The competitive edge of community banks
In the wake of financial reform: what's next for community banks?
The sixth annual Community Bankers Symposium, co-sponsored by the Federal Reserve Bank of Chicago and the Federal Deposit Insurance Corporation (FDIC), was held at the Chicago Fed on November 19, 2010. This article summarizes the key presentations and discussions at the conference.
Scale economies and geographic diversification as forces driving community bank mergers
Mergers of community banks across economic market areas potentially reduce both idiosyncratic and local market risk. Idiosyncratic risk may be reduced because the larger post merger bank has a larger customer base. Negative credit and liquidity shocks from individual customers would have smaller effects on the portfolio of the merged entity than on the individual community banks involved in the merger. Geographic dispersion of banking activities across economic market areas may reduce local market risk because an adverse economic development that is unique to one market area will not affect a ...
Technology outsourcing : a community bank perspective
This article provides an overview of the technology industry that has evolved to provide technology outsourcing services for community banks, and the risk management issues associated with outsourcing. The service provider industry is in a transition phase being brought about by changing economic fundamentals in banking and in information technology. These factors have contributed to significant consolidation among the technology companies that serve the banking industry, especially among technology firms offering core processing services. Accordingly, the array of firms serving the national ...
The Impact of the Small Business Lending Fund on Community Bank Lending to Small Businesses
Following the financial crisis, total outstanding loans to businesses by commercial banks dropped off substantially. Large loans outstanding began to rebound by the third quarter of 2010 and essentially returned to their previous growth trajectory while small loans outstanding continued to decline. Furthermore, much of the drop in small business loans outstanding was evident at community banks. To address this perceived lack of supply of credit to small businesses, the Small Business Lending Fund (SBLF) was created as part of the 2010 Small Business Jobs Act. The fund was intended to provide ...
Putting a name with a face: community banks count on customer service
Despite some dire predictions, community banks have not been driven out of the market by megabanks. On the contrary, their personalized services and attention to their customers? needs have allowed them to thrive.
Community banks full of change
Though a variety of competitive challenges persist, many community banks are thriving
Most community banks will pay lower premiums under FDIC assessment rules
Find out why community banks will benefit from the new FDIC assessment base as called for under the Dodd-Frank Act.
The future of community banks: lessons from banks that thrived during the recent financial crisis
The authors study the distinguishing features of community banks that maintained the highest supervisory ratings during the recent financial crisis (2006 to 2011). They identify balance sheet and income statement ratios that separate these thriving banks from other community banks and supplement that analysis with detailed interview evidence from a sample of thriving banks. They conclude that there is a strong future for well-run community banks and that the banks that prosper will be the ones with strong commitments to maintaining risk control standards in all economic environments. There is ...