Noticed How Few Banks There Are? Only One New Bank Chartered Since 2010.

Number of U.S. Banks at Record Low

The number of banking institutions in the United States has fallen to its lowest level since at least the Great Depression — while overall bank deposits have more than quadrupled since the 1980s.

Federally insured institutions across the country dropped to 6,891 in the third quarter, falling below 7,000 for the first time since federal regulators began keeping track in 1934, the Federal Deposit Insurance Corp. disclosed.

The number peaked at more than 18,000 in the 1980s.

The decline in the number of banks has come almost entirely among smaller banks, those with less than $100 million in assets. From 1984 to 2011, more than 10,000 banks ceased to exist as a result of mergers, consolidations, or failures, the FDIC reported.

From 2008 to 2012, 465 banks failed, while only 10 failed in the five prior years.

At the same time, overall bank deposits have risen from around $2.3 trillion in the mid-1980s to around $9.6 trillion this year.

The falloff in the number of smaller banks "is raising alarms among boosters of community banks, who say such lenders — which represent the vast majority of U.S. banks — are critical to the economy because they are more likely to make small-business loans," The Wall Street Journal observed.

The number of new startup banks has also dwindled in recent years. Every year from 1934 to 2009, investors chartered at least a few and sometimes hundreds of new banks. But since December 2010, only one new startup has been chartered — a bank that opened earlier this month in Bird-in-Hand, Pa.

According to The Journal, the reluctance to open new banks "stems from slim profits and rising regulatory costs as Washington tries to ensure banks won't fail en masse as they did during and after the 2008 financial crisis."