Community bankers remained optimistic in the second quarter of the year, according to the Conference of State Bank Supervisors. .The community bank sentiment index dropped three points to 126 from 129 in the first quarter of the year amid less certainty that regulations will ease and reduced expectations for higher profits. The reading, one of the three highest since the survey started in 2019, remains well higher than the growth-neutral score of 100. Profitability, operations and franchise value measurements fell but remained near record highs, according to CSBS. Concerns over tariffs and inflation eased, according to the report. The index tracking expected future business conditions fell for the second straight quarter, but still increased to 91 from 86 in the first quarter. Sixty one percent of community bankers said the economy was either at the start of or already in a recession, up from 59 percent in the first quarter. Bankers cited cyberattacks, bank fraud, federal debt, labor costs and availability, and competition as their top issues. The regulatory burden index fell 16 points to 114, but stayed above 100 for just the second time in the history of the survey. The index is 94 points higher than 12 months ago. The monetary policy component increased eight points to 114 from 106 in the first quarter, remaining above 100 for the fifth straight quarter. “Even though the economic outlook still remains clouded by uncertainties arising from tariff talks, immigration reforms, and fiscal and monetary policy decisions, overall community banker sentiment remains mostly optimistic and similar to the last two quarterly surveys,” said CSBS Chief Economist Tom Siems.The survey included responses from 250 community bankers in 43 states.