Regulations and cost of funds are top concerns for community bankers, according to the Conference of State Bank Supervisors annual community bank survey. .The survey, released Oct. 2, covered the views of 370 community bankers from 38 states on compliance costs, technology, competition, and funding and liquidity. Banks also cited net interest margins and growing core deposits as top concerns, after also citing those challenges in the 2023 survey. .The CSBS tied the rise in regulatory concerns to the March 2023 failures of Silicon Valley Bank and Signature Bank and subsequent heightened regulatory focus on bank liquidity, unrealized losses on available-for-sale and held-to-maturity securities and uninsured deposits..Treasury Secretary Janet Yellen said last week that greater supervisory attention is needed for banks with less stable deposits. She also called for long-term debt requirements to increase for regional banks. .Banks in the CSBS survey listed cybersecurity as their highest internal risk, while technology implementation and costs ranked second. The percentage of respondents listing liquidity as either "very important" or "extremely important" fell six percentage points to 78 percent from 84 percent last year as banks continued to hold advances from the Bank Term Funding Program, which was created in the wake of the failures. .Respondents expected inflation-created challenges to continue but remain manageable. Inflation was most impacting deposit costs, followed by personnel expenses, the value of securities investments and operating expenses, according to the survey..A significant percentage expected loan credit quality would worsen for individuals, as well as commercial and industrial loans and CRE loans. ."Last year, banks were worried about a recession," said CSBS President and CEO Brandon Milhorn. "This year, they are more concerned about the cost of compliance after increased federal regulatory and supervisory activity over the last 18 months. With economic headwinds still blowing, regulators must stay focused on core financial risks and be wary of regulatory overreach." .The survey was conducted from April 15-July 15.
Regulations and cost of funds are top concerns for community bankers, according to the Conference of State Bank Supervisors annual community bank survey. .The survey, released Oct. 2, covered the views of 370 community bankers from 38 states on compliance costs, technology, competition, and funding and liquidity. Banks also cited net interest margins and growing core deposits as top concerns, after also citing those challenges in the 2023 survey. .The CSBS tied the rise in regulatory concerns to the March 2023 failures of Silicon Valley Bank and Signature Bank and subsequent heightened regulatory focus on bank liquidity, unrealized losses on available-for-sale and held-to-maturity securities and uninsured deposits..Treasury Secretary Janet Yellen said last week that greater supervisory attention is needed for banks with less stable deposits. She also called for long-term debt requirements to increase for regional banks. .Banks in the CSBS survey listed cybersecurity as their highest internal risk, while technology implementation and costs ranked second. The percentage of respondents listing liquidity as either "very important" or "extremely important" fell six percentage points to 78 percent from 84 percent last year as banks continued to hold advances from the Bank Term Funding Program, which was created in the wake of the failures. .Respondents expected inflation-created challenges to continue but remain manageable. Inflation was most impacting deposit costs, followed by personnel expenses, the value of securities investments and operating expenses, according to the survey..A significant percentage expected loan credit quality would worsen for individuals, as well as commercial and industrial loans and CRE loans. ."Last year, banks were worried about a recession," said CSBS President and CEO Brandon Milhorn. "This year, they are more concerned about the cost of compliance after increased federal regulatory and supervisory activity over the last 18 months. With economic headwinds still blowing, regulators must stay focused on core financial risks and be wary of regulatory overreach." .The survey was conducted from April 15-July 15.
