Charles G. Cooper and John Ryan Talk Community Banks in Promontory Webinar
Texas Department of Banking Commissioner Charles G. Cooper and CSBS President and CEO John Ryan joined Barb Rehm, senior managing director at Promontory Interfinancial Network in a webinar to discuss the Business of Community Banking on Nov. 6. The full webinar can be accessed here.
Below are some highlights from the conversation:
On the biggest outside threat to banks:
Charles G. Cooper: “What keeps me up at night is the danger that we are facing from cybersecurity issues. And I don’t think we can talk about it enough...Banks have a credit culture. They also now need a cyber culture. Everyone in the bank needs to be involved…The attacks are becoming more sophisticated and we have to evolve with it.”
CSBS conducting a cyber security training over 1,000 bankers on cyber issues and are beginning of similar training for examiners.
John Ryan: “Banks and nonbanks have high-level potential risk around liquidity, and as a subset, liquidity funding and funding for the community bank model.”
Charles G. Cooper: “We’ve been dealing with liquidity for a while – I call it the banks that are running hot – where they have a high loan to deposit ratio and less liquidity than they’ve had before, as John mentioned, more reliance on noncore funding. And when you get down to why this happens it is really common sense. There is more competition now for core deposits, and some of that is coming from the big banks, and we haven’t seen that before, or as much.”
On new leadership in the federal financial agencies:
Charles G. Cooper: “We have some highly qualified and gifted individuals. They understand community banking...The stars are aligned, I think, to be able to work together closer than we have before.”
On Community Reinvestment Act Reform:
Charles G. Cooper: “It has been a long time since the Act came about in the 70s, and the world has changed so many times since then. I get concerned about how the federal regulators are trying to examine for CRA. They try to apply old standards to new technology. It is pretty hard to do, so I think something should be done.”
Federal Reserve Bank of Cleveland President and CEO Loretta Mester shared her views about the CRA at the Fed-CSBS-FDIC Community Banking in the 21st Century Research and Policy Conference held at the St. Louis Federal Reserve in October.
On the Bank Secrecy Act:
John Ryan: “BSA was rated the highest compliance cost of all compliance issues in our annual community bank research conference. There is a need to do something differently around this. I think technology could be a part of the solution.”
What is the future of community banks?
Charles G. Cooper: “It really depends what your clientele is and what your age of your clientele. Deposits are what you are going to have to get. Loans are not going to be as bad, but with all the competition we’ve got there, that is going to increase also. But you can’t just stay where you are right now.”
CSBS is developing an indicator of community bank sentiment. See here for initial findings.