Pa. hasn’t gotten any new banks in over a decade. Here’s why.

Back in the 1980s, when Charlie Crawford was a student at the University of Pennsylvania, groups of local investors across America were pooling a few million dollars and starting new banks at the rate of one a day. Most were local institutions, lending to developers, small businesses, and homeowners. The number of U.S. commercial banks peaked at around 14,500 in 1984.

Now, after unrelenting mergers and takeovers, including more than 90 banks taken over this year alone, the U.S. has fewer than 4,000 banks — and very few new ones are on the horizon.

Since the last banking crisis in 2008 provoked tough new bank capital rules, Americans have started, on average, fewer than 10 banks a year, and just two so far in 2024.

No new bank has opened in Pennsylvania since 2013, when the Bank of Bird-in-Hand opened its doors in Lancaster County, says Crawford, who’s been chairman and CEO at Hyperion Bank at Second Street and Girard Avenue since 2017 and is the new chair of the Pennsylvania Association of Community Banks, a 70-bank advocacy group.

Local banks face aggressive competition. Member-owned, nonprofit credit unions have gained market share at banks’ expense — some in other states are even buying banks. Meanwhile, big national banks with cool digital apps and some “fintech” digital lenders designed to make more expensive loans more quickly than regulated banks have won millions of customers.

Crawford and the community bankers group’s top staffer, chief executive Kevin L. Shivers, a past aide to Republican Govs. Mark Schweiker and Tom Ridge, are touring the state rallying allies for what they hope is a revival under deregulation-minded President-elect Donald Trump.

“Optimism around deregulation under Trump 2.0 is a significantly positive factor” in attracting bank investors, as reflected in recovering share prices for existing banks, Christopher McGratty and his bank-analyst team at Keefe, Bruyette & Woods wrote in a report to clients Dec. 16.

Crawford and Shivers reviewed the lending scene with The Inquirer on Dec. 12. Their comments were lightly edited for clarity and brevity.

Crawford: The cost for compliance with all the regulations is very large. I have 45 employees. Four do nothing but compliance.

Shivers: That is our number-one ask to the new administration in Washington, D.C.: to ease bank regulation.

Shivers: The Biden administration was very heavily involved in setting aside resources for minority institutions. They made a new push with community development financial institutions, the nonprofit CDFIs, that focus on microenterprises — the young lady who is hair braiding and wants to become a hairdresser, for example.

Crawford: We made the suggestion they ought to consider starting a [depositor-owned] mutual bank instead. When Derek Green, a former banker, was on City Council, he talked about setting up a bank. But his actual proposal was for a loan fund that would raise money from public or private sources. Not a bank.

Crawford: They invest in existing banks to get them growing, like the Norcrosses just did with Mid Penn Bank. See if they can use that platform. That’s what I did when I came to Hyperion. We raised another $18 million; it was like starting a new bank.

There are a lot of big national banks with branches in Philadelphia. A lot of people want to do business just by apps, by tapping their card. But a lot of people still want someone they can meet with.

And there are a lot of areas of the state where the big banks don’t go. There’s still a bank up in Turbotville, Northumberland County; they close at noon on Wednesday and open late on Friday. When you go, there’s a line of farmers and businesspeople. They are lifeblood in that community.

Shivers: I’m a fan of Josh [Shapiro]. He’s been supportive. If [Gov. Tom Wolf’s banking secretary, Richard Vague, a former banker] ran for governor, I’d back him, no matter which party. When they wanted to shut the banks in the pandemic, he made sure the governor put in his statement that the banks are essential. Richard would sit down with the business community and have these conference calls. Cabinet secretaries don’t all do that.

Now we have Wendy Spicher as banking secretary. She’s very good. She has experience as a banker in central Pennsylvania, and I think she learned a lot from Richard about how to lead.

Shivers: We met earlier this year with the Legislative Black Caucus. Members were angry because of [allegations of overcharging and racial disparity at] Navy Federal Credit Union and Citadel, [the Chester County-based credit union that agreed to belatedly open promised branches in Philadelphia]. They wanted a state Community Reinvestment Act [to force banks to lend in rich and poor neighborhoods alike, as national banks do]. We had to explain that as banks, we already follow the federal Community Reinvestment Act and antidiscrimination and redlining rules. We told them another state law would mean more banks rechartering as national banks.

What we need is a national agency that will crack down on all lending institutions equally.

Crawford: The credit union regulators are doing a great job taking care of their members. Credit unions are moving closer and closer to doing what banks do. But they don’t have to pay taxes, like we do. And they don’t have the same community investment rules.

In Georgia and some other states, you are seeing credit unions acquiring banks. In Pennsylvania, we have not seen a credit union buy a whole bank. Citadel is big enough; it could buy a community bank. But a lot of smaller credit unions are struggling. Their regulator won’t let banks buy them.

Crawford: In the last month we’ve had a lot more loan applications. Partly that’s rates coming down; partly it’s the certainty from the election, even if you don’t like the results.

We think we’ll get a lighter touch on regulation. And we think we’ll have a stronger economy.