings- 18.1 and-loans-credit unions (5221), with a range of 9,800, 80.0 and financing and credit (5222), varying by 7,100. 60.0 89.2 92.3 88.3 91.4 • Smaller variations not coinciding with the largest two 40.0 86.1 87.7 81.6 groups were seen in the processing group (5223, olive green) and the securities-and-funds subsector. Cleve- 20.0 land Federal Reserve Bank employment levels (521, not 0.0 shown) fluctuated around 1,000. 2011 2012 2013 2014 2015 2016 2017 5221: Banks, S&Ls, CUs 5222: Financing & Credit • Current data from the U.S. Bureau of Labor Statistics 5223: Processing, etc. 523, 5: Securities, Funds, etc.^ show banking and securities employment increasing 1.1 and 3.6 percent, respectively, from 2017 to 2018. Note: ^ - all employment figures are estimates. Source: U.S. Census Bureau Ohio Employment Projections Employment Projections for Selected Industries 140,000 • Collective employment for the largest industry subsec- 117,970 tors (522-3) is projected grow 6.5 percent from 110,810 120,000 110,810 to 117,970 during the 2016-2026 decade according to 22,550 the Ohio Dept. of Job and Family Services’ Labor Market 100,000 18,210 Information division (ODJFS-LMI).* 13,760 16,620 80,000 • These summary figures mask divergent predictions for 20,150 22,160 60,000 the constituent groups. The greatest number of new jobs and the fastest growth – 23.8 percent – are forecast 40,000 for the securities subsector, followed by processing, etc. 58,690 56,640 – 20.8 percent, and non-depository financing and credit 20,000 – 10.0 percent. These contrast with an expected in 3.5 percent decrease in banking, etc. No projections were 0 made for the Cleveland Fed or the funds subsector. 2016 2026 5221: Banks, S&Ls, CUs 5222: Financing & Credit 5223: Processing, etc. 523: Securities, etc. Note: * – 2016 Census Bureau and ODJFS-LMI figures differ due to different methodologies and site classifications. Source: ODJFS-LMI, 2018 Financial Services: Finance Companies and Projects The Biggest Companies in Ohio Industry Employers in Ohio’s 100 Largest* • 220 depository organizations (NAICS 5221, banks, sav- ings-and-loans, credit unions, etc.) had 3,573 active of- JP Morgan Chase 21,000 fices in Ohio according to the latest data from the Feder- al Deposit Insurance Corp. (FDIC); however, the vast Huntington 10,600 majority are branches with less than 20 employees ac- cording to the latest Census Bureau data. Fifth/Third 8,800 • Despite these big numbers, the industry is dominated by PNC 7,000 a few very large organizations. The chart at top-right KeyCorp 6,400 shows the total state employment of the seven largest employers, all of whom are on Fortune’s U.S.-1,000 list. US Bancorp 5,300 JP Morgan Chase is the largest of the six depository Alliance Data th rd 4,800 companies (dark green), while 5 /3 , Huntington and Systems KeyCorp have their world headquarters here. The six also have the largest number of offices, combining for 0 5,000 10,000 15,000 20,000 25,000 50.7 percent of the total according to the FDIC. Ohio-based Financial Companies on Fortune’s • Other companies on Fortune’s U.S.-1,000 or Global-500 U.S.-1,000 List (2018 revenues in billions)* list employing at least 500 here in the industry (but not shown at right) include BMW1 Financial Services, Dis- Fifth/Third $7.97 cover Financial Services, Fidelity National Information 1 Services (fka World Pay or Vantiv), Macy’s Credit, Na- Alliance Data $7.79 tionwide1, Synchrony, and Union Bank of Switzerland.