Outlook of Community Banks Positive After Less-Than-Expected Performance Last Year; Larger Community Banks Shift Priorities Even More Toward Regulatory Management

ARLINGTON, VA (June 24, 2016) – Promontory’s national survey highlights perspectives of senior bank executives. In the first quarter of last year, bank CEOs, presidents, and CFOs expected notable increases in loan demand, funding costs, and competition for deposits in tandem with economic growth. Twelve months later, while their experiences have not completely lived up to expectations, bankers continue to expect positive market conditions for the year ahead.

Further confirmation of this trend is highlighted in Promontory’s new Banker Confidence IndexSM, which quantifies the future outlook of bank leaders across four key areas: access to capital, loan demand, funding costs, and deposit competition. The initial index was pegged at 53.2 in April of 2015, at the time of the first survey. The index hit a low of 48.8 in December 2015, before rebounding slightly to 50.5 in the most recent survey.

According to Mark Jacobsen, President and CEO at Promontory, “Bankers have told us that they still see the market moving in a positive direction. However, larger community banks with between $1 billion and $10 billion in assets face some headwinds that go beyond market conditions. One thing that has led to larger community banks’ more subdued outlook is the additional time required to comply with regulatory requirements. Last year at this time, larger community banks indicated that they were allocating 9% of their time and attention to responding to regulations. This year, larger community banks assigned, on average, 13% of their attention and resources to responding to regulatory requirements, second only to growing loans and more than the attention they devoted to growing deposits.” 

This quarter’s survey also included a breakout on bank technology. Findings include:

    • Community banks see success in mobile banking adoption.
    • Customer security is the biggest consideration in technology adoption.
    • Community banks show interest in automated underwriting technology but remain uncertain about customer demand.

For more analysis of the results, download the Bank Executive Business Outlook Survey report.  

About the Survey

The survey was completed online over the course of three weeks, from April 13 to May 4, 2016, by CEOs, presidents, or CFOs of 239 banks. Respondents were almost entirely at community banks with less than $10 billion in assets.

About Promontory Interfinancial Network, LLC

Promontory Interfinancial Network was founded by leading figures in the banking industry—Eugene LudwigAlan BlinderMark Jacobsen, and Alfred Moses—to provide financial institutions with profit-enhancing solutions. The founders envisioned a network, composed of thousands of financial institutions, whose “synthetic size” would help each member institution to compete more efficiently. 

Media Contact

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