Covid-19 Impacts Community Banks

The Federal Insurance Deposit Corp. (FDIC) published its Quarterly Banking Profile for the first quarter of 2020. It includes the measures the health of U.S. financial institutions have taken to help combat COVID-19. The report also highlighted the impact the pandemic has had on community banks. In particular, community banks saw a decline in net income while there was growth in non-interest income and non-interest expenses.

Increases in provision expenses caused declines in net income. Specifically, expected credit losses from COVID-19 impacted community banks through increased provision expenses by threefold (to 1.8 million) compared to first quarter 2019. As a result, the report stated "the increase in provision expenses drove the pretax return on assets (ROA) ratio down 38 basis p...

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