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Balance Sheet Changes at Community Banks From 4Q 2020 to 4Q 2021

The chart shows that total deposits at community banks continued to grow at a substantial rate in 2021, funding growth primarily in securities and cash and due from accounts; however, growth in total loans was greatly impeded by forgiveness-driven declines in PPP loans.

Source: Reports of Condition and Income **

  • Deposits continued to grow in 2021 for community banking organizations (CBOs) after unprecedented growth in 2020, up $302 billion year-over-year (14 percent) including $72 billion in the most recent quarter (3 percent). These deposit inflows continue to fuel increases in liquid assets, with securities and cash holdings outpacing growth in loan portfolios.
  • The loan-to-deposit ratio at CBOs has now fallen to 71 percent, the lowest level in over 25 years. Total loans as a percentage of total assets declined from 66 percent in 2020 to 61 percent in 2021, though total loans increased $47 billion year-over-year (3 percent). Loans not associated with the Paycheck Protection Program (PPP) increased by $141 billion year-over-year (9 percent), offsetting the forgiveness-driven $94 billion decline in PPP loans with only $32 billion in PPP loans remaining.
  • Total securities have grown $172 billion in 2021, or 38 percent year-over-year, and now account for 22 percent of total assets at CBOs, up from 18 percent in 2020. Cash holdings increased $61 billion year-over-year (21 percent) in 2021, accounting for a record high 12 percent of total assets, but declined slightly by $11 billion over the past quarter.

Questions or comments? Please contact KC.SRM.SRA.CommunityBankingBulletin@kc.frb.org.


*Community banking organizations are defined as having $10 billion or less in total assets.

**Data throughout the Community Banking Bulletin have been adjusted for mergers, acquisitions, and failures.

The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.