Channel Strategy · December 10, 2025
Scale Matters: Small Banks Shrinking, Mid-Sized Banks Growing
By Tom McDermott, Managing Partner, Inver Consulting Group
Scale matters, and the numbers don't lie. Large and mid-size banks are driving balance-sheet growth, while the smallest banks are shrinking and consolidating. This trend will continue in a favorable regulatory environment and with an increased need for digital spending to compete.
The smallest banks are shrinking
- Banks under $100M in assets: deposits down 7.4% and loans down 7.7% year-over-year
- Banks from $100M–$1B: slightly less negative on both measures
Regional and super-regional banks are growing
In contrast, banks between $1B and $250B report solid growth: deposits up roughly 4% to 10% and loans up 3.5% to 6.6% year-over-year, indicating most new business is flowing to regional and super-regional franchises.
Consolidation is a small and mid-sized bank story
There were 121 bank mergers and consolidations through 3Q 2025. Most of the merged institutions are in the sub-$10B tiers, especially $100M–$1B. From a numbers perspective, consolidation in 2025 is overwhelmingly a small and mid-sized bank story rather than a mega-bank story.