Source: Community Banking in the 21st Century | Research and Policy Conference

The Federal Reserve and the Conference of State Bank Supervisors today released the findings from the 2017 National Survey of Community Banks. Survey responses were obtained from 611 community bankers in 37 states, and provide insights into what community bankers are thinking about key issues facing their industry. The survey questions addressed changes in bank lines of business, regulatory compliance, competition and consolidation. The 2017 survey also asked specific questions about small business lending and challenges and opportunities posed by financial technology firms.

Download the 2017 National Survey of Community Banks.

Federal Reserve Chair Janet Yellen gave welcoming remarks during the 5th Annual Community Banking in the 21st Century research and policy conference, presented jointly by the Federal Reserve System and the Conference of State Bank Supervisors (CSBS). Yellen discussed the Fed’s recent efforts to ensure that its regulation and supervision of community banks is tailored appropriately to the size, complexity, and role different institutions play in the financial system. She also highlighted the work the Fed, along with other state and federal regulators, is taking to reduce the regulatory burden on community banks and other smaller, less complex institutions.

To view Janet Yellen's remarks - click here

The House of Representatives passed the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers, and Entrepreneurs) Act Thursday, a bill that significantly chips away at about 40 provisions and regulations put in place via Dodd-Frank during the Obama-era.

When the Dodd-Frank Act was enacted, it was sold to the American people as a solution to the financial crisis that would hold Wall Street banks and bad actors in the financial services arena accountable.

In the years since its enactment, however, big banks have grown larger, and small banks and credit unions across the country have suffered. In fact, community financial institutions are disappearing at an average rate of one per day (1,600+ which have either closed or been forced to merge since the implementation of Dodd-Frank). This is because the large Wall Street banks are the only ones with the manpower and resources to navigate the complex Dodd-Frank regulatory environment.

The Financial CHOICE Act, provides desperately needed relief to community financial institutions from the harmful, complex and excessive regulatory environment created by the Dodd-Frank Act. It increases access to, and reduces the cost of, credit for families that want to purchase a home or start a business.

Regulatory relief would alleviate the burdens on lending to small businesses, which account for 70 percent of all new jobs created in the US.

When institutions begin to flourish and thrive again, lower-income and middle-class consumers, as well as small businesses, that rely on the services of community banks will once again have more choices and better access to the products and services they need to live their daily lives and conduct their businesses.

The legislation passed the House by a vote of 233 to 186. CHOICE would end Dodd-Frank’s too-big-to-fail bailouts for financial firms and creditors, deliver stronger consumer-fraud protections for all Americans, and provide much-needed regulatory relief to community banks and other small financial institutions. The CHOICE Act will be sent to the Senate next, where the path to approval could prove more difficult.

President Trump met with the top leadership of the Independent Community Bankers of America on Monday, including more than 100 of its members.

The meeting was requested by the president, according to Cam Fine, the president and CEO of the Independent Community Bankers; and, Vice President Mike Pence was also in attendance.

“ICBA is deeply honored that the White House reached out to ICBA and invited more than 100 of our ICBA community bank leaders to meet with President Trump during our annual Capital Summit,” Fine said in a press release. The ICBA discussed issues that are top of mind for our nation’s more than 5,800 community banks—including regulatory reflief.

While Trump has met with small groups of bankers before, this is by far his largest gathering with community bankers. Since taking office, he has repeatedly sought to reassure them that he is committed to regulatory relief. He signed an executive order requiring Treasury Secretary Steven Mnuchin to examine what can be done to provide help to institutions as part of a review of the Dodd-Frank Act.

Community banks are the backbone of small business in america!   - President Trump

Trump also met with a smaller group of community bankers in March. Participants in that meeting came away impressed, saying the president repeatedly asked his advisers if he could fix problems in the system by issuing new executive orders (many of the problems bankers brought to him either required legislation or action by an independent regulator).

Community bankers are hopeful for the passage of regulatory relief this year, though the outlook for sweeping legislation is poor.

While House Financial Services Committee Chairman Jeb Hensarling is expected to see his relief bill pass the panel on Tuesday, the legislation stands little chance in the Senate. Democrats broadly support providing relief to community bankers, but are opposed to many of the Hensarling bill's provisions, including its restructuring of the Consumer Financial Protection Bureau.

Senate Banking Committee Chairman Mike Crapo, R-Idaho, has said passage of a broad relief bill is unlikely, but he is working with Democrats on targeted bipartisan legislation. Hensarling and Mnuchin are expected to appear at the ICBA's Capital Summit this week.

