Banker Confidence Shifting Significantly to More Positive Territory Survey Results Show Highest Rated Bank Confidence IndexSM Since Q2 2016

ARLINGTON, VA (February 22, 2018) – For the first time since Q1 2017, a composite outlook of bank CEOs, presidents, and CFOs from across the United States suggests that there is more optimism about the banking industry, as well as overall economic conditions.

This according to Promontory Interfinancial Network’s proprietary Bank Confidence IndexSM, which is back in positive territory with a sizable 2.4-point improvement (to 50.5, crossing from contractionary to expansionary territory) over last quarter. This is the highest rating for the Bank Confidence Index since Q2 of 2016.

The Bank Confidence Index, which is calculated using the results of Promontory Interfinancial Network’s Bank Executive Business Outlook Survey, tracks banker expectations in four key areas: access to capital, loan demand, funding costs, and deposit competition. (Charted on a scale of 0-100, a score over 50 can be read as expansionary.) The Q4 2017 survey is the twelfth published by Promontory Interfinancial Network with data released every fiscal quarter.

In general, respondents showed growing enthusiasm for the economy, with 63% saying economic conditions had improved for their bank today compared to 12 months ago and only 5% saying things had gotten worse. By contrast, those numbers were 49% “improved” and 9% “worse” last quarter—meaning that for this quarter there was an 18-point gain in net favorability on that measure. Looking to the future, this survey shows bankers are even more optimistic about how the economy will impact their bank. Sixty-five percent said their situation will improve, and only 5% said it will get worse. Those numbers were 45% “improved” and 10% “worse” last quarter—a significant 25-point increase in net expectations.

“Bankers are feeling more positive about the future than they have in the last 18 months,” said Mark Jacobsen, President and CEO of Promontory Interfinancial Network. “This optimism is good for the industry and for the economy, especially given that community banks play such a critical role in lending and job creation, and could counter the impact of higher interest rates.”

This quarter’s survey also examined how bankers plan to use the money saved from the enactment of the Republican tax cut legislation. A majority of bank executives (51%) say they intend to use the money saved to invest in their business, while the second most popular option (40%) was to increase wages for employees (notably ahead of paying higher dividends and/or buying back stock). Executives were also asked which regulatory change would make the biggest positive impact for their bank; two-thirds (67%) said they wanted a regulatory approach based on the size and complexity of firms being regulated.

Respondents were also asked whether they would credit the former or the current White House administration for 2017’s strong economy. Forty percent of respondents gave the Trump administration a lot of credit, compared to just 5% who chose the former Obama administration. Overall, 83% of respondents believed that the Trump administration deserved at least some credit for the 2017 economy, while only 27% said the same about the Obama administration. (On a 0 to 10 scale, Trump’s White House earned a mean score of 6.55 on this economic “credit test,” while Obama’s administration garnered a 2.81.)

For details and other insights, please download the latest Survey report.

About the Survey

The Q4 2017 Bank Executive Business Outlook Survey was completed online over the course of two weeks from January 16-January 30, 2018, and incorporates responses from 370 unique banks as provided by C-level bank executives, defined as CEOs, presidents, and CFOs, from across the country. Compared to the asset-size distribution of the banking industry, responses were slightly weighted toward banks with between $1 billion and $10 billion in assets. The survey is the twelfth quarterly survey published by Promontory Interfinancial Network.

About Promontory Interfinancial Network, LLC

Promontory Interfinancial Network was founded by leading figures in the banking industry—Eugene Ludwig, Alan Blinder, Mark Jacobsen, and Alfred Moses—to provide financial institutions with profit-enhancing solutions. The founders envisioned the largest bank network of its kind, whose “synthetic size” would help each member institution to compete more efficiently. More than 3,000 financial institutions have chosen to be a part of the company’s Network. Network members use Promontory Interfinancial Network’s balance sheet and liquidity management solutions to acquire and retain large-dollar customer relationships, purchase funding, reduce collateralization costs, and buy and sell bank assets.

Media Contact

Phil Battey
Senior Vice President, External Affairs
Promontory Interfinancial Network, LLC
(703) 292-3357