A FEW weeks ago Standard Financial, a bank with assets of just $ 488m and a mere nine branches, merged with Allegheny Valley Bancorp, a slightly smaller neighbour in the suburbs of Pittsburgh. The main reason for the deal, says Tim Zimmerman, Standard’s chief executive, was the rising cost of regulation—though competition from PNC, a $ 371bn colossus based in the city, also played a part. “Without the regulatory overreach…since the crisis,” Mr Zimmerman says, “we’d probably both have gone along on our own, I think.”
Standard is one of America’s 5,400 community banks: local lenders, funded chiefly by deposits, who pride themselves on knowing their turf by the inch and their customers by name. Their size can range up to $ 10bn in assets, but most are much smaller: over 5,000 banks and savings institutions have less than $ 1bn and more than 1,500 under $ 100m. They account for 92% of federally insured banks. Though they make only 16% of all loans, they provide 43% of small-business loans….
The Economist: Finance and economics
