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ICBA Statement on FDIC Quarterly Bank Report

Washington, D.C. (August 22, 2007)—Paul Merski, chief economist of the Independent Community Bankers of America (ICBA) issued the following statement upon release of the FDIC's quarterly bank report:

"Today's FDIC quarterly banking report shows that our nation's community banks remain in solid shape. Despite challenging pressures on net interest margins, community banks are well-positioned to lend to the businesses and families in their communities. Notably, community banks have strong deposit growth, have maintained solid underwriting standards, have healthy collateral, and have had little or no exposure to subprime lending. They are among the most highly regulated financial institutions in the nation.

While the latest headlines are filled with the woes of the biggest financial institutions on Wall Street and many non-bank lenders, the more than 8,000 community banks and savings institutions are meeting the credit needs of borrowers on Main Street every day. They are well capitalized and able to lend at historically reasonable and attractive rates. Despite talk of a credit crunch, there is liquidity and the truth is community banks are open for business. The FDIC reports that commercial lending remains strong. Commercial and industrial (C&I) loans increased by a quarterly record of $51.3 billion, or 4.1 percent.

Lending to small business accelerated during the last 12 months. Loans of less than $1 billion to C&I borrowers grew by $28.5 billion, or 9.6 percent, over the past year. This is the largest increase for these loans in the 12 years for which growth data are available.

Notably, the FDIC reported that there were 48 new charters added during the second quarter and no institutions failed in the second quarter.

ICBA sees steady employment and income growth and solid consumer spending for the remainder of 2007 with Gross Domestic Product growth of 2.5 percent or higher. The slower but steady economic growth and an improving yield curve in the months ahead bode well for continued consumer and small business lending and the ongoing strength of community banks."