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The Federal Reserve Bank of St. Louis (St. Louis Fed) and the Conference of State Bank Supervisors (CSBS) recently released the results of their 2015 National Survey and Key Findings from Town Hall Meetings relating to the key issues and trends facing community bankers. These results were presented in connection with a joint St. Louis Fed/CSBS conference, “Community Banking in the 21st Century: 2015” concluding on October 1st.  See   

Community bankers, currently defined as banks with less than $10 billion in assets and seeing their role in terms of “customer service” rather than size, reported that regulatory compliance accounts for 11 percent of personnel expenses, 16 present of data processing expenses, 20 percent of legal expenses, 38 percent of accounting and auditing expenses and 48 percent of consulting expenses.  Together, these expenses imply an annual compliance cost to community banks of $4.5 billion or 22 percent of their net income.  It is no wonder that the collective interpretation of the survey results and discussion panels reveal that community bankers are clearly frustrated by regulatory compliance.

Next of importance to community bankers is the narrowing of the breadth of their mortgage lending activities.  Particularly, lending in connection with one-to-four family mortgages was named as a primary product line by only 69 percent of the community banks, compared to 75 percent last year, a proportionate drop of 8 percent.  Moreover, bankers listed the regulations governing these products as among the most confusing and burdensome.

Finally, the survey showed that community bankers either recently have expanded (or intend to expand) their product offerings in mobile banking, cash management, wealth management and personal finance.   Nearly 70 percent of respondent community banks now offer mobile banking services, and wealth management has emerged as a primary line of business of 18 percent of banks, compared to 11 percent only a year ago, an 18 percent increase.