TRENDS IN BANK CHARTERS

(Data updated quarterly as Call Reports are filed; Click on any image to enlarge.)

The Trends in Bank Charters is sourced from the F.D.I.C. with data as of Q2 2019 and tables or graphics created by BankingStrategist.com. The charts show the continuing industry consolidation at a pace comparable to historical averages since 1990.

Bank Charters LTM: For the latest twelve months, the number of banking institutions declined by a net 239, or 4.3 percent. This decline was comparable to annual averages since 1990.

De novo banking: Nine (9) new banks chartered compared to annual average of 100 new banks over past 27 years. For a variety of reasons, including regulatory process and increased capital requirements, it is unlikely that de novo banking will return to its past levels.

Bank M&A continued with 247 bank charters eliminated by mergers; this is well below the annual average of nearly 400 over the past 27 years.

Bank Charters Since 1990: There has been a net reduction in bank charters or number of banking institutions by 9,855, or 65 percent. On average, the number of banking institutions declined by 3.6% annually.

De novo banking: Over 2,700 new banks were started since 1990 with ~100 de novo banks chartered annually on average.

Industry consolidation and bank M&A activity averaged nearly 400 bank charter reductions annually. Over 11,000 banks were acquired or merged since 1990.

Bank Consolidation by Asset Size: Industry consolidation continues but at slower pace. And the consolidation continues to occur in the smaller community banks - net reduction in number of community banks under $1 billion in total assets.

Bank Consolidation by State: And the consolidation continues in those states with the most number of smaller community banks. States showing larger declines include Illinois (22), Texas (19), Iowa and Minnesota (13), Wisconsin ( 12), Kansas (11) and California and Pennsylvania (10).

Bank Charters Outstanding by Year: Bank charters continue downward trend primarily due to mergers and acquisitions. Bank failures and de novo banking are also impacting this trend. The decline in the number of bank charters has been at a 3.6% annual rate since 1990.

Bank Charter Reductions by Year: The reduction in bank charters continues at a fairly consistent pace - averaging 293 over past eight years with a reduction of 103 through first half of 2019.

De Novo Banking Activity: One of the most noteworthy impacts of the change in banking regulation arising out of the Great Recession is the lack of de novo banking activity. Where historically there averaged approximately 149 de novo bank start-ups annually, today there are only a nominal number of new banks being formed. This is a topic that the FDIC and other bank regulators are reviewing for action.

Handbook for Organizers of De Novo Banks (FDIC)

Bank Merger and Acquisition Activity: Bank merger activity has slowed considerably compared to the 1990's. However, bank mergers and acquisitions continue at a steady pace - approximately 228 bank mergers annually. over past eight years Acquisition activity stems from a variety of factors, including expansion into contiguous markets or into new market, strategic decisions for family-owned banks to cash out for estate planning and diversification goals or to leverage operating platform across larger asset base.

Trends in FDIC De Novo Bank Applications Since 2000:  De novo bank applications saw a significant change prior to the Great Recession and after the Great Recession. FDIC actions dropped from 1,387 for the nine years from 2000 to 2008 to only 57 for the +10 years from 2009 to 2019.

Trends in FDIC De Novo Bank Applications Since 2000: De novo bank applications saw a significant change prior to the Great Recession and after the Great Recession. FDIC actions dropped from 1,387 for the nine years from 2000 to 2008 to only 57 for the +10 years from 2009 to 2019.

Trends in FDIC De Novo Bank Applications for Leading States Since 2000:  The same trend occurs by the leading states for de novo activity before (Green) and after (Red) the Great Recession. Defining characteristics of states with de novo activity: growing populations, strong local economies and history of bank merger and acquisition activity.

Trends in FDIC De Novo Bank Applications for Leading States Since 2000: The same trend occurs by the leading states for de novo activity before (Green) and after (Red) the Great Recession. Defining characteristics of states with de novo activity: growing populations, strong local economies and history of bank merger and acquisition activity.

Bank Failures: Since the Great Recession, the number of bank failures had declined significantly. While there were no bank failures in 2018, there was one bank failure in 2019.

Total Assets of Bank Failures: And the dollar level of bank failures has also declined. With no bank failures in 2018, the single bank failure in 2019 had total assets of less than $40 million.