FRB’s Supervisory View on Community Banking

November 1, 2013

On November 1, 2013, CBAI members and staff attended the 9th Annual Community Bankers Symposium which was jointly sponsored by the Federal Reserve Bank of Chicago, the FDIC, and the OCC. The symposium was titled GPS for Success: Navigating the New Community Banking Environment. Kevin Bertsch, Associate Director of the FRB, presented a View from the Board of Governors, and highlighted the following with insightful graphs and statistics to support the Fed’s observations.

  • Community bank performance and conditions are improving.
  • Community banks have taken steps to address the crisis.
  • The number of problem banks is declining.
  • Challenges to return to historic performance levels remain including: tighter margins, pre-provision operating income is lower, interest rate risks, and lending has still not recovered.
  • Supervisory priorities reflect current conditions including: loan portfolio quality and adequacy of reserves, managing interest rate risk, and risk mitigation before entering new lines of business.
  • The Federal Reserve’s is making efforts to improve the supervisory programs for community banks.

This material is appropriate to inform your Board on community banks’ progress in addressing the financial crisis and the current state of the profession. See FRB Presentation Report.