The community banking model is supposed to be simple: take deposits, make loans. There is, however, a growing number of banks that are largely omitting the lending part of the model.

As loan yields get tighter and key mortgage rules remain unclear, more community banks are reducing their lending and investing more in securities portfolios. These loan-averse lenders are following a conservative strategy that a subset of banks have been using for years, a strategy where lending plays a minimal role.

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