Forget the image of sleepy local lenders, because the data tells a story of financial powerhouses where impressive strength, from holding $5.7 trillion in assets to outperforming national averages on key metrics, is built one relationship at a time.
Key Takeaways
- In 2022, community banks accounted for 3,300 institutions holding $5.7 trillion in assets, representing 14% of total U.S. banking system assets according to FDIC data
- Community banks' return on assets (ROA) averaged 1.12% in Q4 2023, outperforming the industry average of 1.05% due to lower funding costs, per Federal Reserve analysis
- Total deposits at community banks grew by 4.2% year-over-year to $4.9 trillion as of June 2023, driven by local relationship banking, from ICBA report
- Community banks originated 18% of all small business loans under $1 million in 2022, totaling $250 billion, SBA data via ICBA
- Agricultural loans at community banks reached $112 billion in 2023, comprising 22% of their loan portfolios, FDIC rural banking report
- Commercial real estate (CRE) loans held by community banks totaled $1.1 trillion in Q4 2023, with delinquency at 0.65%, Federal Reserve
- Total non-interest-bearing deposits at community banks rose 6.1% to $1.2 trillion in 2023, ABA deposit study
- Community banks captured 25% of rural deposits totaling $2.8 trillion in 2022, per FDIC
- Time deposits under $100k at community banks were $450 billion in Q4 2023, stable amid rate hikes, FFIEC data
- Community banks spent an average of $2.5 million on BSA/AML compliance in 2022, representing 15% of operating expenses, ABA compliance survey
- 92% of community banks met or exceeded CET1 capital requirements in 2023, with average buffer of 450 bps, Federal Reserve stress tests
- Dodd-Frank stress testing applied to 45 community banks over $10B assets in 2023, all passing thresholds, FDIC report
- Mobile banking adoption among community banks reached 95% in 2023, with 4.2 million active users, J.D. Power study
- Community banks invested $1.8 billion in core processing upgrades in 2022, per FIS report
- 72% of community banks offered digital account opening in 2023, reducing branch visits by 25%, Jack Henry survey
Community banks are financially strong and effectively serve their local communities.
Deposit Trends
- Total non-interest-bearing deposits at community banks rose 6.1% to $1.2 trillion in 2023, ABA deposit study
- Community banks captured 25% of rural deposits totaling $2.8 trillion in 2022, per FDIC
- Time deposits under $100k at community banks were $450 billion in Q4 2023, stable amid rate hikes, FFIEC data
- Brokered deposits represented only 2.1% of community bank liabilities in 2023, indicating strong core funding, S&P Global
- Money market deposit accounts grew 12% to $1.1 trillion at community banks in 2023, Federal Reserve H.8 release
- Community banks in the Midwest held 35% of national community deposits at $1.7 trillion in 2022, regional FDIC breakdown
- Jumbo CDs over $250k comprised 15% of community bank time deposits in 2023, up from 10% in 2020, ICBA survey
- Transaction account growth at community banks was 3.9% in 2023 despite outflows, Call Report analysis
- Uninsured deposits averaged 22% at community banks under $10B assets in 2023, lower risk profile, Klaros Group
- Savings deposits at community banks increased 8.4% to $900 billion in Q3 2023, benefiting from rate environment
Deposit Trends Interpretation
Despite whispers of an industry decline, community banks are quietly hoarding a war chest of sticky, low-cost deposits, proving that in the age of digital finance, there’s still immense value in being the trusted neighbor with the vault.
