2017 Looks Like a Promising New Year for Banks ... Finally

We’ve seen an incredible drought in new bank formation over the last six years. Strict regulations put in place to prevent another financial meltdown after the Great Recession made it quite difficult for new banks to open, and for the existing ones to operate.

In fact, only two new institutions opened their doors between 2011 and 2016. That compared to 258 new banks in the previous five years.

But our latest data indicates that’s all about to change in 2017. New bank activity is already up and running, with Blue Gate Bank starting operations in January. Plus, nine others are currently in organization and likely to start operating sometime this year. That means 2017 could see at least 10 new banks open.

With the new administration promising to reduce business regulations, there could be an even larger surge of new bank openings over time. That may make it easier for individuals and businesses to get loans, especially if stringent capital rules also change in the near future.

Still, while having more banks sounds like a good idea because of the potential for more employment opportunities and borrowing options, all this growth must be managed carefully and take place gradually. Otherwise, unexpected financial hardships could strike the industry all over again.

Incidentally, if you’re wondering about the quality of the nation’s newest institutions, here are the Weiss Safety Ratings for the two banks that opened from 2011 to 2016:

And as always, be sure to check the safety of your bank on the Weiss Ratings website – or find a recommended bank near you using our “Recommended Banks by State” tool.