FDIC Launches New Network to Support Youth Savings Programs

The Federal Deposit Insurance Corporation (FDIC) today released of a report on its Youth Savings Pilot program at a meeting of its Community Banking Advisory Committee. The pilot program identifies promising approaches to combining financial education with the opening of safe, low-cost savings accounts for school-aged children. Financial education and school-based savings programs introduce young people to financial concepts and services at an early age, and promote savings habits at a formative age.

The report from the FDIC's two-year Youth Savings Pilot is based on the experiences of 21 diverse participating banks. The report describes promising practices banks can use to develop or expand their own youth savings programs.

"Offering financial education to school-age children opens the door to many opportunities and establishes the groundwork for a lifelong banking relationship," FDIC Chairman Martin J. Gruenberg said. "Coupling that education with the opportunity to open a savings account allows students to put their knowledge to work immediately and makes education efforts considerably more effective.This is a long-term benefit for young people, their families, and financial institutions."

The FDIC is launching a Youth Banking Network, a platform to support banks as they work with school and nonprofit partners to create and expand youth savings programs. The FDIC will offer periodic conference calls and resources on topics of interest to network members. The FDIC will seek feedback from network participants on ways to support collaborations. Educators and non-profit organizations also are welcome to sign up to receive updates, including alerts about when resource materials are posted. To review the report or learn about joining the Youth Banking Network, visit the new Youth Banking resource center at www.fdic.gov/youthsavings.

The FDIC Quarterly released today includes a feature article that highlights key findings from the 2016 Summary of Deposits (SOD) survey.

Banks Attract More Deposits While Operating Fewer Offices—Deposits across the banking industry grew while the number of offices shrank among noncommunity banks and increased among community banks from the previous year, according to an analysis of data from the 2016 Summary of Deposits (SOD) survey. The survey collects data about offices and deposits from all FDIC-insured institutions as of June 30 each year. The number of FDIC-insured institutions totaled 6,058 on June 30, 2016, down from 6,348 the previous year. FDIC-insured institutions reduced their total number of offices by 1.5 percent to 91,851 for the year ending June 30, 2016. While the number of retail offices and brick-and-mortar offices fell, the number of home banking offices and trust offices increased, and the number of institutions with offices in multiple states increased from 688 to 703. Total deposits at FDIC-insured institutions increased 5.8 percent to $11.2 trillion. Offices in energy-dependent counties reported almost no deposit growth as natural gas, oil, and coal prices fell, but deposits in those offices have stabilized from the 7.1 percent decrease noted in the 2015 SOD. Total noncommunity bank deposits increased 6.1 percent ($543.5 billion), with more than three-quarters of noncommunity banks reporting an annual increase. Community bank deposits increased 5.8 percent ($95.3 billion), with more than two-thirds of community banks reporting an annual increase.

This issue of the FDIC Quarterly also includes fourth quarter 2016 industry results from the Quarterly Banking Profile, which was released on February 28, 2017.

The American Bankers Association (ABA) has issued a whitepaper discussing some of the most burdensome issues that community banks will face as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The ABA acknowledges that the amount of regulation is a significant challenge for a bank of any size, but is overwhelming for community banks with limited resources.

The ABA says that five of the most cumbersome provisions of the Dodd-Frank Act for community banks are:

1. Risk Retention. 
2. Higher Capital Requirements and Narrower Qualifications for Capital. 
3.  SEC’s Municipal Advisors Rule. 
4. Derivative Rules. 
5. Doubling Size of the Deposit.

Read the whitepaper here

By Drew McKone | American Banker

Just as locally kept businesses differ from national conglomerates, community banks are inherently different from the big banks. We, local businesses, depend on relationships more than volume. We know our customers by name and we make banking and lending decisions down the street from where our customers live and work, not from across the country.

Even in today’s quick-fix world motivated by technology advancements, many bank customers still seek out old-fashioned customer service. Indeed, more than half of consumers prefer to interact with their bank in person, according to a report from TimeTrade. This is great news for community banks, where emphasis on customer service in the branch comes first, including promoting quality over quantity in product offerings.

Read the entire article here

By Renae Merlea, Washington Post | February 9, 2017

A Republican plan to dismantle Wall Street regulations would strip the Consumer Financial Protection Bureau of many of its powers, including eliminating its consumer complaint database and scaling back its enforcement abilities, according to a five-page memo distributed by Rep. Jeb Hensarling, chairman of the powerful House Financial Services Committee.

The memo obtained by The Washington Post offers the first peek into Republican plans to ease regulations big banks have been subject to since 2010's Dodd-Frank Act.

Read the entire article here

Source : American Banker

American Banker recently published a slide show on five ancillary business lines that lately have appealed to community banks pursuing new sources of loans or fee income. The five are:

1. Equipment Finance
2. Public Finance
3. Insurance-Premium Finance
4. Senior Care Construction Loans
5. SBA Lending

View the slideshow here