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IBAA SURVEY SHOWS COMMUNITY BANKS ACTIVE IN COMMUNITY DEVELOPMENT ACTIVITIES

 WASHINGTON, April 26 /PRNewswire/ -- Local lending is essential to community development and job creation. That fact is not lost on the nation's community banks, whose very survival and prosperity depend on the economic health of their communities. Through local investment, community banks bolster the economy of both their neighborhoods and the nation.
 The importance that community banks place on community development is confirmed by results of a survey released today by the Independent Bankers Association of America (IBAA). In the Community Development Lending Survey, all respondent banks said they participate directly in at least one type of community development lending, while 30 percent said they work with a community development corporation or other development entity.
 "Community development is the very foundation of community banking," said IBAA President James R. Lauffer, chairman/president/CEO of the First National Bank of Herminie, Irwin, Pa. "Community banks take local investment very seriously because they recognize the fact that if their communities don't prosper, neither do they."
 When asked to comment on their local investment activities, community bankers responded with overwhelming consistency that regulatory burden is impeding their lending efforts. Community development loans are subject to rigorous scrutiny by examiners, forcing banks to apply strict underwriting standards.
 "The slew of unnecessary regulations is discouraging community banks from doing more," Lauffer said. "Regulatory relief would allow them to dedicate more time and resources to meeting local credit needs."
 Commercial lending to small business and small farms is the most common form of direct community development activity, the survey revealed, with 94 percent of respondents participating. The survey showed that a higher percentage of smaller banks engage in direct lending to small business and small farms than larger institutions.
 The next most common community development activity involves loans secured by single-family property in low- and moderate-income areas, with 74 percent of respondents taking part. That is followed by industrial development (64 percent), lending to minority-owned business (63 percent), and rehabilitation (55 percent).
 Respondents also pointed to community involvement as a key to their community development activity. More than half said they serve on boards of directors of public- or private-sector organizations that support community development.
 An overwhelming number of respondents -- 89 percent -- said they oppose further government involvement in community development activities. In fact, respondents said, their community reinvestment efforts would be more effective than that of government institutions if regulations were loosened.
 The survey was based on responses from 796 community banks, for an 8 percent response rate. The respondents represent 45 states, with 74 percent of them in rural communities.
 IBAA is the only national trade association that exclusively represents the interests of the nation's community banks.
 -0- 4/26/93
 /CONTACT: Diane Casey of the Independent Bankers Association of America, 202-659-8111/


CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:

IH-MH -- DC032 -- 0874 04/26/93 15:32 EDT
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Date:Apr 26, 1993
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