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Community Banks Safe and Sound

Outperform Industry in Many Key Areas

Washington, D.C. (September 2, 2009)— The Independent Community Bankers of America (ICBA) reiterated today that our nation’s more than 8,000 community banks continue to be safe and sound and are outperforming the industry in many key metrics.

“Because community banks are highly capitalized and well-regulated, they are more risk averse than the big banks,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “Community banks continue to support small business and individual customers, and, as a group, are outperforming the industry in many key areas. Even during these economically challenging times, it’s safe to say that our nation’s community banks are the lifeblood that continues to drive America’s communities in cities and towns throughout the nation.”

According to the FDIC’s Quarterly Banking Profile, a higher percentage of community banks were profitable in the second quarter compared to the industry overall. Institutions with less than $1 billion in assets remained the best-capitalized in the industry, with a leverage ratio of 9.75 percent. Credit quality was also better at banks with less than $1 billion in assets, with net charge-offs to loans of 1.08 percent and noncurrent loans at 3.11 percent. Both were lower than the industry average by more than a percentage point.

According to an ICBA analysis, community banks with less than $1 billion in assets were the only segment of the industry to show growth in net loans and leases in Q2 2009 on both a quarterly and annual basis. In aggregate, these institutions had 0.8 percent annualized growth over the previous quarter and 3.2 percent growth over a year earlier. Additionally, these community banks led the industry with 4.5 percent annualized growth in domestic deposits on a quarterly basis and 8.3 percent over the previous year.

“Community banks lend locally, know their customers and continue to stick to traditional lending practices—all of which contribute to the continued stability and strength of the community banking sector,” Menzies said.

ICBA reminds community bank customers that their insured deposits are safe in their community banks. The FDIC insures deposits up to $250,000 per depositor and $250,000 for certain retirement accounts. If you have more than $250,000 at a community bank, however, you can still be fully insured if your accounts meet certain requirements. No one has ever lost a penny of FDIC-insured funds. To learn more, go to www.fdic.gov. To learn more about the safety and soundness of community banks, visit www.icba.org.