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Best states for banking

The banking industry has come a long way since 2010, when 157 FDIC-insured banks failed. Last year, just eight banks went belly-up, which makes the banking environment considerably more stable for bankers and customers alike.

Still, stability is just one factor that determines what banking conditions are like for consumers. Breadth of choice, quality customer service, and access to competitive bank rates are important factors as well.

Taking all of this into consideration, MoneyRates.com looked at the following four factors to assess banking conditions in 2018:

  • Breadth of choice -- the number of banks based in each state, according to the FDIC
  • Attrition rate -- the number of 2017 bank failures in each state, according to the FDIC, as a percentage of the number of banks
  • Customer satisfaction -- based on an average of ratings from JD Power for major banks with branches available in each state
  • Access to top rates -- according to where there are branches of banks that made the MoneyRates lists of best savings and money market accounts for 2018.

Based on an average of each state's rank in the four categories above, MoneyRates.com identified the best US states to bank in for 2018.

Best states for banking - 2018

1. Texas
They say everything is bigger in Texas, and that includes the number of banks. With 530 FDIC-insured institutions based in the state, Texas offers more local banks than any other state.

That breadth of choice also gives it a leg up when it comes to access to the best bank rates -- five of the banks that made the MoneyRates lists of the best savings and money market accounts for 2018 have branches in Texas.

Despite its large number of banks, Texas had no bank failures last year, and the average customer service ratings of major banks with a presence in the state was in the top ten nationally.

2. Georgia
Back in the peak year for bank failures of 2010, Georgia was one of the real trouble spots, so it has made quite a turnaround by having no bank failures last year. Georgia also ranked in the top ten of the customer satisfaction and breadth of choice categories of this survey.

3. California
Like Georgia, California banking has shown great improvement since the troubles of the financial crisis, with no bank failures last year despite being home to over 200 banks.

4. Nebraska
Maybe it's the Warren Buffet effect: For a state with a relatively low population, Nebraska has a surprisingly large number of locally-based banks. What's even better is that none of its 194 institutions failed last year.

5. Florida
A wide number of choices with no failures and a healthy amount of access to banks with high rates helped Florida make this top ten list.

6. (tie) Colorado
Colorado was above average in all four categories, including having no failures and having branches of banks with high-rate savings and money market accounts in the state.

6. (tie) Iowa
You may be surprised to learn that Iowa ranks fourth nationally with 327 banks based in the state, giving consumers plenty of choices. Better yet, despite such a large banking population, Iowa experienced no failures last year.

8. Oklahoma
Banks with branches in Oklahoma had a better average score than those in any other state for overall customer satisfaction in J.D. Power's U.S. Retail Banking Survey. Oklahoma also ranks in the top ten for number of locally based banks.

9. Missouri
Another somewhat surprising member of the top ten for number of locally based banks, Missouri finished above median in all four of this survey's categories.

10. New York
Though New York City is known as the country's leading financial center, the state actually falls just outside the top ten for locally based banks. However, it tied for second in the number of branches of banks on the list offering the best savings or money market rates.

Geographic barriers spur online banking

While overall banking conditions have improved considerably since the depths of the financial crisis, some states are still significantly better than others when it comes to banking. Where banking options are limited, consumers may need to search for their best bank online.

If you live in a state with unfavorable banking conditions, don't despair. Online banking has broken down geographic barriers to banking choices. Depending on where you live, you may have to change your banking habits to get more competitive rates and better service; but if you are willing to bank online, chances are you can improve your banking experience no matter where you live.

Full ranking of best US states to bank in -- 2018

If you didn't see your state among the best US states for banking list, you'll find it in the full ranking of all 50 states:

StateOverall RankCustomer Satisfaction ScoreNo. of Banks in State% of Banks Failures in State in 2017No. of "America's Best Rates Banks" with Locations in State
Alabama113.351617.43%1
Alaska492.60768.06%
Arizona213.266715.67%3
Arkansas393.1412236.11%
California33.392171.72%3
Colorado63.391403.64%3
Connecticut402.956238.83%1
Delaware343.014230.36%3
Florida53.322272.99%3
Georgia23.502271.14%1
Hawaii383.261234.86%1
Idaho333.433227.50%
Illinois173.5151812.41%1
Indiana203.2315014.81%1
Iowa63.373273.64%1
Kansas133.483019.03%3
Kentucky243.3018018.60%
Louisiana343.4014030.36%2
Maine293.393123.02%1
Maryland243.179518.60%2
Massachusetts133.161589.03%3
Michigan412.8212641.41%
Minnesota193.2136313.97%
Mississippi273.389921.09%
Missouri93.333245.63%1
Montana442.985950.00%
Nebraska43.491942.33%2
Nevada173.434712.41%1
New Hampshire273.384221.09%1
New Jersey483.0713760.00%2
New Mexico343.145830.36%1
New York103.242126.37%4
North Carolina233.269217.69%1
North Dakota422.998643.30%
Ohio153.3322310.87%
Oklahoma83.892274.91%
Oregon293.454923.02%
Pennsylvania153.3619610.87%
Rhode Island453.112252.94%
South Carolina323.358426.45%
South Dakota343.038330.36%1
Tennessee113.421997.43%
Texas13.435300.52%5
Utah503.055570.42%4
Vermont453.102352.94%
Virginia213.2012615.67%2
Washington243.418318.60%
West Virginia293.297423.02%1
Wisconsin433.3224145.26%
Wyoming472.994655.95%
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