2021 industry consolidation underperformed relative to the historical averages. While the COVID pandemic significantly impacted consolidation during the first half of the year, it had a waning impact during the second half.

• The Banking Industry Consolidation Rate was 3.3% for the trailing 4 quarters compared to the long term annual rate of 3.7%.

• The Bank Merger Rate was only 3.3% L4Q compared to the 4.5% rate over the past 3+ decades.

• The Bank Failure Rate over the L4Q was 0.0% with no failures, showing the financial strength of the industry today.

• And, while the De Novo Bank Replenishment Rate was 5.2% - primarily due to the drop in bank merger activity rather than a resurgence of de novo banking, this rate remained well below the average rate of 21.1% over the past several decades.

Overall, the number of banks in the U.S. fell to 4,839 at the end of Q4 2021 - down 163 from one year ago.

The largest declines occurred in Community Banks with less than $250 million in total assets.

And, importantly, the largest declines occurred in rural markets with populations of less than 50 thousand.

The rate of banking industry consolidation remained below the historical average of 3.7%.

For the L4Q, the Banking Industry Consolidation Rate was 3.3%, or approximately 33 banking charters disappeared for each 1,000 banks existing one year ago.

Community Banks consolidated at a rate of 3.5% with several states showing a consolidation rate of greater than 4%: Indiana, Minnesota, Tennessee, and Oklahoma.

While starting the year out quite restrained, bank merger activity picked up during the second half of 2021. The Bank Merger Rate was 3.3% compared to an average rate of 4.5% since 1990. Q4 2021 activity - at an annualized rate -approximated the historical averages.

While de novo banking activity has seen a pick up, it remains significantly below historical averages. The De Novo Bank Replenishment Rate was 5.2% for L4Q, or approximately 5 new banks formed to replace every 100 lost to merger or failure. But this rate remains well below the historical average of 21.1%, or 21 new banks chartered to replace banks lost to merger or failure.

There were no bank failures during 2021. Hence, the Bank Failure Rate was 0.0%.

Financially, the industry is sound. Earnings were solid. Credit quality looks good. And capital levels are strong.

Outlook for 2022: Continued moderate pace with banking industry consolidation continuing slightly below historic averages. This will result from moderate rate of bank mergers. No reason to believe any unusual resurgence. The bank failure rate should continue hovering just above zero. And de novo bank activity will continue to be nominal.