Digital Transformation
- Mobile banking adoption among community banks reached 95% in 2023, with 4.2 million active users, J.D. Power study
- Community banks invested $1.8 billion in core processing upgrades in 2022, per FIS report
- 72% of community banks offered digital account opening in 2023, reducing branch visits by 25%, Jack Henry survey
- Open banking API integrations adopted by 40% of community banks in 2023, enabling fintech partnerships, Plaid report
- Cybersecurity incidents reported by 18% of community banks in 2022, down from 25% due to MFA rollout, ABA cybersecurity survey
- AI-driven fraud detection implemented in 55% of community banks by Q4 2023, cutting losses 30%, NICE Actimize data
- Remote deposit capture usage grew 28% to 15 million transactions at community banks in 2023, Alogent study
- Blockchain pilots for payments launched by 12% of community banks in 2023, R3 consortium report
- Digital wallet acceptance (Apple Pay etc.) at 68% of community bank branches in 2023, FIS payments report
- Cloud migration completed by 45% of community banks in 2023, saving 20% on IT costs, Accenture banking cloud study
- Online loan application completion rates hit 75% for community banks in 2023, up from 50% in 2020, Temenos survey
- Data analytics platforms adopted by 62% of community banks for customer insights in 2023, SAS institute report
- Community banks in the Southeast originated 22% of their loans via digital channels in 2023, regional FIS data
- Robotic process automation (RPA) reduced back-office costs by 18% for 35% of community banks in 2023, UiPath banking report
- Voice banking features rolled out by 25% of community banks in 2023, enhancing accessibility, Nuance analytics
Digital Transformation Interpretation
The community bank's historic front porch is now a well-defended digital fortress where 95% of customers are on their phones, 40% are linked to fintechs, and a surprising number are still politely asking the chatbot for a loan.
Employment and Operations
- Community banks employed 520,000 full-time workers in 2022, 12% of total banking workforce, BLS occupational data
- Average community bank branch count was 5.2 per institution in 2023, down 3% from 2020 due to consolidation, FDIC summary
- Community bank CEOs averaged 18 years tenure in 2023, higher stability than large banks, ICBA leadership survey
- Training hours per employee at community banks averaged 42 in 2022, focusing on compliance, ABA HR study
- 28% of community bank board members were women in 2023, up from 22% in 2018, Deloitte governance report
- Operational expenses at community banks rose 6.5% to $180 billion in 2022, driven by personnel costs, FDIC P&A data
- Community banks opened 1,200 new branches in rural areas from 2018-2023, serving underserved markets, USDA rural finance report
- Employee turnover rate at community banks was 11.2% in 2023, below industry 14%, SHRM banking survey
- Non-officer staff salaries averaged $52,000 at community banks in 2022, BLS data
- 65% of community banks outsourced non-core operations like payroll in 2023, cost-saving measure, Hackett Group study
- Community banks hosted 15,000 community events in 2022, enhancing local engagement, ICBA community impact report
- Part-time employment comprised 18% of community bank workforce in 2023, flexible staffing, AFL-CIO labor stats
- Executive compensation averaged $450k for community bank CEOs under $1B assets in 2022, Pearl Meyer survey
- Vendor management programs covered 85% of community bank operations in 2023, OCC guidance compliance
- Succession planning in place at 78% of community banks for key roles in 2023, ABA risk management report
Employment and Operations Interpretation
While holding a lean and local line against banking behemoths, community banks are navigating a tightrope of rising costs and consolidation pressures, yet they still manage to foster impressive stability, deepen rural roots, and slowly modernize their governance and operations—all on a distinctly human scale.
