The number of U.S. banks has fallen to its lowest level since the government started keeping track 79 years ago, dipping to 6,891 federally insured institutions in the third quarter, according to the Federal Deposit Insurance Corp.

The tepid economy, historically low interest rates and stricter regulations are pushing banks out of business, according to The Wall Street Journal.

To be sure, the level of bank deposits and assets has grown despite the shrinkage in bank population.

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Small banks — with assets of less than $100 million — account for almost all the decrease, which took place mostly between 1984 and 2011, The Journal reports. Approximately 17 percent of the disappearing banks collapsed, while the remainder merged with other banks.

Some say the winnowing can increase industry efficiency.

"Seven thousand is still an awful lot of banks" at a time when physical bank branches are suffering a decline in profitability, David Kemper, chief executive of Commerce Bancshares, a regional Missouri bank, told The Journal.

"There's no reason why we need that many banks, especially if those smaller banks have a much lower return on capital. The small banks' bread and butter is just not there anymore."

Meanwhile, Gerard Cassidy, a bank analyst at RBC Capital Markets, says major bank stocks could soar 25 to 30 percent in 2014, as their litigation costs wane.

"There's meaningful upside left for selected names of the top 20 banks," he told CNBC.

"When you take a look at where some of our largest banks are trading, such as Bank of America [and] Citigroup, they're trading at big discounts to book value. And when they return to normal profitability, they should be trading at premiums to book value."

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