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Consolidation And Concentration Among U.S. Banks

Published 12/08/2013, 12:50 AM
Updated 07/09/2023, 06:31 AM
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The number of banks in the US has steadily declined, while the amount of deposits has steadily increased. This Great Graphic, posted by Ryan Tracey at the Wall Street Journal  depicts both trends.

The number of federally insured banks has fallen to its lowest level since the FDIC began in 1934. Most of the decline has taken place among banks with less than $100 mln in assets, mostly between 1984 and 2011. Most have disappeared due to mergers, consolidations and failures.
US Banks Getting Bigger
Despite the decline in the number of banks, assets and deposits continue to grow. This reflects the ongoing consolidation and concentration taking place among banks. This means the average bank (deposits or assets divided by the number of institution) is getting larger rather than smaller. US officials do not seem inclined to address the too-big-to-fail issue by directly making the banks smaller.

Moreover, this process of consolidation and concentration does not seem over yet. In addition the mergers and closures, another force has been the dearth of new banks. Until 2009, there were new, federally chartered banks popping up every year. Monday's (Dec 2) opening of the Bank of Bird-in-Hand (PA) became the first new federally insured bank in three years.

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