FDIC Report Outlines the Outsized Role Community Banks Played in PPP

A new FDIC report gives details on the major role community banks played in providing Paycheck Protection Program (PPP) loans at a critical period in the COVID-19 economic crisis.

The report notes that community banks now hold nearly a third of all bank-held PPP loans, compared to holding only 15% of all bank loans.

“The Importance of Community Banks in Paycheck Protection Program Lending,” available here, has been released as part of the FDIC Quarterly publication, the Federal Deposit Insurance Corporation said.  

Among the findings:

• FDIC-insured community banks held $148 billion, or 31%, of bank-held PPP loans, compared to their 15% share of all bank loans.
• More than 75% of community banks in nearly every state and U.S. territories are participating in the PPP.
• Through their participation in the PPP, community banks reported an increase in their share of small business loans to 29% from 25% one year ago.

Industry observers have noted that participating so heavily in PPP may open new doors to the community bank sector.

“The key to using the PPP for future success with existing, and new customers, is going to be staying as responsive to your customer as we did during the onset of the pandemic and shutdowns,” said Lexie Garrison, Chief Credit Officer, Valliance Bank.  “If COVID has taught us anything, it is to be compassionate, understanding, and to give everyone a little grace.  The lines of communication that PPP opened up are great, and we need to keep those open in order to be able to move forward in the best way possible.”

A look at the role community banks played in administering PPP and how they can leverage that going forward will appear in the February 2021 RMA Journal.