Research & Reports

First Quarter 2022

Fourth Quarter 2021

Third Quarter 2021

Second Quarter 2021

The FDIC Quarterly provides a comprehensive summary of the most current financial results for the banking industry, along with feature articles. Articles from the most recent four quarters highlighting community banks are provided below. Older issues are located in the Archives section of this page.

Community Bank Performance in Manufacturing-Concentrated States - PDF
FDIC Quarterly, 2022, Volume 16, Number 3

The manufacturing industry has undergone fundamental changes in recent decades that are important to communities that rely on manufacturing firms for employment and local economic growth. This article highlights areas where manufacturing is most concentrated, discusses long-term trends, and analyzes community bank performance in manufacturing-concentrated areas.

Consumer Lending Through the Pandemic and the Recovery - PDF
FDIC Quarterly, 2022, Volume 16, Number 1

The COVID-19 pandemic pushed the economy into what was, by some measures, the worst contraction on record. However, consumer lending trends did not deteriorate as they usually do during a recession. Consumer loans are a relatively small share of community bank portfolios, totaling $66 billion in fourth quarter 2021. However, for lenders that specialize in consumer lending, trends in the consumer landscape are of great importance. Performance of all types of bank consumer loans improved thanks to government support, forbearance programs, and tighter underwriting standards for new loans. In both the consumer and auto loan categories, the noncurrent rate was lower in community banks than in noncommunity banks. While caution is warranted, and changes in the pandemic and responses could weaken the outlook, the future of consumer lending appears strong.

2021 Summary of Deposits Highlights - PDF
FDIC Quarterly, 2022, Volume 16, Number 1

The 2021 Summary of Deposits data reflect the effects of the COVID-19 pandemic, changing spending patterns, and government stimulus programs on deposit levels and the number of branch openings and closures. This article evaluates changes in community banks compared with those of noncommunity banks. A special feature discusses branch openings and closings of minority depository institutions. This article also evaluates the likely effect on branch levels of increased availability and use of mobile and electronic banking applications. Responses from the 2021 Summary of Deposits survey show that deposit growth rates for the industry were higher than pre-pandemic growth rates. However, deposit growth rates have moderated compared with the record highs in 2020. Over the past year, deposit growth rates have been higher among community banks compared with those of noncommunity banks. In 2021, the decline in the number of branches accelerated from a year ago, with branches of noncommunity banks closing at a higher rate compared with that of community banks.

Commercial Real Estate: Resilience, Recovery, and Risks Ahead - PDF
FDIC Quarterly, 2021, Volume 15 Number 4

Commercial real estate (CRE) lending is important to the banking industry, which holds $2.7 trillion in CRE loans. CRE lending is particularly prevalent among community banks. As noted in the FDIC’s December 2020 Community Banking Study, community banks play an outsized role in CRE lending relative to their overall market share. In the pandemic, CRE conditions in several property types came under stress. The pandemic challenged the brick-and-mortar retail, hotel, and office sectors, while multifamily largely held up and the industrial sector benefitted from increased demand. Market conditions improved with economic recovery in 2021, but some of the changes the CRE industry experienced in the pandemic may be long-lasting.

Implications of Record Deposit Inflows for Banks During the Pandemic - PDF
FDIC Quarterly, 2021, Volume 15 Number 4

In 2020, the pandemic disrupted the global economy, creating stress and uncertainties for consumers and businesses. The U.S. government responded with assistance programs that increased personal savings and contributed to a record inflow of deposits to banks. Community and noncommunity banks face benefits and challenges when liquidity is abundant. Liquid assets grew at a similar rate between noncommunity banks and community banks. The deposit inflows created historically high bank liquidity, and many banks shifted their balance sheet composition to shorter-term, lower-yielding, and non-yielding assets. The shift in asset composition and a prolonged period of low-interest rates caused the net interest margin to decline to the lowest level on record for both noncommunity banks and community banks in 2020 and the first half of 2021.

The Importance of Technology Investments for Community Bank Lending and Deposit Taking During the Pandemic - PDF
FDIC Quarterly, 2021, Volumne 15 Number 3

Community banks that invested more in technology generally reported faster loan and deposit growth in 2020 than did banks with less technology investment. Moreover, the differences in loan and deposit growth associated with technology investment were greater in 2020 than the differences reported prior to the pandemic. Faster loan growth for community banks with greater technology investment largely stemmed from participation in the Paycheck Protection Program (PPP). These community banks, on average, originated a greater share of PPP loans regardless of the loan size, origination date, or borrower distance from the nearest bank branch. Meanwhile, the larger increases in deposit growth of community banks that invested more in technology were due to increases in deposit balances of existing customers rather than from new depositors.

The Historic Relationship Between Bank Net Interest Margins and Short-Term Interest Rates - PDF
FDIC Quarterly, 2021, Volume 15 Number 2

The years since the Great Recession generally demonstrate that protracted periods of low interest rates tend to compress net interest margin (NIM) at FDIC-insured banks. In most rate cycles since the 1980s, the median NIM, representative of typical banks, has moved in the same direction as changes in the federal funds rate. Considering that the theoretical predictions of how interest rates affect NIM are unclear, this article explores the topic in all rate cycles since 1984 by examining the change in the median bank NIM during rising and falling rate cycles. It looks at this change for the median community bank and the median noncommunity bank over each rate cycle. The overall positive relationship between short-term interest rates and NIM and the effect of maturity structure on this relationship generally hold true over time for both community banks and noncommunity banks.

Small Bank Financing and Funding Hesitancy in a Crisis: Evidence from the Paycheck Protection Program
FDIC Center for Financial Research Working Paper 2021-01
We study the delivery of subsidized financing to small firms through the Paycheck Protection Program (PPP). Smaller firms are less likely to gain early PPP access, an effect attenuated in small banks and firms with prior lending relationships. Their more even treatment offers a new rationale, beyond traditional soft information arguments, for why small businesses pair with small banks. We also detect a “funding hesitancy” in PPP uptake by small businesses, partly reflecting their wariness of the extensive, subjective government powers to investigate PPP recipients. We discuss the implications of the results for research and policies on small business financing.