How US community banks became ‘irreplaceable’ in the pandemic

Darryl Jorgenson steps into his cherry-red Ford pick-up truck and apologises for the glitter in the back seat. It is left over from his son’s prom night. Jorgenson, the business banker at Gate City Bank in Grand Forks, a small city of 50,000 people in North Dakota, is on his way to Rumors, a hockey bar at the Grand Cities Mall. It is one of the many small businesses he helped keep alive with a pandemic loan last year.

There are still a lot of local bankers like Jorgenson. They underpin large swaths of US economic activity, in particular small businesses and farmers, in many parts of the US.

Community banks tend to have less than $10bn in assets, take deposits and hold a traditional portfolio of mortgages and business loans. Of the 5,000 lenders in the federal programme that insures deposits against bank runs, all but 500 are community banks. They are ubiquitous in rural areas and, during the first months of the coronavirus pandemic, proved their value. Small businesses and the self-employed needed loans to stay afloat, and it was often the community banks that made them.

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