The Herfindahl-Hirschman Index (HHI) is used to measure competition in a banking market. Ranging between 0 and 10,000, the HHI is the sum of the squares of the market share (based on deposits) of each firm competing in a market. Lower HHIs correspond with more competition. According to the U.S. Department of Justice and the Federal Trade Commission, markets in which the HHI is greater than 1,800 are considered to be concentrated. Bank mergers or acquisitions that increase the HHI by more than 100 points in concentrated markets can be challenged by authorities as they are likely to have adverse effects on competition. Among Ohio’s six largest metros as of June 2009, the HHI varied from 1,813 in Cincinnati to 1,133 in Akron.

The dominant banks in the Cincinnati metro area (including the Kentucky and Indiana portions) are Fifth Third with a 31.0% market share and US Bank with a 27.4% share. Both of these banks saw a decline in deposits from June 2008 to 2009, causing a 3.2% drop in overall deposits at FDIC-insured institutions in the metro area. Such a decline is not unusual in the region which has shown to have high volatility in deposits. Changes in deposits can happen for a variety of reasons, including wealth growth in a region, shifts in spending and savings patterns, shifts in investment strategies, and local banking practices such as checking account incentives. Nevertheless, deposits have grown in Cincinnati at a 6.5% average annualized pace from 1999 to 2009, the fastest rate among the six largest metros in Ohio. Further details are found in the Fall 2009 edition of the Ohio Economic Trends