The decades long consolidation of the banking industry continued through Q3 2020. The Banking Industry Consolidation Rate was 4.2% - above the long term trend rate of 3.7% but slower than recent quarters. The impact of the COVID-19 pandemic is starting to show. It is anticipated that the consolidation rate will decline over the next few quarters.
Bank mergers across the banking industry slowed. The Bank Merger Rate was 4.3%. Although above the long term trend rate of 4.0%, the merger rate has been decreasing in recent quarters. And it is expected to decline over the next few quarters.
Also impacted by the COVID-19 pandemic was the opening of new banks. The De Novo Bank Replenishment Rate was 3.5%. The rate of new bank openings will never see the long term trend rate of 22.1%, but was also down from prior quarters.
Finally, bank failures continue to be low. The Bank Failure Rate was only 0.1%, below the long term trend rate of 0.4%.
The banking industry consolidation - while occurring across banks of all sizes - continues to impact the Community Bank sector more. The Community Bank Consolidation Rate was 4.5% for the latest 12 months. The number of Community Banks declined by a net 231 banks.
Also noteworthy was where the banking industry consolidation is occurring. The pace of consolidation is highest among communities with population greater than 500,000.
And where is the consolidation rate lowest? Counties with populations of less than 100,000 are showing a lower rate of 3.9% or less.
For additional information on the trends in the banking industry go to BankingStrategist.com.