Community Banks Respond to Americans’ Needs

By Rebeca Romero Rainey

I’m an optimistic kind of person, often finding the silver lining in difficult times. While we have never before experienced anything quite like COVID-19, we can identify a bright spot: community banks rising to serve the needs of their communities.

While this “community first” philosophy is nothing new for community banks, the Paycheck Protection Program (PPP) cast a national light on the role they play in supporting America’s hard-working small businesses. In fact, FDIC Chairman Jelena McWilliams recently referred to community banks as “the small engines that could and did and delivered big,” and countless news features raised the profile of the can-do mentality at the center of every community bank.

Because community banks delivered for small businesses when they needed it, they now have the nation’s attention. This newfound spotlight means they have a platform to amplify their voices to ensure Americans recognize all that community banks stand for and all that they provide.

For example, community banks serve areas that otherwise may not have access to local financial services. In fact, 35 percent of counties in the U.S. are only served by a community bank, and more than 80 percent of all agricultural loans come from community banks.

In addition, community banks support individuals of moderate means. Low-income counties in 28 states are more likely to be served by a community bank than a credit union. What’s more, a National Community Reinvestment Coalition study found that banks outperformed credit unions on 65 percent of fair lending indicators in home purchase, refinance, and home improvement lending to low- and moderate-income areas.

As small businesses themselves, community banks have stepped into the shoes of every small business that has come to them for help. Community bankers don’t just see a loan request; they see the lifeline for the future of the small business. As a result, they have processed more than 65 percent of the 4.6 million approved PPP loans and more than 63 percent of the $515 billion in funds approved since the program's launch. In fact, 82 percent of banks under $1 billion in assets participated in the PPP program. This crisis magnified that community banks truly are there for the communities they serve.

And community banks continue to provide service that makes them the small business lender of choice. According to the Federal Reserve Banks' latest Small Business Credit Survey, which features pre-COVID responses, 79 percent of community bank small-business loan applicants were satisfied with their experience, and community banks' net satisfaction score of 73 percent continued to lead as it has in recent years, topping large banks by 15 points, finance companies by 23 points, and online lenders by 36 points.

While COVID-19 may have wreaked havoc on our nation’s economy, community banks were there to help pick up the pieces and support customers, small businesses, and others who needed a champion in their corner. And that’s an important story to tell. I encourage community banks to continue to share their successes and help raise awareness of the role they play as the cornerstone of community.  

Rebeca Romero Rainey is ICBA President and CEO.