Based on the current pace of consolidation among Wisconsin’s community banks, there will be zero banks with less than $50 million in assets by 2025, according to a projection by the Federal Reserve Bank of Minneapolis.
Ron Feldman, executive vice president and senior policy advisor at the Minneapolis Fed, presented the finding, along with several other Wisconsin banking trends, at the Wisconsin Bankers Association Executives Conference this morning at The Pfister Hotel in downtown Milwaukee.
From 1985 to 2016, the number of banks and thrifts chartered in Wisconsin declined from 575 to 227. In that same time period, the percentage of banks with less than $50 million in assets has dropped from 68 percent to 6 percent of the state’s institutions. By 2025, this smallest size of bank will have gone extinct and there will be just 96 banks chartered in the state, Feldman said.
This consolidation, mainly driven by mergers and acquisitions among community banks, is a national trend. Over the past 30 years, there has been a 65 percent reduction in the number of banks in Feldman’s Federal Reserve district, which includes part of Wisconsin.
From 1985 to 2016, the proportion of banks in the $50 million to $150 million range increased from 25 percent to 32 percent, and the banks in the $150 million to $500 million range jumped from 5 percent to 47 percent. Feldman said consolidation is expected to continue, and it may target the $50 million to $150 million range.
“There’s going to be some more consolidation, but the pace of it is really unknown,” he said.
Polling the crowd through text message, Feldman asked the hundreds of state bankers in attendance whether they expect trends to continue in the way he projected. Half of them said, “No, trends will slow.” Another 34 percent said “Yes” and 14 percent said “No, trends will increase in pace.”
He also asked a bold question of the crowd: “Why do we have so many banks to begin with, particularly in the Upper Midwest?”
The WBA conference, which delves into a number of issues facing the state’s banking industry, started Feb. 6 and continues through Feb. 8 at The Pfister Hotel.