Over the past decade, the majority of community banks have maintained high common equity tier 1 capital levels—consistent with the “well-capitalized” designation under regulatory capital standards. Though there are considerable challenges to the community bank model, these banks continue to post strong earnings, which, in turn, contribute to healthy capital accounts.
In fact, given the sound condition of the banking industry, there were no community bank failures in 2018. Our job now is to ensure that community banks continue to remain strong. That requires bankers and supervisors alike to stay vigilant in the management and supervision of risks facing these institutions and the community bank model.