and choice for customers without other benefits, or when it is an unintended effect of government regulation and the cost of that regulation rather than a result of vigorous competition. this isn ’ t news to community bankers or to community banking researchers. it is not news to many people who live in small towns or urban areas who have lost access to community banks with deep roots in the community. and it is a major challenge for those who live in areas that lack access to service from any bank. - 8acquiring banks need to consider that when you purchase a community bank and enter into a new market, along with the new customers and opportunities come a responsibility to be a part of and to support that community. that is why i believe it is critical that we work together to find ways to preserve the benefits provided to communities by well - managed, strong financial institutions that are deeply grounded in the areas they serve — including the communities that they expand or merge into. now let ’ s consider how the changes i have described in the banking industry have affected the benefits provided to local communities across the united states. one might expect that the decline in the number of banks over the past few decades would mean communities would see fewer banks operating within the average local banking market. in fact, when viewing the data in a national perspective, the number of banks per local market has been quite stable over time in both urban and rural areas. there may be two factors that explain this outcome. first, many bank mergers combine firms that do not operate in the same local area, so they don ’ t reduce the number of competitors in any market. second, many banks continue to expand their geographic scope by opening branches in new markets, leading to an increase in the number of banks in those local areas that offsets the decline from bank mergers in the same market. of course, stability in the average number of banks across a large number of markets does not imply stability locally within each market. many local markets have seen declines in the number of banks, while others have experienced increases. and even if the number of banks in a community does not change, there is a difference for customers and communities between a branch of a bank with numerous locations and the - 9headquarters of a bank that is strongly rooted in a community. for example, does bank consolidation influence the availability of credit to local small businesses? a number of studies have addressed this question and have yielded mixed results. the effect of a merger on small business lending depends

on a number of factors, including the size of the merging banks, whether the acquirer is focused on small business lending, and the response of other local banks to the merger. 6 studies have also shown that the post - merger bank tends to be healthier than the target institution was before the merger, which could to lead to an increase in the availability of credit in the community. 7 the bottom line is that some studies find small business lending goes up after mergers, and others find it goes down. given the wide range of results, this is another topic where policymakers and the public would benefit from further research and analysis. one very clear trend in the united states is a decline in the number of bank headquarters. acquisitions have resulted in the conversion of many bank headquarters into new branches of the acquiring institution. unfortunately, some evidence suggests that these conversions may adversely affect the local communities that are no longer home to a headquarters. the impacts extend well beyond the availability of credit. bank executives and staff who serve on the local chamber of commerce or on the boards of local hospitals or nonprofits may move to the new headquarters location, creating a leadership void in their old hometown. unfortunately, community involvement like this is difficult to measure. we turned to community reinvestment act ( cra ) performance evaluations in the hope that for example, see berger and others ( 1998 ), peek and rosengren ( 1998 ), and avery and samolyk ( 2004 ). see jagtiani, kotliar, and maingi ( 2016 ). - 10 they would offer some insights into local involvement by banks. because certain institutions are subject to community development tests, their performance evaluations include information on the bank ’ s qualifying loans, investments ( including donations ) and services, grants, and certain community service activities. 8 comparing performance evaluations from cra exam reports before and after an acquisition can provide some limited, case - specific evidence on the potential consequences of the loss of a bank headquarters. several examples from the past decade show that local donations and community service activity decline in communities that lost a bank headquarters following a merger. pre - merger cra evaluations detailed donations to organizations targeting initiatives such as child care, job training, homeless shelters, and scholarship programs for low - and moderate - income ( lmi ) individuals. other notable activities included in - kind donations of real estate to habitat for humanity and monetary contributions to food pantries, meals on wheels, and big brothers big sisters of america