Banking » Guides » What Is a Regional Bank?
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What Is a Regional Bank?

A regional bank is a middle-sized bank operates in a specific area. It's bigger than community banks but smaller than national banks
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

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Table Of Content

Regional banks play an important role in the US economy by providing financial services to individuals and businesses in their local communities.

Let's explore how they work, what the differences are compared to national banks or community banks, how many regional banks exist, and what are the main pros and cons.

What Is a Regional Bank?

A regional bank is like a middle-sized bank that operates in a specific area of the country. It's bigger than the small community banks you might find in your town but not as huge as those national banks you see everywhere. These banks have between $10 billion and $100 billion in assets.

The main goal of regional banks is to offer financial services to people and businesses in their local communities. They want to help out folks nearby with their money needs. Because they are not as big as national banks, they can give more personalized attention to their customers and are quicker to respond to what people want.

You can do a lot of stuff at a regional bank, just like at any other bank. They offer checking and savings accounts, loans for buying things or paying for college, mortgages for buying homes, credit cards for making purchases, and investment options to grow your money.

Regional banks know their local area really well, so they can offer services that fit the needs of the people living there. They understand the local economy and can adapt their offerings accordingly.

Even though they're not as huge as national banks, regional banks still have an important role. They help the local economy grow by supporting businesses and individuals with their financial needs. They also add stability to the banking system in the United States. Some examples of regional banks you might recognize are U.S. Bank, PNC Bank, and SunTrust Bank.

Regional Bank vs National Bank

Regional banks and national banks have some important differences.

  • Size: regional banks are smaller than national banks. The government defines regional banks as those with assets between $10 billion and $100 billion, while national banks, like Chase or Wells Fargo, have assets over $100 billion.
  • Geographic reach: regional banks usually operate in a specific area, like a state or a few neighboring states. In contrast, national banks have branches all across the country.
  • Customer focus: When it comes to the way they treat their customers, regional banks tend to focus more on providing personalized service. They try to build closer relationships with their customers and be more attentive to their individual needs compared to national banks.
Regional Bank
National Bank
Size and Assets
$10 billion to $100 billion in assets
More than $100 billion in assets
Geographic reach
Operates within a specific region or group of neighboring states
Has a nationwide presence across the entire country
Customer Focus
Better personalized service
Serves a broader and more diverse customer base
Regulatory Authority
Subject to state-level and federal regulations
Regulated by federal agencies

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Regional Banks vs. Community Banks

Regional banks are larger and serve a broader customer base within specific regions or neighboring states. They offer a wide range of financial services, catering to individuals, small businesses, and sometimes larger corporations.

In contrast, community banks are smaller and have a more localized focus, serving specific towns or cities. They offer essential banking services but with a simpler product portfolio.

Community banks prioritize personalized relationships and tailored services, understanding the unique characteristics of the local community they serve. Regional banks have a more diverse set of offerings and may have both local and non-local customers.

Regional Bank
Community Banks
Size and Assets
$10 billion to $100 billion in assets
Less than $10 billion in assets
Geographic reach
Operates within a specific region or group of neighboring states
Limited presence within a local community
Customer Focus
Serves a larger and more diverse customer base
Personalized service for the local community
Range of Services
Offers a diverse range of financial services
Provides essential banking services

What Kind Of Services Do Regional Banks Provide?

Regional banks offer a comprehensive range of financial services tailored to the needs of the local communities they serve. These services encompass various aspects of personal and commercial banking.

For individuals, regional banks provide checking and savings accounts, certificates of deposit (CDs), credit cards, mortgages, and personal loans. They also offer investment services, such as mutual funds and retirement accounts, to help customers build and grow their wealth.

For businesses, regional banks extend essential banking services, including business checking and savings accounts, business loans, lines of credit, and merchant services. These banks often have a deeper understanding of the local business environment, enabling them to offer specialized lending solutions based on the specific needs of local enterprises.

Moreover, regional banks may provide treasury management services, cash management solutions, and commercial real estate financing to support the financial operations of small to medium-sized businesses.

