Community Banks On The Decline Since 1980s

Community banks across America are disappearing at astonishing rates due to pressure from the rising costs of doing business. In an AgDay exclusive, stockholder-owned lending company Farmer Mac is releasing the results of its study on the health of the farm economy. The lender says more than 10,000 community banks have ceased to exist since 1984, largely due to failure, mergers and acquisitions. Farmer Mac economists are quick to point out that many of these banks were smaller with a limited number of employees and were gobbled up by larger banks. The benefit of community banks, in rural communities, are their emphasis on what they call “relationship banking,” which is important in supporting small businesses, like farmers. However, rising costs like increased regulations and compliance, as well as greater capital requirements are constraining these smaller banks to the point of forcing some out.