Community banks in manufacturing-concentrated states have provided more commercial loans than other community banks and reported higher net interest margins, according to a new FDIC report.
Details: The report in the latest FDIC Quarterly says:
Community banks headquartered in the five states with the highest manufacturing output have substantially higher concentration of various types of commercial loans.
These manufacturing-focused institutions have higher shares of commercial and industrial loans as well as commercial real estate loans.
The manufacturing industry is sensitive to business cycles and recessions, which may have weighed on community bank profitability through direct credit exposures to manufacturing firms and indirectly through the manufacturing industry’s impact on the local economy.