Trends in small bank and small business lending As we evaluate the financial system and the broader economy, we regularly examine firms from a horizontal and aggregate perspective to gain insight on the trends in the provision of financial services in the Second District. Today, I’ll say a few words on trends in small business lending. Of course, looking at trends is not sufficient to identify causal relationships, but it does provide one perspective on these developments and identifies areas for future inquiry. The overall level of commercial and industrial (C&I) lending at Second District firms with under $ billion in total assets has grown steadily in recent years (Chart 1). Since the financial crisis, these loans have increased by just over 80 percent, which is somewhat faster than growth at the national level of 64 percent over the same period. 2/6  BIS central bankers' speeches  Within commercial and industrial (C&I) lending for these banks, small business lending is particularly important, given the traditional role of small businesses in job creation. While data are not immediately available on borrower size, we can look at a simple proxy for small business lending by isolating individual C&I loans to commercial borrowers that are each under $ million. These data show that while the dollar value of small C&I loans has grown since 2010, the pace of growth has not been as high as overall C&I lending growth.
During my brief remarks this morning, I’d like to highlight three related topics that I believe are relevant to you as community bankers: the critical role that community banks play in the U.S. economy, particularly at the local level; trends in small business lending; and recent efforts to enhance the efficiency of the regulatory and supervisory framework. My comments today are my own and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System. The critical role of community banks Let me begin with some thoughts on what we seek to achieve through supervision. A core objective for safety and soundness supervision is to ensure that supervised entities are resilient. That is, a firm should be able to continue to operate and provide financial services across a wide range of economic and financial conditions. Supervisors and regulators can support this objective through our focus on stronger capital and liquidity, comprehensive risk management and robust governance and controls. All of this makes firms resilient to unexpected shocks and allows them to continue to serve their customers and communities. Resilience, however, is not the end objective. Rather, we seek to ensure that banks of all sizes contribute to the sustained and efficient provision of credit and other financial services to consumers and businesses that support the growth and stability of the economy. Community banks play a distinctive role in the provision of financial services, offering a wide range of products and serving specific segments.