Community banks in urban areas hold more assets and tend to be larger, but have consistently been out-performed by community banks in rural areas, according to recent data from the Federal Reserve that examined community banks of different sizes and in different markets.

The average size of community banks in urban areas was slightly over $800 million in assets at the end of 2017, compared to slightly below $300 million in assets for rural banks, according to Federal Reserve data. But rural community banks have consistently outperformed urban community banks on return on assets and return on equity since the late 1990s.

“This difference was particularly pronounced during the financial crisis, when profitability fell much more sharply at urban community banks than at rural community banks,” Randal Quarles, vice chairman for supervision at the Federal Reserve, said in a speech on Oct. 4. “This data suggest that, despite facing a more challenging economic environment, rural community banks appear to be holding their own relative to urban community banks.”

Overall, the number of community banks has declined from over 10,000 in 1997 to below 6,000 in 2017, with urban community banks declining faster than rural banks since the financial crisis in 2008. While both classes of community banks have increased average size and total deposits, urban banks are doing it at a faster rate.

However, rural community banks have consistently held a larger market share of deposits on average than urban community banks.

Community banks held almost half of all deposits at urban bank branches in 1997, but just over one-third in 2017. In rural markets, community banks collectively had a deposit market share of 80 percent in 1997, declining moderately to 77 percent in 2017.

“It occurs to me that we often speak of community banks as though they are all pretty much the same,” Quarles said. “But, in reality, there is considerable heterogeneity within the group of firms that are commonly considered to be community banks.”