Survey reveals economic, NIM concerns

Community bankers are most concerned about net interest margins, sluggish economic conditions and loan demand, reflecting the slow U.S. economy, according to the Conference of State Bank Supervisors’ annual National Survey of Community Banks.

The survey, released Sept. 28, included responses from nearly 500 community banks. The survey was taken from April to June as increasing interest rates and the Russia-Ukraine war continued to dampen economic sentiment. 

Bankers viewed cybersecurity as their No. 1 internal risk, though the number of community bankers who deemed it “a very important risk” dropped 16 percent from last year. Community bankers saw  inflation as a manageable ongoing challenge. 

Retaining employees continued to pose a challenge: Nearly 85 percent of respondents said keeping staff  “was an extremely or very important issue,” a 10-percent increase from last year, noted CSBS Chair Tom Fite. Bankers expect relationship-based lending to increase more than transactional lending, and view in-house core processing services as less expensive and less secure than relying on external providers. 

  “Strong headwinds from stagnating economic growth, high inflation and rapidly rising interest rates have created another difficult economic environment for consumers and businesses,” said CSBS Chief Economist Tom Siems. “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.”