Regional Banks Are Stuck in No Man’s Land

This hasn’t been a good year for banks. Since March, four with assets of greater than $1 billion have collapsed, billions in deposits have migrated out of bank accounts into higher-yielding alternatives, and regulators have unveiled sweeping new rules that could reduce the amount of money they have available for lending.

Although the largest institutions were able to shrug off the worst of the turmoil, midsize ones—roughly speaking, those with $85 billion to $250 billion in assets—are still grappling with the problems that touched off the panic earlier this year. And regulators have signaled that they will be subject to stricter rules in the near future. Some analysts are voicing concerns about their place in the banking ecosystem. “It’s kind of no man’s land,” says Brandon King, an analyst with Truist Securities. “You’re not big enough to be a money center bank, where you can have this massive scale, mature businesses, that you don’t have to solely rely on spread income, like JPMorgan or Bank of America or Wells Fargo.”