Loan, Deposit Growth Slows YOY for US Community Banks in Q1

Loan and deposit growth slowed year over year for U.S. community banks in the first quarter, a period in which seasonality typically affects loan demand and which this year was marked with uncertainties posed by rising interest rates and soaring inflation.

Community banks, defined as those with less than $10 billion in total assets, posted year-over-year loan growth of 2.6% and deposit growth of 8.8%, according to an S&P Global Market Intelligence analysis. Only about a third of banks in the group grew loans at a faster rate, and even fewer, 16.7%, managed to beat their 2021 first-quarter deposit growth rate.

The 2022 first quarter was slower for most community banks in three other metrics: return on average assets, net interest margin and efficiency ratio. Across these indicators, more than 60% of the covered banks failed to improve results. The net charge-off rate was flat at 0.01% for the group year over year.

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