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Community Bankers Forecast Concern for Local Economies, Index Shows

Washington, D.C. – Community banks are concerned about the future of their local economy as the novel coronavirus has shifted to a pandemic, according to the most recent CSBS Community Bank Sentiment Index (CBSI). 

The CBSI showed a dramatic drop in banker sentiment in the first quarter 2020 results, falling 32 points to 91 from 123 at the end of last year. It is the first significant decline since CSBS started the index in the second quarter of 2019.

Notably, the CBSI declined throughout the month of March as survey responses came in, from an average 98 points at the beginning of March to an average 71 by the end of the month. Six of the seven CBSI components declined relative to the last survey, with five components dropping more than 35 percentage points each.

“As the COVID-19 virus became more widespread, community bankers quickly started to see the local impact,” said CSBS President and CEO John Ryan. “Fortunately, these banks are well positioned to work with their customers in a potential downturn.”

Key findings from the first quarter 2020 results include:

  • 47% of bankers believe business conditions will be the same (40%) or better (7%), down significantly from 85% in the fourth quarter 2020 index (74% same and 11% better)
  • 45% of banks expect the same (26%) or better (19%) profits, down significantly from 77% (45% same and 32% better) in the previous survey
  • 20% of banks believe they will see a decrease in franchise value, up significantly from 3%

The CBSI captures on a quarterly basis what community bankers nationwide think about the future on seven key areas: business conditions, monetary policy, regulatory burden, capital expenditures, operations expansion, profitability and franchise value.

Participant answers are analyzed and compiled into a single number; an index reading of 100 indicates a neutral sentiment. Anything above 100 indicates a positive sentiment, and anything below 100 indicates a negative sentiment. 

Media Contact:  Susanna Barnett, 202-680-3143, sbarnett@csbs.org

The Conference of State Bank Supervisors (CSBS) is the national organization of bank regulators from all 50 states, American Samoa, District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands. State regulators supervise 79% of all U.S. banks and are the primary supervisor of non-depository financial services. CSBS, on behalf of state regulators, also operates the Nationwide Multistate Licensing System to license and register non-depository financial service providers in the mortgage, money services businesses, consumer finance and debt industries.

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