Number of Community Banks Drops Sharply

The number of banks in the United States fell by almost 50% during the last 20 years, from about 10,700 in 1997 to about 5,600 in 2017, with the vast majority of the decline, 97%, accounted for by community banks.

“The rate of decline was steeper for rural banks than for urban banks before the financial crisis but has reversed in the post-crisis period,” said Randal K. Quarles, vice chairman for supervision of the Federal Reserve System.

“While there are more rural community banks than urban community banks, the latter consistently account for a larger volume of deposits, loans, and offices than the former,” Quarles said. “This difference is due, in part, to the average size of an urban community bank, in terms of total assets, being about two and a half to three and a half times that of the average rural community bank.”

The remarks and the charts come from Quarles’ speech “Trends in Urban & Rural Community Banks,” which was delivered Oct. 4 at the sixth annual Community Banking Research & Policy Conference. The conference, held in St. Louis, was sponsored by the Federal Reserve System, the Conference of State Bank Supervisors and the Federal Deposit Insurance Corp.

Quarles defined a community bank as a bank or thrift with less than $10 billion in assets, in constant 2005 dollars.