How Many Regional Banks Are There?

As of December 2022, there were 134 regional banks in the United States. This number has declined in recent years, as some regional banks have merged with or been acquired by larger banks.

The following are some of the top regional banks in the United States, ranked by total assets:

These banks have a wide range of products and services, including checking and savings accounts, loans, credit cards, investment services, and insurance. They also have a strong local presence, with branches and ATMs in many communities across the country.

Regional Bank Pros cons

Regional banks, like any financial institution, have their own set of pros and cons. Let's explore some of the advantages and disadvantages of regional banks:

Pros
Cons
Local Focus
Limited Geographic Reach
Personalized Service
Fewer Branches and ATMs
Faster Decision-Making
Technology and Innovation
Wide Range Of Products And Services
Risk Exposure

Regional banks prioritize serving local communities, allowing them to better understand the unique needs and challenges of the region they operate in. This local focus can lead to more personalized and tailored financial services for customers.

With a smaller customer base compared to national banks, regional banks can offer more personalized attention and customer service. Customers often have easier access to bank staff and decision-makers, fostering stronger relationships.

Due to a less complex organizational structure, regional banks can often make quicker decisions on loan approvals and other financial matters, benefiting customers and businesses seeking timely assistance.

 Regional banks typically offer a wide range of products and services, including checking and savings accounts, loans, credit cards, investment services, and insurance.

 This means that you can find all of your financial needs met at one bank.

The limited geographic scope of regional banks can be a disadvantage for customers who need banking services outside of their region or while traveling.

Regional banks may have fewer branches and ATMs compared to larger national banks, making it less convenient for customers who prefer widespread physical accessibility.

Regional banks might lag behind national banks in adopting the latest technological advancements and digital banking solutions, potentially impacting the overall customer experience.

Regional banks may face higher risk concentrations as their lending activities are concentrated in specific regions or industries, making them more susceptible to economic fluctuations.

Are Regional Banks At Risk?

While consumers are protected by the FDIC, up to $250,000 per depositor per account, regional banks are currently facing risks and challenges that could impact their stability and solvency.

The recent collapse of Silicon Valley Bank and Signature Bank, followed by the seizure of First Republic and the precarious situation of PacWest, have raised concerns about the regional banking sector.

One of the underlying problems is the exposure to interest rate fluctuations. As interest rates increase, the value of banks' assets can decline, affecting their financial health. Additionally, regional banks still have a significant number of uninsured depositors who could be at risk if the bank becomes insolvent. 

Although the government stepped in to protect deposits in specific cases, uncertainty remains regarding future bailouts, leading to depositor unease and potential bank runs.

Furthermore, the failing commercial real estate market poses a threat to regional banks. Many small-to-medium-sized banks have significant exposure to commercial real estate loans, and as these loans mature, investors may struggle to refinance due to higher interest rates and reduced demand for office spaces. The potential losses resulting from the commercial real estate market could further strain the banking sector.

Depositors are also demanding higher interest payments, which could pressure regional banks to raise rates to retain customers. Smaller banks may find it challenging to compete with larger institutions, leading to potential solvency issues.

To address these risks and put regional banks on firmer ground, some experts propose requiring banks to recapitalize by raising additional equity capital. The Federal Reserve has also discussed increasing capitalization requirements, but the extent of the increase remains a subject of debate.

 While these measures may provide greater stability in the long term, adjusting to stricter standards could be painful for the industry in the short term.

FAQs

Yes, like all banks in the U.S., regional banks are insured by the FDIC, which provides deposit insurance coverage to protect customers' funds up to the specified limits.

Yes, regional banks are influenced by changes in interest rates, which can impact their profitability, loan demand, and asset valuations. Fluctuating interest rates can pose challenges to their financial stability.

Yes, many regional banks have adopted online banking platforms to provide convenience and accessibility to their customers for transactions, bill payments, and account management.

Regional banks differentiate themselves through their local focus, community involvement, and personalized service, attracting customers who value these aspects over the broader reach of national banks.

Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
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