Number of new US banks continued to decline in 2024

The establishment of new banks dwindled in 2024 due to high capital requirements, an unfavorable interest rate environment and regulatory scrutiny discouraging investors.

Only six new banks were established in 2024, following another slow year in 2023, when eight banks were formed. There were 16 new banks in 2022 and nine in 2021, according to S&P Global Market Intelligence data.

The lower rate of new bank formation affected the overall number of banks in the US banking sector. The total number of Federal Deposit Insurance Corp.-insured institutions dropped to 4,487 as of Dec. 31, 2024, from 4,587 as of Dec. 31, 2023, according to FDIC quarterly data.

In a June 2024 speech, Federal Reserve Governor Michelle Bowman expressed concern over the decreasing number of banks in the US and highlighted an unmet demand for new bank creation, evidenced by trends such as "charter strip" acquisitions and the increasing popularity of banking-as-a-service partnerships.

"For the past decade, de novo bank formation has been largely stagnant, even as the banking industry has rapidly evolved over the same time," Bowman said. "In my view, the absence of de novo bank formation over the long run will create a void in the banking system, a void that could contribute to a decline in the availability of reliable and fairly priced credit, the absence of financial services in underserved markets, and the continued shift of banking activities outside the banking system."

President Donald Trump recently nominated Bowman as the Fed's vice chair for supervision

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Banks established in 2024

Nova Bank, based in Huntsville, Alabama, was established in January 2024. As of Dec. 31, 2024, the bank had $47 million in total assets, a 72.0% increase since its first call reporting. Nova Bank concluded 2024 with a return on average assets (ROAA) of negative 4.36%, and net interest margin of 6.12%.

Nova was the only new bank to begin operations in 2024 until Four States Bank and Integrity Bank SSB opened in the third quarter of 2024. Carthage, Missouri-based Four States grew its assets by 108.0% since its inception on Aug. 26, 2024, reaching $52.2 million at the end of 2024. Houston-based Integrity Bank had $46.6 million in total assets as of the end of the year.

Three banks opened in the fourth quarter of 2024: Los Altos, California-based Altos Bank; Grandview Heights, Ohio-based Fortuna Bank; and Ocala, Florida-based Gala Bank.

Profitability metrics

Of the 30 new banks established between 2022 and 2024, only six posted a positive ROAA for the year ended Dec. 31, 2024.

Two of the recently chartered banks have gotten off to promising starts.

The $230.1 million TIAA Trust NA in Charlotte, North Carolina, which opened in July 2023, booked the highest ROAA in the analysis at 37.40%. As of Dec. 31, 2024, the Teachers Insurance & Annuity Association of America unit reported a net interest margin of 4.37% and an asset growth rate of 24.6% since its first call reporting.

The $17.7 million Dayforce National Trust Bank in Minneapolis, which opened in January 2023, posted a 20.63% ROAA for full year 2024. TIAA and Dayforce National are primarily regulated by the Office of the Comptroller of the Currency and have total deposits-to-total assets ratios of less than 20%.

On average, banks established in 2019 had 22.31 quarters of operations and 8.31 consecutive quarters of losses since inception. Banks established in 2020 and 2021 had on average 7.60 and 9.67 consecutive quarters of losses since inception, respectively.

Of the 27 banks established between 2019 and 2021, only one bank — Genesis Bank — has yet to post a profit as of Dec. 31, 2024. The Newport Beach, California-based bank announced an all-cash deal to acquire Excel Bank in February 2025. For full year 2024, the bank logged an ROAA of negative 3.11%.