  In response to these concerns and as a matter of prudent public policy, I strongly support “tailoring” supervision and regulation to reflect the risks and roles of community banks. I will now describe these issues in more detail. Community bank conditions Community banks in Minnesota and the nation experienced a very sharp increase in problem loans during the financial crisis.
Fortunately, that trend has now reversed. Consider a standard measure of problem loans: the ratio of noncurrent and delinquent loans to bank capital and the allowance for loan loss. In the first quarter of 2009, that ratio rose for all loans to 24 percent for the median Minnesota bank, double the 25-year median level of 12 percent.