Community banker optimism jumps following Trump’s election

Community banker optimism surged in the fourth quarter of last year amid expectations of a friendlier regulatory environment and better business conditions during the second administration of President-Elect Donald Trump, according to the Conference of State Bank Supervisors. .The Community Bank Sentiment Index increased 17 points to 127, its highest mark since the survey started in 2019 and 27 points higher than the growth-neutral score of 100. Community bankers expect improved future business conditions for the first time since the Federal Reserve's most recent monetary policy tightening cycle began in early 2022. .The survey included responses from more than 250 community bankers in 42 states. The index tracking regulatory burden sentiments had its largest quarterly rise on record, increasing a record 80 points from the third quarter to a three-year high of 100. The business conditions index increased 37 points to 117, its first quarter above 100 in three years. .CSBS Chief Economist Tom Siems cited Trump's victory over Kamala Harris in November's general election as the main reason for the increase. "Over the past four years, the majority of community bankers have been concerned with the possibility of a more burdensome regulatory environment," Siems said. "Post-election, community bankers are evenly split on whether regulatory burden over the next year will be lighter or heavier.".The index has increased for six straight quarters from its low of 73 in the summer of 2023, following the failures of Silicon Valley Bank and Signature Bank in the spring of that year.