Thomas Warren: We’re staying focused on communities

ICBA’s Community Focus 2020 agenda reinforces its local commitment.

By Thomas Warren, ICBA

As Congress reviews the state of the nation’s largest and riskiest banks a decade after the Wall Street financial crisis they caused, locally focused community banks are adding new offices to meet the needs of Main Street communities.

To help community banks extend the nation’s economic recovery to every corner of every community, ICBA recently released a comprehensive policy platform designed to enhance economic opportunity. The Community Focus 2020 legislative and regulatory agenda offers common-sense reforms that will better disperse economic opportunity across and throughout every local community.

Quick stat


of agricultural loans from the banking sector are made by community banks

Source: ICBA

Unfortunately for many parts of the country, local communities hit hardest by the fallout of the Wall Street financial crisis are being left out of the expansionist plans of the entities that caused the calamity. 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.

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 non-community banks shrunk by 384 offices over the same period. Further, community bank loan growth has exceeded growth at non-community 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.

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 help realize their customers’ goals in communities throughout America. To help community banks meet the needs of communities left behind by the largest institutions, ICBA’s Community Focus 2020 supports reforms that policymakers on both sides of the aisle can advance to ensure a robust, fair and competitive financial system that best serves consumers.

Community banks operate with a commitment to ensuring economic prosperity spreads through every local community—one loan, one consumer at a time—and ICBA’s policy positions are no different. ICBA and community bankers developed Community Focus 2020 to advance a more efficient system of regulation, unbiased laws governing the financial sector, a safer and more secure business environment, and more effective agriculture policies to extend the nation’s economic growth to every corner of the country.

This multi-pronged agenda, which will be the focal point of ICBA policy outreach during the 116th Congress, includes a variety of policy proposals to help community banks put deposits to work in their communities.

For instance, the agenda supports relief from the overregulation that continues to hamper the ability of community banks to spread economic recovery to regions that have not yet experienced strong growth. This includes maximizing the benefits of provisions of the S.2155 regulatory relief law simplifying capital standards for community banks and instituting a truly short-form call report during the first and third quarters of the year.

Community Focus 2020 also supports new congressional regulatory relief efforts, such as a bipartisan initiative to modernize the Bank Secrecy Act. The platform encourages lawmakers to develop a system in which business ownership records are gathered when legal entities are formed—rather than by their bank—to improve uniformity, consistency and efficiency in the system.

The community bank commitment to equity extends to the financial services marketplace and beyond. Community banks support a competitive landscape free from distortions caused by too-big-to-fail financial firms and the undue competitive advantages enjoyed by credit unions and Farm Credit System lenders, whose unfair tax exemptions limit their contributions to government coffers. At the federal level alone, the Joint Committee on Taxation last year tallied the federal cost of the credit union industry’s tax exemption at roughly $10 billion through 2022—an annual cost to taxpayers of nearly $2 billion and rising.

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.

Further, advancing data breach legislation that requires all participants in the payments system to have bank-like data security standards and that establishes a national data breach notification standard would enhance security in every community. Meanwhile, the agenda supports housing-finance reforms that ensure a reliable source of funding for mortgage lending, as well as provisions to spur agricultural and rural lending to promote economic prosperity in rural  areas.

In short, 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. As policymakers begin to tackle these and other issues, community bankers will continue working with them to provide every American an equitable opportunity to take part in our nation’s economic and job growth. Together, we can ensure full and nationwide opportunity and prosperity, one community at a time.

Thomas Warren ( is ICBA vice president of communications.