BCLP Banking Blog

Bank Bryan Cave

Great Recession

Main Content

Lessons for Community Bank Boards from the Great Recession to Apply in the Pandemic

In March, I dialed into the first ever “conference call only” meeting of a 14 year old community bank. The main office of the bank is located in Philadelphia and there was growing concern about the rapidly increasing number of Coronavirus cases in New York and New Jersey, and the spread of new cases into eastern Pennsylvania. I recalled that our board had reviewed an updated version of the bank’s pandemic policy in December but I couldn’t remember the details. Suddenly that policy had relevance in a way I could never have imagined. In April, our board held its second conference call only meeting, and we are likely to continue that pattern for several more months.

We are all aware of the circumstances that led to pandemic policies being retrieved from file folders and read with interest for the first time.  What we don’t yet know is how severe the resulting economic shock will be, and the degree to which loan portfolios of community banks will be adversely impacted.  It is clear, however, that the adverse impact on small to medium sized businesses across the U.S. has been considerable. As the CEO of one of our law firm’s bank clients in the Southwest recently remarked, we are experiencing the first ever government imposed recession.

God willing, the banking industry will remain strong and be a source of support for the nation’s economy as we recover from the onslaught of COVID-19.  In that context, the boards of community banks could benefit from recalling some hard learned lessons from the recent Great Recession. 

Read More

Community Banks that Thrived During the Great Recession

Notwithstanding the headlines in the press, more community banks thrived during the Great Recession than failed.  A new study from the Federal Reserve Bank of St. Louis looks at The Future of Community Banks: Lessons from Banks That Thrived During the Recent Financial Crisis.  While 417 banks and thrifts failed from the beginning of 2006 through the end of 2011 (and another 51 banks failed during 2012), the Federal Reserve Bank of St. Louis found that 702 community banks (total assets of less than $10 billion) retained a composite CAMELS 1 rating throughout the financial downturn.


The report confirms that community banks can continue to play a vital role in the U.S. economy by allocating credit and providing financial services in their communities – particularly to the small businesses in those communities. In general, the thriving banks were found to have strong commitments to maintaining standards for risk control in all economic environments and business plans that work for their individual markets.  At a macro level, the thriving banks had lower total loans-to-total asset ratios (54% vs. 65%), lower concentrations in commercial real estate and construction and development lending, higher concentrations in consumer and agricultural loans, and were slightly more reliant on core deposits.

Read More
The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.