Through Q1 2020, Banking Industry Consolidation Steadily Continues.

The banking industry consolidated continued at an above average rate. The Banking Industry Consolidation Rate was 4.6%. This is above the average of 3.7% since 1990.

Bank mergers & acquisitions had a strong showing with the Bank Merger Rate at 4.5% (or, for every 1,000 banks in existence one year ago, 45 of these banks merged with another bank).

With only 5 failures over the last four quarters, the Bank Failure Rate was a negligible 0.1%.

And, the source to augment the banking industry - de novo banks - was nominal. The De Novo Bank Replenishment Rate was only 5.7%. That is, only 6 banks replaced each 100 banks that merged or failed.

Note: with the “shelter-in-place” actions taken in response to COVID-19, a review of FDIC merger actions in Q2 would suggest a significant slowdown in the Banking Industry Consolidation Rate and the Bank Merger Rate during the next quarter or two.

Total number of banks declined by 246, or 4.6 percent, to 5,116 from 5,362.

By size, the reduction in the number of banks was largest in the smaller asset segment sizes. The number of banks under $100 million in Total Assets declined over 11%; banks between $100 million and $250 million in Total Assets decreased by approximately 6%; and banks between $250 million and $500 million in Total Assets saw a 4.5% drop in their numbers. There was generally net gains in the larger bank assets segments.

And, among the states with large numbers of Community Banks (< $10 billion in Total Assets), four states had Banking Industry Consolidation Rates (Community Banks only) above 6%. Massachusetts had an 8.5% loss in number of banks; Kentucky showed a decrease of 7.4%; the number of banks headquartered in Wisconsin dropped 7.0%; Alabama showed a reduction of 6.9%; and Georgia’s banking industry declined by 6.1%.

The banking industry consolidation continues. A slow, but steady pattern that is expected to continue for the foreseeable future.