Most Community Banks Experienced Growth in 2008

March 10, 2009:   According to a new report from the Community Bankers of America, most community banks experienced deposit growth in the last year, while adding new customers at a faster rate than in the past.

The report, entitled The Impact of the Financial Crisis on U.S. Community Banks: New Opportunities in Difficult Times, was conducted in February 2009 in partnership with the Aite Group, LLC.

According to Carmden R. Fine, the association's president and CRO, "While the financial crisis has affected banks of all sizes and in all regions, community banks continue to lend and are typically faring much better than the larger banks because they didn't participate in the high-risk activities that led to problems we are experiencing  This survey clearly shows that the vast majority of community banks are well-positioned to survive the economic downturn and, perhaps, even reclaim some of the customers from larger banks."

Highlights of the report include:
  • Community banks are still lending.  Forty percent have seen an increase in loan origination volume over the last year, while 11% believe the crisis has "significantly" curtailed their institution's ability to lend. Economic compression and mixed messages from the U.S. government are key factors driving down loan activity.
  • Community banks are seeing growth in deposits. While 55% of the community banks surveyed have seen an increase in deposits as a result of new customer acquisition, only 17% have had customers withdraw deposits from their institutions.
  • Community banks are acquiring new customers at a faster rate than in the past. A significant 57% of the community banks surveyed saw an increase in new retail customers during the third and fourth quarters of 2008 compared to the first half of the year. Forty-seven percent saw an increase in new business customers.
  • Despite most community banks' lack of participation in subprime lending, the implications of larger banks' activities have had an impact on smaller banks: 73% of the community banks surveyed have seen an increase in their traditionally low loan delinquencies and charge-offs since the start of the crisis. The significant growth in quarterly net charge-offs for the industry is driven primarily by the largest banks.

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Posted by Mark Rodrigues at 3/10/2009 3:37 PM
Categories: Deposits,Management,Lending
Tags: Growth
 

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