Regional Banks in the US
Regional banks are composed of commercial banks that have between $50.0 billion and $500.0 billion in domestic asset under management (AUM) and operations are not limited to one state. Banks that fall into this threshold provide the same services that the commercial banking industry provides. Also,...
Saved in:
| Format: | Market Research |
|---|---|
| Language: | eng |
| Subjects: | |
| Online Access: | Request full text |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | Regional banks are composed of commercial banks that have between $50.0 billion and $500.0 billion in domestic asset under management (AUM) and operations are not limited to one state. Banks that fall into this threshold provide the same services that the commercial banking industry provides. Also, regional banks have a significantly smaller scope of operations compared with large commercial banks that operate across the country.
Through the end of 2023, operators in regional banks have benefited due to increased consumer confidence and consumer debt levels. This coincided with the Federal Reserve raising the Federal Funds Rate (FFR) during the early portion of the period. Despite this, the Federal Reserve began to gradually lower the FFR in 2019, before dropping it to the zero-bound range in 2020 in an attempt to combat economic concerns surrounding the spread of COVID-19. Due to higher economic uncertainty coupled with lower interest rates, regional banks are to have endured a significant decline in demand throughout the pandemic. Still, the resumption of economic activity due to mass immunization efforts will significantly boost revenue, enabling the industry to marginally grow throughout the five-year period. This will result in higher loan volumes being taken out at a higher interest rate, boosting profitability. Regional banks revenue has inched upward at a CAGR of 0.4% to an estimated $322.6 billion over the past five years, pushed up by an 8.1% increase in 2023 alone.
Through the end of 2028, regional banks will gradually grow as concerns surrounding the COVID-19 dissipate. Increased economic activity will incentivize the Federal Reserve to raise the FFR from the zero-bound range it was reduced to amid the pandemic. Rising interest rates will not deter consumers from assuming growth, as the aggregate household debt will also increase. Regional banks revenue is expected to expand at a CAGR of 1.2% to an estimated $342.7 billion over the next five years. |
|---|