The share of community banks’ assets devoted to commercial real estate loans has drastically increased over the last 20 years. According to Columbus Business First, commercial real estate loans made up about 26.7% of all assets at community banks in 2011, up from 19.6% in 2000 and from 14.5% in 1990. This is significantly higher than larger banks, which have shrunk their portfolios to 8.8% in 2011, down from 9.9% in 2000 and 12.1% in 1990.
The study, conducted by the FDIC, shows how community banks have evolved over the past 20 years and now predominantly focuses on lending secured by commercial real estate, which helps them maintain their advantage in generating higher net income. The study found that the overall performance gap between community banks (up to $1 billion in assets) and non-community banks stems directly from lower interest income over the last five years.
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