How Many Regional Banks Are There & What Defines Them?
Unpack the definition of regional banks and why their precise number is complex to determine.
The banking industry encompasses diverse financial institutions, each serving distinct roles. Regional banks frequently draw public interest, prompting questions about their characteristics and prevalence. This article explores what sets regional banks apart.
What Defines a Regional Bank
Regional banks are defined by their asset size, geographic footprint, and the scope of services they offer. They have assets of $10 billion to $100 billion. However, while some definitions extend this to $250 billion, regulatory bodies like the Federal Reserve commonly use the $10 billion to $100 billion range.
Geographically, regional banks serve multiple states within a specific region. They maintain a network of branches in their service areas, balancing local presence with broader reach. This approach enables them to develop expertise in local market conditions and economic trends.
Regional banks offer more comprehensive services than community banks, but less complex than national institutions. Services include commercial lending, retail banking products (checking, savings, mortgages, consumer loans), and wealth management. “Regional bank” is primarily an industry and functional classification, not a formal legal designation.
Challenges in Quantifying Regional Banks
Determining a precise number of regional banks is challenging due to the dynamic banking sector and varying classification criteria. Regulatory bodies like the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) use different asset thresholds or metrics. This lack of a single legal definition contributes to discrepancies.
The banking landscape constantly evolves through mergers, acquisitions, and growth. Banks frequently cross asset thresholds; a community bank might grow into a regional bank, or a regional bank might merge to become a national player. These changes make any static count quickly outdated. For instance, in December 2022, there were approximately 134 regional banks in the U.S., but this number constantly changes.
The term “regional” is a descriptive industry term reflecting operational scope and asset size, not a strict legal category. While asset size is primary, geographic concentration and service model also influence categorization. The number of institutions identified as regional banks depends significantly on the specific definition applied.
Beyond Regional Banks: Other Bank Classifications
To understand regional banks, consider other classifications. Categories are distinguished by asset size, geographic reach, and service complexity. The banking industry recognizes community banks and national or global banks as distinct from regional institutions.
Community banks are the most numerous banking organizations in the U.S., defined as having less than $10 billion in assets. They focus locally, serving individuals and small businesses. They emphasize personalized service and often have deep roots in their communities.
National or global banks have significantly larger assets, often exceeding $250 billion or even trillions. They operate nationally or internationally, providing complex financial products and services to corporations, governments, institutional clients, and retail customers. Their extensive operations and systemic importance often subject them to more stringent regulatory oversight.