Conference of State Bank Supervisors’ releases survey on trends among community banks


A new survey from the Conference of State Bank Supervisors’ (CSBS) has found that community banks have historic levels of deposits yet narrow net interest margins, the difference between interest taken in from loans versus interest paid out on deposits.

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In its eighth annual national community bank survey, CSBS said this is due to the lingering effects of the pandemic, as people are spending less and saving more. But this is creating a concern for banks due to the narrower margins. The survey of nearly 500 community bankers found that while banks had abundant liquidity, 52 percent described loan demand as a “very important” challenge due to the decline in lending, particularly in the business, agricultural and commercial real estate categories.

On a more positive note, 40 percent of community bankers said they increased efficiency, and more than 70 percent said their prospects for long-term lending were improved by new or closer customer relationships.

In addition, community bankers expressed concerns about cybersecurity as 81 percent called it a very important risk – more than double the rate of any other type of operational risk. Also, the cost of technology went from the least important issue two years ago to one of the most important this year as nearly 47 percent of bankers called it a “very important” challenge. Further, regulation risk continues to be seen as a challenge, with nearly 50 percent calling it “very important.”

CSBS released the results this week at the start of the Community Banking in the 21st Century Research and Policy Conference, sponsored by CSBS, the Federal Reserve System and the Federal Deposit Insurance Corporation.

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