DelhiDesk Community banks, which are generally defined as having less than $10 billion in assets, account for as much as 97% of the total number of America’s banks, but less than 14% of assets and deposits. While some see these institutions as inefficient historical relics, for many small businesses and farms, these banks are a vital source of credit. Community banks tend to rely more heavily than larger commercial banks on interest for their revenue, meaning less earnings volatility and greater earnings pressure when rates fall. These banks often serve specific populations and are often family-run. Community banks account for 36% of all small-business loans and 31% of farm-sector debt, despite comprising well under one-sixth of total American banking assets and less than one-fifth of loans.

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👉 Some view small banks as inefficient relics with less than $10bn in assets, but they are vital for small businesses and farms.

👉 The US has over 4,100 banks, an artefact of history and early suspicion of federalism and big banks.

👉 Community banks account for 97% of US banks, but less than 14% of assets and deposits.

👉 Community banks serve small towns and rural areas, relying heavily on interest for revenue and offering a stronger focus on the community they serve.

👉 They account for 36% of small-business loans and 31% of farm-sector debt, despite having less than one-sixth of total American banking assets.

👉 Community banks tend to be family-run, serving specific populations and offering old-fashioned banking services.

👉 The fallout from the failures of Silicon Valley Bank and Signature Bank has not materially affected community banks.

👉 The outsize share of commercial real-estate loans on their books may pose a risk, but they are too small to pose a systemic risk.

👉 Trouble in the sector would make things tough for homeowners, farmers and small businesses across America.

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