Why does the US have many small banks?
SQUIRE: A lot of states passed what were called branch banking laws, which made it illegal to operate a bank out of more than one building. It's hard to imagine it now. And so every little town in America had its own local bank.
However, small banks can win out when it comes to fees and interest rates, as personal finance company SoFi notes that small banks "may charge fewer and/or lower fees and offer more competitive rates on deposit accounts and loans." Service can be more personalized at smaller banks than their behemoth counterparts.
How many regional and community banks are there in the US? As of December 2022, there are 4,001 community banks with 27,511 branches and 134 regional banks with 13,109 branches across the US. There are 31 banks categorized as large financial institutions, with 30,570 branches nationwide.
Jim Sammons inside Kentland Federal Savings and Loan's main vault—one of the originals from 1920. The bank is considered America's smallest.
There are 4,236 FDIC-insured commercial banking institutions in the U.S. as of 2021 but 72,166 commercial bank branches. Most banks have at least one physical branch, and some have dozens or hundreds.
Many of these losses occurred during the banking crises of the 1980s and 1990s. More than 4,000 banks closed between 1980 and 1994. Several factors contributed to this prolonged financial instability, including high interest rates, insufficient oversight, and new legislation deregulating the banking industry.
For calendar year 2023, the OCC's CRA regulations defined a “small bank or savings association” as an institution with assets of less than $1.503 billion as of December 31 of either of the prior two calendar years.
To address these concerns and protect small banks, many states put in place so-called branch banking laws. "Those made it illegal to operate a bank out of more than one building," Squire says. "So every little town in America had its own local bank. At one point, in the 1920s, there were nearly 30,000 banks in the U.S.
The unexpected collapses of three banks - Silicon Valley and Signature in March 2023 and First Republic in May - put a spotlight on how lenders managed risks to assets and liquidity as the Federal Reserve raised interest rates aggressively to bring surging inflation under control.
1 bank in America? J.P. Morgan Chase is the number one bank in America in terms of total assets held, according to the Federal Reserve.
What is the strongest U.S. Bank?
1. JPMorgan Chase. JPMorgan Chase, or Chase Bank, is the biggest bank in America with nearly $3.4 trillion in assets. It boasts a vast network of over 4,800 physical branches and more than 15,000 ATMs.
To protect their communities, many states passed legislation requiring banks to operate out of only one building—thus creating community banks. The new law led to the existence of over 30,000 banks in the US during the 1920s.
Starbucks is the world's largest coffee selling company, but they are now operating somewhat like a bank. The difference is that Starbucks doesn't have a banking license like traditional banks do. In 2022, Starbucks had over 80,000 stores worldwide, with nearly 16,000 of them in the United States alone.
As many areas are hit with drought and other environmental issues, banks have seen losses and write-downs. These and other factors have increased the vulnerability to the community banks. Banks hold capital (equity) to offset the risk of failure.
The number of smaller banks has declined by more than 9,000 over the past three decades, largely through mergers. When the local bank disappears, people and businesses in their communities often find credit goes away too.
The collapses of Silicon Valley Bank and Signature Bank in March 2023—then the second- and third-largest bank failures in U.S. history—took consumers by surprise. Subsequently, three more banks failed in 2023: First Republic Bank in May, Heartland Tri-State Bank in July and Citizens Bank of Sac City in November.
Local community banks can offer numerous advantages, starting with personalized service. A local bank may be less costly than a larger bank and have lower employee turnover. You can also bank closer to home and may find that the financial institution offers special products and programs tailored to the local community.
You can bank with confidence at your local community bank because no one has ever lost a dime of FDIC-insured funds. Community banks hold FDIC deposit insurance, which covers each depositor's account, dollar-for-dollar, up to the insurance limit ($250,000).
Very small banks may only keep $50,000 or less on hand, while larger banks might keep as much as $200,000 or more available for transactions. This surprises many people who assume bank vaults are always full of cash. It has surprised many bank robbers, too.
As the Federal Reserve began raising interest rates in 2022 in response to the 2021–2023 inflation surge, bond prices declined, decreasing the market value of bank capital reserves, causing some banks to incur unrealized losses; to maintain liquidity, Silicon Valley Bank sold its bonds to realize steep losses.
What bank is in the most US states?
Chase has the largest branch network out of all the biggest banks, with locations in the most states. ATMs: More than 15,000. Branches: More than 4,700 in 49 states and Washington, D.C.; no branches in Alaska.
According to the FDIC's reports, the number of problem banks continued to decline, reaching 39 by the end of 2022. This is a positive trend for the banking industry, indicating its stability and resilience amidst various economic challenges.
2024 in Brief
There are no bank failures in 2024. See detailed descriptions below. For more bank failure information on a specific year, select a date from the drop down menu to the right or select a month within the graph.
On March 10, 2023, Silicon Valley Bank (SVB) failed after a bank run, marking the third-largest bank failure in United States history and the largest since the 2007–2008 financial crisis.
Generally speaking, credit unions are safer than banks in a collapse. This is because credit unions use fewer risks, serving individuals and small businesses rather than large investors, like a bank.
