Bankers concerned about state’s economic conditions
LEXINGTON, Ky. (Sept. 29, 2016) — A report published today, “Community Banking in the 21st Century: Opportunities, Challenges and Perspectives,” includes insight and concerns by Kentucky bankers on the economy, competition, regulatory burden and other issues.
The Kentucky Department of Financial Institutions (DFI) joined the Conference of State Bank Supervisors (CSBS) and the Federal Reserve to release the annual report that features the findings of a nationwide survey on community banking, along with state-by-state banker interviews.
“Kentucky community banker concerns are similar to those of community bankers nationally,” said DFI Commissioner Charles Vice. “I’m pleased that Kentucky’s perspective is shared within the broader context of this report, which shows how vital community banks are to local and national economic growth and prosperity.”
Highlights from Kentucky banker interviews include:
- Kentucky bankers have some concerns about the state’s economic conditions, especially regarding coal production, urban migration and low demand for loans for capital investments to improve operating efficiency.
- Kentucky bankers are seeing increased competition from non-bank entities, credit unions and the Farm Credit System.
- Easy access to credit and increasing compliance burdens for banks make the market challenging for Kentucky community banks.
- The federal TILA-RESPA Integrated Disclosure rule was cited as the most time-consuming and burdensome regulation to which Kentucky bankers must comply.
- Increased disclosures and federal regulations have led to a significant decrease in bank employee productivity.
- Kentucky bankers in rural areas are facing challenges with recruiting millennials.
- Financial literacy needs are a significant concern among Kentucky bankers.
Highlights from the national survey include:
- Bankers are seeing an active merger and acquisition market, as 20 percent of banks surveyed made an acquisition offer in the past year.
- Regulatory burden is still a top concern among bankers and was cited the number one reason for banks exiting an activity, product or geographic market.
- The TILA-RESPA Integrated Disclosure rule was cited the most costly regulation, accounting for 23 percent of all compliance expenses.
- While surveyed community banks saw an increase in small business lending activity by more than 7 percent, the total dollar volume of overall small business lending slightly decreased to $340 billion.
- Approximately 75 percent of surveyed banks made small business loans to customers in 2015 with whom they had a previous relationship.
The 2016 national survey was developed and administered with the assistance of Cornell University’s Survey Research Institute. It was distributed by state bank commissioners in 30 states. A total of 557 community bankers participated. The survey provides a comprehensive view of what bankers are thinking surrounding key issues facing their industry and how they are responding to changes in their markets. The state-by-state banker interviews were conducted by state banking commissioners from 29 states.