Comment by harmmonica
7 months ago
Can you expand on "probably in rural America"? Do you just mean that those smaller community banks are more at risk if rates rise? If so, because they issue more variable rate debt? Or is there something else?
edit: grammar
> Do you just mean that those smaller community banks are more at risk if rates rise? If so, because they issue more variable rate debt? Or is there something else?
Current issue is community banks have 3x the commercial real estate exposure of other banks [1]. They're also less liquid and have a lower ROA. So in cases where the shock comes from outside the financial sector, they tend to be the first we worry about.
[1] https://www.fdic.gov/quarterly-banking-profile 33% vs 11% of total assets