St Casimirs Mortgage Minute

FDIC Releases Community Banking Study



The FDIC yesterday released its “data-driven” Community Banking Study that looks at community banks over the past 25 years to identify and explore issues and questions about them. The study, which is part of the FDIC’s year-long community banking initiative, “is designed to be foundational, providing a platform for future research and analysis by the FDIC and other interested parties,” the agency said in a press release.

It explores such key areas as the definition of a community bank; structural changes among community and noncommunity banks; the geography of community banking; the performance of community banks compared to noncommunity banks; the performance of community bank lending specialty groups; and capital formation at community banks.

The study uses detailed balance sheet and geographic data to define community banks primarily in terms of their traditional relationship banking and limited geographic scope of operations.

“Based on this definition, there were 7,658 FDIC-insured community banks operating within 6,914 separate banking organizations (or 94 percent of all banking organizations) as of year-end 2010,” it said. The study added that 330 of those institutions exceeded the $1 billion limit that might have identified them as noncommunity banks if a strict asset-size definition had been applied.

The study also found, among other things, that in in 600 counties -- out of slightly more than 3,000 -- there wouldn’t be any banking services if it weren’t for the local community bank; the best-performing banks are those that specialize in agricultural lending, residential real estate, or are diversified with no specialty; and 40 percent of community banks never needed to raise external capital during the 25-year period.---
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