Independent Banker - May 2019 - 33

out of the expansionist plans of the entities that
caused the calamity. While JPMorgan Chase &
Co. announced a major branching and lending
boom last year, it has notified regulators of more
branch closures than openings over the past 13
months, according to a Bloomberg report.
It's no surprise that this initiative is less an
overall expansion than a shift from small and
remote local communities to the wealthiest cities.
Of JPMorgan's 185 new branch openings, 71
percent are in more affluent areas, including 70
in the Washington, D.C., metro area. Separately,
Bank of America used retail banking acquisitions
to become the nation's largest bank, but sold
off 350 small-town offices in recent years. The
Wall Street Journal recently profiled the negative
impact of the megabank's withdrawal on
local communities in upstate New York amid the
post-crisis recession. Meanwhile, Wells Fargo is
closing hundreds of branches in the wake of a
series of scandals, including its infamous opening
of millions of phony accounts without customers'
knowledge or consent.
Community Focus 2020
offers a comprehensive
plan to help every
American in every
community-whether
urban, suburban or
rural-join in the nation's
economic prosperity.
The megabanks themselves have acknowledged-and
taken pride in-this trend. The Bank
Policy Institute recently reported that while
deposit growth in urban areas is higher at the
largest banks, community banks are more than
tripling the deposit growth of their larger competitors
in rural communities.
Filling the gaps
With big banks pulling out of local communities
in favor of higher-income areas, community
banks have used their more than 52,000 locations
nationwide as an economic lifeline in the
areas most in need of financial services. New
data from the FDIC backs this up. According to
the agency, community banks added more than
700 bank offices between June 2017 and June
2018, whereas noncommunity banks shrunk by
384 offices over the same period. Further, community
bank loan growth has exceeded growth at
noncommunity banks for six consecutive years,
reflecting community banks' continued commitment
to economic development in local areas.
These efforts build on the disparate responses
to the Wall Street financial crisis, when community
banks increased lending to consumers and
small businesses while megabanks closed off
access to credit. Accounting for more than 60 percent
of small-business loans under $1 million and
80 percent of agricultural loans from the banking
sector, community banks continue to drive
local economies and create local jobs. Through it
all, they operate within the strenuous regulatory
requirements often provoked by the misbehavior
of the megabanks and the economic fallout those
megabanks have all too frequently caused.
Overall, banking consolidation has done little
to diminish the role of community banks.
Three-quarters of those that merged in 2017
and early 2018 were acquired by other community
banks to become larger community banks,
according to the FDIC. In other words, local
banks are growing and reinvesting in the community
banking industry.
Quick stat
80%
of agricultural
loans from the
banking sector
are made by
community
banks
Source: ICBA
Jumpstarting local growth
The continued success of community banks is due
in no small part to their embrace of new technologies
alongside the high-quality customer service
for which they are known. Community banks use
widely available technology platforms to offer the
products and services their customers need, and
they are increasingly partnering with and investing
in innovative financial technology companies
to transform the banking system.
Meanwhile, community banks continue channeling
$3.4 trillion in loans to local consumers,
small businesses, farms and agricultural enterprises
to spur job creation, foster innovation and
independentbanker.org Q 33
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Independent Banker - May 2019

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