Where Have All The Community Banks Gone?

Listen to Audio Segment of Brad on Real Estate Revealed Here:

Brad Hettich on Real Estate Revealed, Sunday, August 1, 2021


Transcript of Real Estate Revealed Show on AM560 from Sunday, August 1st, 2021


Welcome to August everyone. 


As you stated, my topic for today is: “Where have all of the Community Banks gone?”


If you are a small business owner trying to find a community banking relationship, this is probably a question you are asking yourself. 


The Bank merger activity has only continued throughout the United States over the past ten years ever since the Great Recession, and the Chicagoland area has been pretty impacted by it as well. 


Just to throw some statistics at our listeners:


  • The current Bank consolidation rate has averaged about 4% over the last 40 years. That means 4 out of every 100 banks in the United States should merge this year. 
  • At the end of 2010 there were 7,658 separately chartered banks in the United States. Today that number is at 4,978.  That is a decline of 35% in just over 10 years. 
  • There have already been 138 bank acquisitions announced in 2021 through June, which represents just under 3% through six months, so it appears likely we will well exceed the 4% average rate of consolidation in 2021.


This consolidation is happening all over the place. It includes large regional banks buying up other regional banks to get into new markets.  It includes medium sized banks buying up smaller banks in order to expand and to take competition out of the market. And it includes the acquisition of small community banks as they get rolled up into larger organizations. 


Here in Chicago alone there have been some major Bank acquisitions announced this year that many people are not even aware of:


  • Huntington Bank out of OH acquiring TCF Bank
  • Old National Bank out of IN acquiring First Midwest Bank
  • Old Second National Bank out of IL acquiring West Suburban Bank
  • Green State Credit Union out of IA acquiring Oxford Bank
  • Busey Bank out of IL acquiring Glenview State Bank


This acquisition activity continues to create a major void in the market.  In the 1990’s and 2000’s De Novo Bank (newly chartered bank) startups pretty much matched the merger activity.  However, since 2010 only 57 new banks have been chartered and there are only about 25 new bank charters in process now.  That is not enough to cover the void being created by just the merger activity this year.  Higher regulatory costs are making it harder to form new banks, and the desire to consolidate to gain profits for the shareholders or to benefit retiring owners or to attract new technologies and additional market share continues.


It is not doom and gloom out there for small business owners, who often suffer as access to credit decreases as banks merge and get bigger.  There are still plenty of community banks out there, many of which are growing and becoming more aggressive in this market.  Credit unions have also greatly expanded their lending to help fill the void.  There are also plenty of new non-bank lending solutions that have been developed to fit emerging needs.  We are actively moving many clients out of merged banks where the acquiring banks don’t provide the same flexibility, pricing, or do not want to renew their loans, and we are taking these clients to other community banks or to non-bank lenders. 


If you are frustrated with your current banking relationship or looking to find one of the quality community banks still out there, we would love to be of assistance.  We have over 350 funding partners we work with, and that list includes many community banks and credit unions.  You can reach us at 630-988-4852 or via email at brad@commerciallendingx.com