FDIC study: Rural community banks remain strong

Community banks in rural areas have continued to maintain strong financial performance over a 30-year period in spite of depopulation in such areas, according to a study released Monday by the Federal Deposit Insurance Corp.

More than 1,000 banks nationwide with a combined $150 billion in assets are headquartered in rural areas, according to the FDIC’s study titled “Long-Term Trends in Rural Depopulation and Their Implications for Community Banks.”

The paper examines a 30-year period from 1980 to 2010, during which time half of rural counties in the U.S. experienced a decrease in population, compared with just 12 percent of banks headquartered in metro areas.

In spite of decreases in the customer base in the areas served by these banks, they have experienced strong financial performance, mainly due to their concentration on lending to the agricultural sector, which has outperformed many other business segments during the recession.

“I am particularly encouraged by our findings that banks operating in areas with a declining customer base are overcoming the additional hurdles rural depopulation poses and in many respects are outperforming their counterparts in other areas of the country,´ said FDIC chairman Martin Gruenberg in a statement.

“Comprehensive research covering the community banking sector is critical to formulating policies that are well-informed as to the particular challenges community banks have faced and the trends that will shape the sector in coming years,” Gruenberg said.

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