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2016 Press Releases
Idaho Department of Finance Earns Banking Supervision Re-accreditation
California and Missouri Begin Using Uniform Mortgage Test; 50 State Agencies Now Using the Test
North Dakota Department of Financial Institutions Receives Certificate of Mortgage Accreditation
CSBS Names Jim Kurtzke Vice President of Communications
CSBS Announces 2016 Community Bank Case Study Competition Participants
SRR Releases 2015 Annual Report
Colorado Begins Using Uniform Mortgage Test; 51 State Agencies Now Using the Test
Gonzales Appointed to FFIEC State Liaison Committee
Scott Corscadden Named New NMLS Ombudsman
FFIEC Seeks Comments on Proposed Revisions
Financial Regulators Release New Appendix for Retail Payment Systems Booklet
Face Appointed to FFIEC State Liaison Committee
Lawson Elected as State Liaison Committee Chairman
Multi-State Non-Bank Supervision Groups Release Annual Reports
CSBS Releases 2015 Annual Report
12 Student Teams Named Finalists in 2016 Community Bank Case Study Competition
CSBS and MTRA Issue White Paper on State Supervision of MSBs
CSBS Announces New Leadership
Texas Department of Savings and Mortgage Lending Receives Mortgage Reaccreditation
CSBS Announces Winners of the 2016 Community Bank Case Study Competition
CSBS Chairman Challenges State and Federal Regulators to Work Together
Illinois Begins Using Uniform Mortgage Test; 52 State Agencies Now Using the Test
West Virginia Department of Financial Institutions Receives Banking Reaccreditation
FFIEC Issues Statement on Safeguarding the Cybersecurity of Interbank Messaging and Payment Networks
Statement on the Financial CHOICE Act
Statement on Introduction of the Bank Service Company Examination Coordination Act
New Call Report to Streamline Supervision of Money Services Businesses
Fed/CSBS 2016 Community Banking Research Conference to Be Held Sept. 28-29
FFIEC Invites Public Comment on Streamlined "Call Report" for Smaller Institutions
Fed/CSBS Announce Papers Selected for the 2016 Community Banking Research Conference
Financial Regulators Release Revised Information Security Booklet
White Paper Discusses Opportunities for Community Banks to Collaborate
NMLS Launches New Capabilities to Streamline State Licensing Processes
North Carolina Commissioner Ray Grace Appointed
CSBS Releases Second Quarter NMLS
Federal Financial Institutions Examination Council Announces Availability of 2015 Data on Mortgage Lending
Federal Reserve and CSBS Release Findings from 2016 National Survey of Community Banks
Washington Department of Financial Institutions Earns Bank, Mortgage Accreditation
CSBS-Federal Reserve Research Conference Describes the Value and Business Prospects of Community Banks
FFIEC Announces Webinars in Observance of Cybersecurity Awareness Month
Maryland Office of the Commissioner of Financial Regulation Receives Accreditation of Mortgage Supervision Program
CSBS Names Tom Bayer Executive Vice President and Chief Information Officer
FFIEC Issues Frequently Asked Questions Guide on the Cybersecurity Assessment Tool
Third Annual “Your License is Your Business Campaign” Launches Today
CSBS Releases Map of State Requirements for Opening Bank Accounts for Minors
FFIEC Issues Uniform Interagency Consumer Compliance Rating System
State Regulators Oppose OCC Fintech Charter
State Regulatory Group Announces New Cyber Certification Program for Bank Examiners
Statement by the Conference of State Bank Supervisors on Comptroller’s Announcement of New Federal Charters
2017 NMLS Renewal Campaign “Your License is Your Business” Off to Strong Start
FFIEC Streamlines “Call Report” for Small Institutions
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 CSBS-Federal Reserve Research Conference Describes the Value and Business Prospects of Community Banks   

WASHINGTON, D.C. — Several key takeaways and common themes emerged from the fourth annual community banking research and policy conference, recently hosted by the Federal Reserve System and the Conference of State Bank Supervisors (CSBS).   The conference, Community Banking in the 21st Century, was held Sept. 28-29 at the Federal Reserve Bank of St. Louis.  The conference brought together academics, community bankers, and federal and state policymakers from across the country to discuss the latest research and trends in community banking. 

The research and discussions centered around three main focal points: the continuing relevance of the community bank business model, the relationship between bank size and performance, and bank regulatory issues.  In addition, state regulators in 29 states held interviews with community bankers in their states.  These interviews, referred to as “Five Questions for Five Bankers,” provided qualitative insights into the data collected as part of a national survey of more than 550 community banks, which was administered prior to this year’s conference.

Common Themes of the Banker Interviews & National Survey

  • Community banks maintain a close, critical relationship with small businesses. Community bankers lent $275 billion to small businesses last year, an amount that, while slightly lower than previous years, is higher than the amount extended by larger banks.
  • Community banks continue to emphasize their concern with regulatory burden, but data suggest a possible plateau in regulatory costs. Explicit compliance costs remain relatively unchanged from one year prior, mortgage lending (an area traditionally seen as too heavily regulated) expanded, and opinions on regulatory burden seemed no worse than prior years.  However, mortgage regulations remain difficult and complicated for community banks.
  • New technology remains both a challenge and opportunity, and community banks are constantly exploring the best options for their consumers.  Community bankers are also split on whether to view new technologically-savvy market entrants, particularly marketplace lenders, as competitors or partners.

The Continuing Relevance and Importance of the Community Bank Business Model

  • Banks with business models normally associated with community banking—that is, those that emphasize relationship loans, core deposit funding, revenue streams from traditional banking products and physical branches--were less likely than other banks to fail, be acquired or absorbed into parent holding companies, 1997 to 2012. The survival advantage was accentuated during the financial crisis.
  • Community banks are major economic drivers for their local communities, both through contributions to lending and liquidity, and in their philanthropic contributions.
  • Even as the number of minority-owned depository institutions (MDIs) grows, black-owned MDIs have decreased in number and have become more concentrated in high-poverty communities.

The Relationship between Community Bank Size and Performance

  • Among publicly-traded companies, evidence suggests that there are incentives for banks to grow larger to exploit economies of scale.  Larger banks seem to spend proportionally less on regulatory compliance and have improved credit-risk monitoring.
  • Compliance costs increase, but at a decreasing rate, with bank size. Relative regulatory burden, in relation to non-interest expenses, triples with decreases in bank size when comparing banks with less than $100 million in assets with banks with $1 billion-$10 billion in assets.
  • Data suggest that large community banks could improve their financial importance by increasing their ratio of small business loans to assets, while small community banks might achieve better performance by reducing this ratio.

Community Bank Regulatory Issues

  • Looking at the tiered implementation of capital requirements in the early 20th century, evidence suggests that capital requirements alone are not an effective tool for promoting bank stability.
  • The Dodd-Frank Act changed assessments for deposit insurance, decreasing assessments for banks which rely more heavily on deposits as a source of funding.  The change provided a net benefit to community banks of $3.6 billion since implementation. 
  • As a community bank increases its concentration in a particular industry, the bank is less likely to request audited financial statements from the borrower.  This suggests that banks rely on their industry expertise as concentration grows.  

More information about the conference, including the research papers that were presented and keynote speaker remarks, is available at Videos of the presentations and remarks will also be made available for viewing.

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