["Contemporary Economic Policy, Volume 44, Issue 2, Page 426-461, April 2026. ", "\nAbstract\nThis paper documents widespread, persistent heterogeneity in the composition and financial behavior of banks across U.S. states since 1997 that cannot be explained well by econometric models of deposit‐loan allocations with observable bank and regional characteristics. Despite faster consolidation, slow‐growth states have more, smaller, and less profitable banks with customers and managers favoring liabilities (time deposits) and assets (real estate loans) with longer maturity and lower risk/returns. A theoretical model with joint determination of deposit and loan portfolios in the regional economy is needed to explain cross‐state heterogeneity. Risk aversion of banks' customers and managers is a possible contributing factor.\n"]