Financial Metrics
- In 2022, community banks accounted for 3,300 institutions holding $5.7 trillion in assets, representing 14% of total U.S. banking system assets according to FDIC data
- Community banks' return on assets (ROA) averaged 1.12% in Q4 2023, outperforming the industry average of 1.05% due to lower funding costs, per Federal Reserve analysis
- Total deposits at community banks grew by 4.2% year-over-year to $4.9 trillion as of June 2023, driven by local relationship banking, from ICBA report
- Community banks' net interest margin (NIM) stood at 3.45% in 2023, higher than large banks' 2.98% due to asset-liability matching, S&P Global data
- Nonperforming loans ratio at community banks was 0.78% in Q3 2023, below the national average of 0.92%, indicating strong credit quality, FDIC Quarterly Banking Profile
- Community banks' loan-to-deposit ratio averaged 78.5% in 2022, reflecting conservative lending practices, per ABA survey
- Efficiency ratio for community banks improved to 62.3% in 2023 from 65.1% in 2020, due to cost controls, Federal Reserve study
- Community banks reported $28.5 billion in net income in 2022, up 12% from prior year, FDIC annual report
- Tier 1 leverage capital ratio for community banks averaged 12.4% in Q2 2023, exceeding regulatory minimums by 240 basis points, Call Report data
- Community banks' mortgage banking income grew 15% to $4.2 billion in 2022, fueled by refinancing boom, per S&P Global
Financial Metrics Interpretation
While their numbers may only represent 14% of the banking system's assets, community banks are quietly proving that being deeply rooted in local soil yields a remarkably healthy and profitable harvest, with superior margins, disciplined lending, and rock-solid fundamentals.
Loan Portfolio
- Community banks originated 18% of all small business loans under $1 million in 2022, totaling $250 billion, SBA data via ICBA
- Agricultural loans at community banks reached $112 billion in 2023, comprising 22% of their loan portfolios, FDIC rural banking report
- Commercial real estate (CRE) loans held by community banks totaled $1.1 trillion in Q4 2023, with delinquency at 0.65%, Federal Reserve
- Community banks' 1-4 family residential mortgages outstanding were $1.05 trillion in 2022, 52% of total loans, Mortgage Bankers Association
- Small business lending by community banks increased 7.8% to $680 billion in 2023, per FFIEC Call Reports
- Consumer loans at community banks grew 5.2% year-over-year to $320 billion in Q3 2023, driven by auto loans, TransUnion data
- Multifamily loans originated by community banks hit $45 billion in 2022, focusing on affordable housing, Urban Institute
- Community banks' exposure to office CRE was only 8% of portfolios in 2023, lower than peers, Trepp analytics
- Home equity lines of credit (HELOCs) at community banks totaled $85 billion in 2023, up 10%, Equifax report
- Energy loans comprised 4.5% of community bank portfolios in 2023, concentrated in oil regions, FDIC energy banking study
Loan Portfolio Interpretation
While community banks are often hailed as Main Street champions, their $1.1 trillion CRE book and $1 trillion mortgage portfolio prove they're also sophisticated, risk-averse heavyweights who simply prefer to lend with a local face.
Regulatory Compliance
- Community banks spent an average of $2.5 million on BSA/AML compliance in 2022, representing 15% of operating expenses, ABA compliance survey
- 92% of community banks met or exceeded CET1 capital requirements in 2023, with average buffer of 450 bps, Federal Reserve stress tests
- Dodd-Frank stress testing applied to 45 community banks over $10B assets in 2023, all passing thresholds, FDIC report
- Community banks filed 1.2 million SARs in 2022, up 10% YoY, FinCEN data
- CRA exam pass rate for community banks was 88% in 2023, focusing on low-income lending, FFIEC CRA database
- Average regulatory exam fees for community banks totaled $150k in 2022, per ICBA member survey
- 75% of community banks implemented CECL accounting standards by 2023, with 5% reserve increase impact, Deloitte banking survey
- Volcker Rule exemptions benefited 98% of community banks in 2023, avoiding proprietary trading restrictions, Federal Register
- HMDA reporting required for 1,800 community banks in 2022, covering 20% of their originations, CFPB data
- Community banks' average liquidity coverage ratio (LCR) was 145% in 2023, well above 100% minimum, OCC report
- 65% of community banks reported increased regulatory burden from Tailored Resolution Planning in 2023, S&P survey
- Fair lending violation citations dropped 12% for community banks in 2022, CFPB enforcement stats
Regulatory Compliance Interpretation
The data paints a picture of community banks as heavily armored, impressively fortified, and tirelessly vigilant sentinels, dutifully navigating a regulatory gauntlet where compliance costs rival their capital buffers and their primary offense seems to be an ever-increasing stack of paperwork.
Sources & References
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