Community banks are a vital anchor in turbulent economic times

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The feeling of turbulence on a plane can be very unsettling: jerky movements, sudden drops in altitude, groans from fellow passengers. But when things level out and get calm once again, relief is palpable. What's happening with the economy right now feels much the same. We are experiencing a moment of turbulence, and community banks all throughout the country will continue to play a critical role in guiding our small-business economy all the way to a smooth landing.

Let's start with the Federal Reserve, which may cut interest rates at its upcoming September meeting. Critics argue it may be too late to manage the jolt in the economy, which is leaving many feeling uncertain, including the nation's millions of small businesses. Throughout this uncertainty, community banks have their fingers on the pulse of the local community and a local decision-making power that many big banks do not. This differentiator empowers community banks to offer consistent, personalized guidance and support to small businesses that help them withstand economic difficulties. 

Just a few weeks ago, the U.S. economy appeared to be thriving, but many feared that interest rates, at a two-decade high, were putting on too much pressure. Then, hiring slowed significantly, with the U.S. only adding 114,000 jobs in July, a near 45% decrease from the 206,000 jobs created in June. The following week, the stock market sharply dipped. The Fed delayed cutting interest rates as it tried to stabilize inflation and slow the economy, but many are saying it waited too long, potentially causing a long-term economic disruption in the process. Community banks will play an important role in the coming weeks and months to stimulate their local economies as small businesses lean on them for support. 

Community bank employees live and work in the regions they cater to; their investment in their customers is significant. Having recently joined EagleBank after working for years with larger banks, I've been impressed to see firsthand how truly dedicated community banks are to their customers, and how some of our nation's best-known companies got their start with community banks. When we gave the restaurant chain Sweetgreen one of its first loans, we financed its innovative ideas and the vibrancy it would add to our community. We recognized the passions and strengths of the leadership team and we've been excited to see the business grow into a national phenomenon, spreading its economic success across the country. From knowing their names and stories to offering lifesaving emergency loans, community banks go the extra mile to help their customers take their businesses to the next level — from their first loan until they're a staple in their community and beyond. 

Community banking

For community banks, rate cuts present positives and perils

Lower interest rates could bolster loan demand, credit quality and securities portfolios. But they could also curb lending profitability faster than they ease deposit costs, crimping net interest margins and eating into near-term profits.

By Jim Dobbs

August 26

When small businesses grow community-wide and nationwide, the impact of community banks doesn't just affect the small businesses, but also has ripple effects all over the country.

Small businesses are a core growth engine for the economy and nearly half of Americans are employed by one. We encounter small businesses every day — they are integral to our lives, our economy, our community. With the support of community banks, small businesses can receive the personalized service they need to grow and become pillars of our community's and country's economy. This is especially important during uncertain times, as community banks can help to fill the gap in the economy by providing lifesaving loans to businesses and personalized support.

As the economy slows, the Federal Reserve's decision in September will have an immense impact on economic activity, but until then, and in the aftermath of its decision, so will the work of community banks. Even as the economy fluctuates, the support of community banks and their pivotal role in fueling the country's small-business economic engine remains consistent. The economy is cyclical, and we will get through it. But during tough times for the economy or tough times for your business, community banks are ready to support small businesses and help weather any difficulties that come with our flexible and personal approach to banking. 

There is sure to be turbulence ahead; it's a matter of who you have sitting next to you that just might keep you calm.