the country. as a result, and to a greater extent than in the past, this slowdown is being felt differently from community to community, and is being responded to differently from community to community. so it is no surprise that community banks are standing shoulder to shoulder with their customers, on the front lines. you have done this before, of course, during past recessions, but for the reasons i ’ ve outlined, your role this time has never been more critical. that is why one of the government ’ s first responses to the pandemic was the paycheck protection program ( ppp ), geared to small business, and necessarily dependent on community banks. so let me start there, and review what has been accomplished through ppp and discuss the role of community banks in that program. based on preliminary results, it appears ppp was timely and effective in helping millions of businesses weather the lockdown period. it was also designed in a way that made community banks integral to its success. the first funds reached businesses roughly three weeks after the need for that relief was recognized. to provide perspective, $ 525 billion, or roughly 19 times the value of all small business administration lending michelle w. bowman, “ the pandemic ’ s effect on the economy and banking ” ( speech at kansas bankers association ceo and senior management forum / annual meeting, topeka, kansas ( via webcast ), august 26, 2020 ), https : / / www. federalreserve. gov / newsevents / speech / bowman20200826a. htm. - 3in fiscal year 2019, was distributed in the four months from april through august 8. 2, 3 community banks with $ 10 billion or less in assets made about 40 percent of the overall number and value of ppp loans. 4 community banks were absolutely essential to the success of this program. this outcome is probably not surprising to this audience, because when it comes to lending to small businesses, community banks have always been an outsized source of credit, relative to their size in the banking system. before the pandemic, community banks accounted for over 40 percent of all small business lending, while they only accounted for roughly 15 percent of total assets in the banking system. community banks know their individual and small business customers, and they know their communities. in my conversations with community bank ceos, several reported to me that early in the pandemic they directly contacted every single one of their business and consumer

for release on delivery 1 : 40 p. m. edt ( 12 : 40 p. m. cdt ) september 30, 2020 community banks rise to the challenge remarks by michelle w. bowman member board of governors of the federal reserve system at “ community banking in the 21st century, ” research conference the federal reserve bank of st. louis st. louis, missouri ( via webcast ) september 30, 2020 thank you, it is a pleasure to join you virtually today and share a few thoughts on what i am hearing from community banks in the wake of the pandemic, and what the federal reserve is doing to assist in the recovery. when i addressed this conference exactly a year ago, the world was a very different place. covid - 19 has brought hardship and disruption to nearly every aspect of our lives, and even as economic conditions improve, the pandemic continues to weigh on households, businesses, and the economy. today, i would like to offer some of my observations on current conditions and share with you what i have learned in discussions with community bankers across the nation. this input has shaped my views of how supervision and regulation are affecting community banks in these challenging times — what is working, and what needs to improve. in addition to the fed ’ s usual consultation with community banks, i have separately embarked on an effort to meet directly with the ceos of all 685 community banks supervised by the fed, an undertaking that has already provided valuable insights that i will relate in these remarks. what community banks have achieved america has never experienced a health and economic crisis like the one we are facing. the measures taken to contain the virus and the ensuing sudden stop to the economy beginning in march were unprecedented, just as some aspects of the downturn. one of these is the extent to which small businesses have been affected. small businesses tend to be service - oriented and clustered in retail and food services, with many less able than larger companies to maintain operations via remote work. because community banks are a major source of credit and financial services for small businesses, this crisis has had a heavy impact on their customers, and in their communities. - 2another unusual aspect of this event, which i have noted before, is the geographic variation in the timing and severity of the pandemic ’ s effect. 1 given the widely varying rates of infection, and the distinct approaches of states and localities in dealing with the virus, we are seeing divergent experiences in economic performance in different areas of