Posted 12/27/2023, 5:57:00 PM
Small Banks Feel Squeeze from Fed Rate Hikes, Securities Losses
- Small community banks are facing losses due to higher interest rates set by the Fed to curb inflation
- These banks invested heavily in securities that declined in value amid rate hikes
- Over 300 banks had over 50% of assets in securities; 100 had over 75%
- Depositors are shifting funds to larger banks seen as less risky after some regional bank failures
- Community bank net income fell 20% in Q3; they are key lenders in local economies