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Banks Dwindle in Physical Number but Increase in Monetary Numbers, The Wall Street Journal Reports
Thursday, December 5, 2013 6:55 AM

The number of banking institutions in the U.S. has dwindled to its lowest level since at least the Great Depression, as a sluggish economy, stubbornly low interest rates and heightened regulation take their toll on the sector, reports The Wall Street Journal.

The number of federally insured institutions nationwide shrank to 6,891 in the third quarter after this summer falling below 7,000 for the first time since federal regulators began keeping track in 1934, according to the Federal Deposit Insurance Corp.

The decline in bank numbers, from a peak of more than 18,000, has come almost entirely in the form of exits by banks with less than $100 million in assets, with the bulk occurring between 1984 and 2011. More than 10,000 banks left the industry during that period as a result of mergers, consolidations or failures, FDIC data show. About 17 percent of the banks collapsed.

The number of physical bank branches in the U.S. is also shrinking. From the end of 2009 through June 30 of this year, the total number of branches dropped 3.2 percent, according to FDIC data. The main reason for the drop, industry experts said, is consumers' increasing reliance on mobile banking and automated teller machines.

SNL Financial, a firm that tracks bank data, reports that the median loan-growth rate for banks with less than $100 million in assets was about 2 percent during the year ending Sept. 30, well behind the roughly 3.4 percent-to-7 percent rate for midsize banks, or those with assets as high as $10 billion.