Economic conditions, net interest margins and cybersecurity rank among community bankers’ top concerns this year, according to the Conference of State Bank Supervisors annual national survey.
About 88 percent of survey respondents identified net interest margins as an extremely important or very important external risk, according to the CSBS 2022 National Survey of Community Banks. The CSBS is the national organization for bank regulators of U.S. states and territories. The nationwide survey of 500 community banks captured responses from institutions with less than $10 billion in assets.
Economic conditions, cited by 84 percent of respondents, ranked second among external risks that bankers considered extremely or very important, followed by loan demand, which was among the top concerns for 78 percent of respondents.
While nearly 78 percent of respondents said inflation would be persistent, 55 percent considered inflation manageable.
“Strong headwinds from stagnating economic growth, high inflation and rapidly rising interest rates have created another difficult economic environment for consumers and businesses,” CSBS Chief Economist Tom Siems said in a statement. “But just like during the pandemic and economic lockdowns that started in 2020, community bankers across the nation will again show their value as relationship lenders that can be trusted to help their customers get through tough times.”
More than 95 percent of respondents considered cybersecurity to be an extremely or very important internal risk, with 64.8 percent calling it extremely important. While cybersecurity remained the top internal risk for bankers, the share of bankers considering it extremely important had declined from 82 percent last year. In its report on the survey, the CSBS said this decline could reflect “better preparation by the banking industry to combat fraud and corruption.”
Staffing retention ranked second among the top internal risks, cited as extremely or very important by 84.5 percent of respondents.
While community bank consolidation continues nationwide, the CSBS said activity has trended downward in recent years. About 11 percent of survey respondents said they had made a bid to acquire another institution, and 8 percent said they had considered an acquisition offer. Succession concerns and achieving economies of scale were the top concerns for bankers considering an acquisition offer.