WASHINGTON–Shifts in U.S. population beginning in 2020 that were and are the result of the COVID pandemic have affected deposits and loans at community banks, even as rural areas saw gains in population and metropolitan areas saw declines, according to the FDIC.
In its latest FDIC Quarterly Report, the FDIC said the change was especially apparent in rural counties, where “patterns at odds with decades-long trends of rural depopulation and urban concentration.”
Key Findings
Among the findings in the FDIC analysis:
- In metropolitan counties, deposits at community banks grew with population, while in more rural counties, deposits grew at a significantly lower rate than population and lag population growth by about a year.
- Community banks in metropolitan counties focused on commercial real estate loans, while community banks in “micropolitan” counties focused on residential loans and community banks in rural counties focused on agricultural loans.
- Across all county types, population growth correlated with higher loan portfolio shares for commercial real estate and lower shares for residential loans.
- In rural and micropolitan counties, population growth correlated with a relative decline in agricultural loans.
- In both micropolitan and metropolitan counties, population growth correlated with a relative decline in commercial and industrial loans.
Additional Findings
The FDIC’s quarterly report also noted for the first time in 30 years, annual deposits at banks overall declined and bank office closures decelerated in the year ending June 30, 2023.
The FDIC said deposit declines were greatest at large banks, while community banks reported deposit growth. The office closure rate improved from a year ago, and community banks opened offices in metropolitan, micropolitan, and rural counties, according to the FDIC.
The report further noted:
- Domestic deposits declined 4.8%
- Deposit declines were greatest at large banks
- Deposits increased in micropolitan counties
- Community banks reported deposit growth over the year
- The largest banks reported the largest decline in offices
- Community banks opened offices in metro, micro, and rural counties.
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