The state of America’s community banks

THE CLASS of the guests reflects the clout of the hosts. In a posh Washington hotel, two powerful visitors—first Maxine Waters, the Democrat who chairs the House of Representatives’ financial-services committee, and then Mike Crapo, the Republican head of the Senate banking committee—address a roomful of well-breakfasted bankers. After the speeches and a few polite but pointed questions, the bankers head to lobby Capitol Hill.

They are not from Wall Street, but are community bankers, from towns large and small all over America. Some belong to the third or fourth generation running the family business. They each oversee only up to about $10bn in assets, and most of them much less. But the Independent Community Bankers of America (ICBA) are both deeply rooted in their home soil and well organised. Almost every congressional district is home to at least one such bank.

Though their numbers have been falling for years (see chart), America’s small banks are, by and large, in fair shape. According to the Federal Deposit Insurance Corporation (FDIC), a regulator, the 4,979 community banks reported an average return on equity of 10.6% last year—less than bigger banks, but nearly two percentage points more than in 2017 and the most since the financial crisis. Only 3.4% lost money, the lowest share on record.

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via The Economist: Finance and economics Business Feeds

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