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Smaller banks – bigger failure rate

Community banks bore the brunt of recession-related bank failures. 85 percent of failures 2008-2011 were smaller banks, many invested in small businesses.

The recession was especially unkind to small community banks. About 85 percent of banks that failed 2008-2011 were considered small, with assets below $1 billion. The majority were concentrated in ten states led by Georgia and Florida.

Smaller banks tend to have a larger portfolio of small business loans, therefore increased risk. But smaller banks also tend to get involved in local community development and philanthropy.

Check out our video for more on small banks and their special vulnerabilities. See “What Do Others Say?” for more views, then add to the discussion below. Are bigger banks better? Is there a role for smaller banks in today’s economy?

What do others say?

  • Federal Deposit Insurance Corporation: Federal Deposit Insurance Corporation: “Bank failures in brief” More

  • Philadelphia Business Journal: Philadelphia Business Journal: “Bank failures easing but still more frequent than before crisis” More

  • National Law Review: National Law Review: “Bank failures in 2013: what’s ahead?” More

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