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The Examiner

“A boat is always safe in the harbor, but that's not what boats are built for.”
- Katie Couric, who debuted as the first female solo anchor of weekday news this day in 2006

John Ryan Statement on CSBS vs. OCC Decision

Statement from John Ryan, President & CEO, Conference of State Bank Supervisors 

“The Conference of State Bank Supervisors’ suit against the OCC seeks to make clear that the OCC may not flout Congress and preempt state laws by granting national bank charters to nonbanks. Yesterday’s decision did not rule on the merits of the case, and our position that receiving deposits is an indispensable part of the business of banking is unchanged. State financial regulators continue to support the New York Department of Financial Services’ (DFS) case against the OCC, which is proceeding over the same objections the OCC raised in the CSBS suit.”

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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 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.

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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Podcast #9 - The Battle for Bank Liquidity

Banks want your deposits. They want you to deposit your paychecks, they want your employer to deposit their assets with them. They want you to choose to keep your money with them rather than put that money into other places.

And there’s all sorts of reasons for that. It means they can issue more loans and grow more quickly. And, importantly for regulators, it helps the bank stay on a stronger financial footing.

But deposits aren’t always easy to come by. In a strong economy, banks are competing for a limited pool of assets that could end up going to other institutions, into investments, or to other regions. This can be especially challenging for rural communities. And, in an economic downturn, as some loans become losses, banks fight even harder for these deposits that will keep them financially sound.

Today, I wanted to talk to the experts about two things regulators are talking about constantly right now but probably haven’t come up at your kitchen table over dinner. The first is how regulators should handle a sometimes-risky type of deposit known as brokered deposits. Why are they risky? If a bank isn’t well-capitalized, should they be cut off from seeking brokered deposits? What’s the logic behind blocking a source of liquidity for a bank that desperately needs it?

And second, I want to talk about the issue of a bank being undercapitalized more broadly, and what happens when regulators put a bank in what is known as Prompt Corrective Action. We covered this a lot in an earlier podcast on leverage ratios, so it might be worth listening to that first if you need some warming up.

My question today is: How do regulators make sure they are catching the warning signs of a struggling bank and intervene in a way that’s beneficial for the bank, consumers, and the federal deposit insurance fund? It’s a question that regulators still grapple with today. In fact, just last week the federal agencies proposed a new rule adjusting their approach to this very question.

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