Remarks by
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
The Importance of Community Banks to the U.S. Financial System and Economy
at the
“Day With the Secretary” Event
Hosted by the Illinois Department of Financial and Professional Regulation’s Division of
Banking and the Conference of State Bank Supervisors
Springfield, IL
October 23, 2017
Martin J. Gruenberg
Chairman
Federal Deposit Insurance Corporation
The Importance of Community Banks to the U.S. Financial System and Economy
at the
“Day With the Secretary” Event
Hosted by the Illinois Department of Financial and Professional Regulation’s Division of
Banking and the Conference of State Bank Supervisors
Springfield, IL
October 23, 2017
2
Introduction
Good afternoon, and thank you for the invitation to speak to you today. I would like to thank
Secretary Schneider and the Conference of State Bank Supervisors for hosting this annual event.
As you may know, the FDIC is the lead federal supervisor for the majority of community banks
in the United States. Since I was sworn in as Chairman in 2012, we have placed a high priority
on understanding and supporting the community banking sector.
We kicked off a research program in 2012 that began with the publication of a comprehensive
study of community banks –the first of its kind.
Our researchers subsequently explored a wide range of community bank topics, including core
profitability, consolidation, ownership structure, branch banking, rural depopulation, and
Minority Depository Institutions. We shared our findings with the industry and the public
through our research publications, two community banking conferences, and our Advisory
Committee on Community Banking.
In 2014, we added a stand-alone section of our Quarterly Banking Profile to provide current
financial results just for community banks, which might otherwise be obscured by the results of
much larger institutions.
Through our Advisory Committee on Community Banking, the FDIC Board receives regular
input from bankers. And we have worked diligently to address the concerns they raise, provide
technical assistance, and tailor our supervisory approach to the size and complexity of each
institution.
Today, I would like to summarize some of the most important results of our community banking
initiative.
I’ll also discuss the historic origins of U.S. community banks, their unique niche in our financial
system, the impact of three decades of industry consolidation, their strong performance in the
post-crisis environment, their key challenges, and the outlook for the future.
What is a Community Bank?
In our 2012 study, FDIC researchers developed a definition for “community bank” that is not
strictly based on asset size.1 Our definition relies on three key, common-sense characteristics of
a community bank: careful relationship lending, stable core deposits, and a local geographic area
of business that the bank understands well.
At the end of 2016, 92 percent of FDIC-insured institutions met this definition.
1 FDIC Community Banking Study, December 2012, https://www.fdic.gov/regulations/resources/cbi/study.html.
Introduction
Good afternoon, and thank you for the invitation to speak to you today. I would like to thank
Secretary Schneider and the Conference of State Bank Supervisors for hosting this annual event.
As you may know, the FDIC is the lead federal supervisor for the majority of community banks
in the United States. Since I was sworn in as Chairman in 2012, we have placed a high priority
on understanding and supporting the community banking sector.
We kicked off a research program in 2012 that began with the publication of a comprehensive
study of community banks –the first of its kind.
Our researchers subsequently explored a wide range of community bank topics, including core
profitability, consolidation, ownership structure, branch banking, rural depopulation, and
Minority Depository Institutions. We shared our findings with the industry and the public
through our research publications, two community banking conferences, and our Advisory
Committee on Community Banking.
In 2014, we added a stand-alone section of our Quarterly Banking Profile to provide current
financial results just for community banks, which might otherwise be obscured by the results of
much larger institutions.
Through our Advisory Committee on Community Banking, the FDIC Board receives regular
input from bankers. And we have worked diligently to address the concerns they raise, provide
technical assistance, and tailor our supervisory approach to the size and complexity of each
institution.
Today, I would like to summarize some of the most important results of our community banking
initiative.
I’ll also discuss the historic origins of U.S. community banks, their unique niche in our financial
system, the impact of three decades of industry consolidation, their strong performance in the
post-crisis environment, their key challenges, and the outlook for the future.
What is a Community Bank?
In our 2012 study, FDIC researchers developed a definition for “community bank” that is not
strictly based on asset size.1 Our definition relies on three key, common-sense characteristics of
a community bank: careful relationship lending, stable core deposits, and a local geographic area
of business that the bank understands well.
At the end of 2016, 92 percent of FDIC-insured institutions met this definition.
1 FDIC Community Banking Study, December 2012, https://www.fdic.gov/regulations/resources/cbi/study.html.