Take a drive down Main Street in any small town or cruise along the farmlands lining rural roads, and you'll likely see community banks at work.
Whether financing a new downtown eatery or a nearby agricultural upgrade, these institutions have an outsized impact on local economies. Community banks dedicate more than a third of their assets to small business lending and provide most agricultural loans nationwide — supporting two sectors that are crucial for local employment.
The financial health of community banks is vital to the U.S. economy, which is why regional Reserve Banks maintain unique relationships with them.
Some 80 years ago, the Philadelphia Fed launched its Field Meeting Series to better understand local economic conditions. Community bankers and Fed staff began meeting to discuss how economic trends were impacting local businesses and economies.
Today, this tradition continues, with community bankers from across the Third District —Delaware, southern New Jersey, and eastern and central Pennsylvania — regularly participating. These meetings allow the Fed to take the pulse of local economies.
“Community banks provide real-time insights into local economic conditions,” said William Spaniel, executive vice president at the Philadelphia Fed. “These meetings are dynamic and help us understand banking and business conditions in our region. We also share updates to assist community bankers in navigating economic shifts and changes.”
The Power of Connection
The Field Meeting Series traces back to 1945 when, following World War II, Philadelphia Fed leaders created a space for local bankers to discuss their communities' experiences and collaborate on solutions to banking challenges.
Philadelphia Fed leaders quickly recognized these conversations provided invaluable insights into the region's distinctive industries and economic landscapes, helping identify emerging trends. The meetings also opened doors to meaningful relationships with community organizations, strengthening the Reserve Bank's outreach and development initiatives.
“Community banks are truly woven into the fabric of their neighborhoods,” explained Joe Budash, who leads the Philadelphia Fed's financial institutions relations activities. “In many cases, they're your neighbor. You can walk down the street and visit your local bank. For building relationships, that matters very much.”
Learning About Local Needs
Meeting with local bankers helps the Philadelphia Fed understand the region's economy, providing real-time insight into how monetary policy affects communities.
“Community banks are the boots-on-the-ground lenders with a true pulse on what's happening locally,” explained Spaniel. “They often spot economic trends before they appear in national data.”
When community bankers identify shifts in loan demand, early signs of economic pressure, or emerging opportunities, they provide regional intelligence that informs Federal Open Market Committee discussions in support of the Fed's dual mandate of maximum employment and price stability.
“It's a priority for me to get out into the District to hear directly from communities, nonprofits, banks, and businesses. These conversations give me rich insights into evolving economic and financial conditions,” said Philadelphia Fed President and CEO Anna Paulson. “One thing that has stood out is the central role that community banks play in the economy.”
Resources That Have an Impact
For community banks, there are benefits to having this open dialogue with the Fed and their banking peers.
Meeting with the Philadelphia Fed team and our banking peers across the region is important for community banks. We discuss both local and national economic conditions, which gives us important context for how conditions can be very different across communities. This contrast also helps us see where trends may be growing and impacting credit, new banking products, or potential economic shifts. Having these conversations really allows us to merge the Fed’s data with the firsthand experiences of bankers in their markets, and I always leave with new ideas and/or fresh challenges to bring back to my team.
James Donnelly
President and CEO
Wayne Bank and Norwood Financial Corp
Community banks also have access to various educational resources created specifically for small financial institutions — webinars on new regulatory issues, workshops on compliance and cybersecurity, economic outlook briefings for strategic planning, and direct technical assistance from Reserve Bank experts. These sessions are designed to help community banks navigate the banking regulatory landscape effectively. The digital publication Community Banking Connections also provides tools and information to help community bankers promote safe and sound banking practices in a changing economy.
“We recognize that smaller institutions may have limited resources for regulatory compliance and risk management,” Spaniel explained. “That's why we offer specialized training programs, workshops, and technical assistance.”
Ensuring Safety and Soundness
Beyond sharing information, community banks work with the Fed to maintain safe and secure operations. Many local banks have accounts at the Philadelphia Fed, giving them access to payment systems, cash services, and emergency liquidity during critical times. Some are supervised by the Philadelphia Fed, helping ensure they remain resilient and able to serve their communities as the economy evolves.
“Supervision is a core function of our Bank, and it's another important way we serve as a resource to local banks,” said Spaniel.
Philadelphia Fed examiners conduct regular visits to regional community banks under their supervision to assess safety and stability, focusing on capital adequacy, asset quality, liquidity, and market risk management. This approach leverages the examiners' local expertise to offer customized risk management guidance. Supervision of community banks is tailored to reflect their size, complexity, and business model, ensuring their safety while acknowledging the distinct roles they serve in their communities.
“Our work at the Philadelphia Fed centers on making connections,” said President Paulson. “Gathering insights from our local communities is vital for informed monetary policy discussions, and our outreach, supervision, and education help ensure community banks remain strong partners to, and resources for, their local communities.”