Community banks may be wide and varied, but they have an important impact on their communities, according to Federal Reserve Vice Chairman for Supervision Randal Quarles. And early findings of a Federal Reserve report show that they are especially important in rural areas. 

Quarles discussed the diversity of rural and urban community banks in his address Thursday at the annual Federal Reserve-CSBS-FDIC research conference on community banking held at the St. Louis Federal Reserve. 

Quarles noted trends in the past 20 years: 

• Community banks have maintained or increased their deposit market, suggesting they can compete quite successfully with larger banks in both urban and rural markets
• Post-recession, rural community banks have seen modest loan growth since 2011, while the pace of growth in urban community bank lending has been strong since 2013  
• Bank consolidation has led to a drop in the number of headquarters in both urban and rural areas, which could mean they are less connected to their communities

The Fed is expected in early 2019 to release a report on the impact of banks closures in rural communities. Quarles said early findings from the Fed’s national listening tour have revealed: 

• Customers value a community bank’s personal touch  
• Some challenges for rural community banks include a poor technology infrastructure   
• Community bank closures can create a ripple effect that negatively impacts local businesses 
• Community banks are important civic leaders in their areas 

The full address can be found here.