According to the Conference of State Bank Supervisors (CSBS) 2021 Community Bank Sentiment Index (CBSI), community bankers continue to reflect a positive economic outlook regarding future financial conditions.
“Community bankers expect future business conditions to improve and profitability to be higher,” CSBS Senior Economist Tom Siems said. “On the flipside, community bankers remain concerned about potential burdensome regulation and anticipating the Fed’s monetary policy decisions might cause more economic harm than good.”
The analysis involved collecting data from community banks nationwide during June, offering a sentiment index of 115 points that mirrored that of the first quarter.
Additionally, officials said participant responses are reviewed and crafted into a single number, with an index reading of 100 indicating a neutral sentiment while anything above 100 indicates a positive sentiment and anything below 100 determines a negative sentiment.
The second quarter CBSI findings showed the monetary policy component varied the most from the previous quarter, decreasing seven points from 96 to 89; regulatory burden remains the greatest concern for community bankers – indicating the current value of 26 signals community banker anxiety bank regulation could be more involved in the future; and the franchise value component increased by five points to 155, returning to the average quarterly level recorded two years ago and more than the 98 determined in 2020, amid the recession depths.