“His banking regulations are so opaque and complex that small banks can’t cope with them, so they sell out to bigger banks,” he said. “And so what you’ve got is a situation where the focus of banking [is] shifted from Wall Street to Main Street. Regional banks now have less money to lend because there are less of them. That takes banking away from Main Street — from builders and people who would buy homes.”

Q: What happened to regional banks?

Generally speaking, regional banks have better customer service than national banks, and a stronger motivation to keep their region healthy.

The number of community banks in the United States has decreased by 50 percent in the last 20 years, shrinking at a much greater rate than non-community banks, according to a new study of the community banking industry from the University of New Orleans.

Here are some of the highlights of the study that analyzed data from 1993-2013:
• Both community and non-community banks saw a reduction in number of FDIC charters; however, the number of community banks decreased by 50 percent, while the number of non-community banks decreased by 19 percent.
• Growth in average net income for non-community banks outpaced that of community banks by 292 percent.
• The average total asset growth for community banks was 220 percent less than that of non-community banks.
• The average return on assets for non-community banks increased 17 percent while the average return on assets for community banks declined 14 percent.

Community banking occupies a valuable place in the economy because smaller community banks comprise a majority of banking institutions in the U.S., and they are responsible for servicing the banking needs of small businesses and rural communities, according to Hassan. Recent trends in regulation, the economic environment and industry practices have led to a significant decline in the amount of FDIC-chartered institutions that qualify as community banks, Hassan said.


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