This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 States Where Small Banks Thrive, Or A Walmart Conspiracy?

NEW YORK ( TheStreet) -- "Big banks are an oligopoly and what that map is showing is that they're exerting their pricing power."

You might expect a quote like that from Sen. Elizabeth Warren (D., Mass.) or Joseph Stiglitz, the liberal-leaning Nobel laureate. Afterall, Warren and Stiglitz are two of the most prominent big bank critics to emerge from the 2008 financial crisis.

Instead, it came from Dick Bove, analyst at Rafferty Capital Markets and author of Guardians of Prosperity: Why America Needs Big Banks.

Bove argues that we need giant banks like Citigroup (C), Wells Fargo (WFC), JPMorgan Chase (JPM) and Bank of America (BAC - Get Report) to compete globally and to service large corporations and governments. Breaking up those institutions, he argues, will seriously undermine U.S. competitiveness.

Still, the analyst concedes giant banks aren't the best thing for consumers.

What is most striking about the map (shown on the next page and originally from a Web site called is the strong concentration of inexpensive banking services in the center of the country along the Mississippi River.

"That's the only region of the country that has not seen the massive consolidation of banking that you've got on the East and West coasts," Bove says. "Therefore you've got banks like USBancorp (USB), Fifth Third (FITB), Comerica (CMA) and Keycorp (KEY) that have the ability to go head to head against each other and that keeps prices down."

Banking is cheapest of all in Arkansas, and most expensive in Arizona, according to the study, which ranks the 50 states and Washington D.C.

"Arkansas is served by many small community banks or mid-size banks, with very few national banks having a large presence," says Jason Kincy, marketing director at Arvest Bank, in a quote accompanying the study.

The quote is more than a little bit ironic. Arvest is the largest bank in Arkansas, though with some $14 billion in assets it is a flea compared to the big four, which are all in the $1.5 trillion to $3 trillion range.

The irony, however, comes from the fact that Arvest is owned and run by the Walton family, of Walmart (WMT - Get Report) fame. Unlike the big banks, Walmart thrives by keeping prices low. The retailing giant does not own Arvest and it gave up on its own quest to get a bank charter in 2007 after legislators fought the move. Still, Walmart has gotten around the rejection quite nicely, and offers plenty of financial services such as check cashing and money transfers that probably aren't the most cost-effective options for its cash-strapped customers. So a more skeptical reading of the map is that the good people of Arkansas, Missouri and Kansas are free from Wells Fargo and Bank of America only because they are prisoners to Walmart.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.36 -2.78%
WMT $67.06 -0.78%
AAPL $95.18 1.64%
FB $117.44 -0.95%
GOOG $692.33 -0.84%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs