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Community Banks Express Positive Future Outlook

By Michael L. Stevens
CSBS Senior Executive Vice President

Community bankers are optimistic about the future, based on their outlook for business conditions, monetary policy, regulatory burden, expansion and profitability. This is derived from the freshly released Community Bank Sentiment Index, released today by CSBS. The inaugural results show an index of 122, with 100 being neutral.

Bankers are optimistic about the outlook for future business conditions, with 68% believing conditions will be the same or better. Given the overall positive state of the economy, this is pretty remarkable. As you would expect, a positive economic environment has a direct correlation to the bottom line, with 80% of banks expecting the same or better profits and 60% believing they will see an increase in franchise value. 

The indicators are not all positive, however, with 42% of bankers projecting higher regulatory burden. This is notable given that the agenda of the federal agencies is focused on regulatory relief. Perhaps that is a message of skepticism to Washington or a belief that the environment will not last long. 

You can read the full report to learn how this breaks down by region and asset size, the influence of technology and impact on merger activity. It is not surprising to see things are not quite as optimistic in the regions dominated by agriculture.

Today, we are issuing the third quarter survey for bankers to complete. All it takes is four minutes to answer 15 questions to share your perspective of the economic outlook. Data will be collected during the month of September with the initial reading released at the Community Bank Research and Policy Conference on October 1. 

This index has the opportunity to be an important indicator of economic activity for policy makers, bankers and the market. If you are a banker, we need and value your perspective. If you are a regulator or vendor for community banks, please make them aware of the survey and encourage participation. 

What happens at the local level matters to us all.

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