CSBS report reveals regulatory burden as top community bank concern

Federal Issues CSBS Community Banks Bank Regulatory Survey

Recently, CSBC published its 2024 Annual Community Bank Survey which provides insights into the concerns and challenges faced by community banks. The survey revealed that regulatory burden has become the primary concern for community bankers, which is a shift from last year’s primary concern about the cost of funds, which now ties as a leading external risk. The survey includes responses from 370 community bankers across 38 states, and highlights issues such as compliance costs, technology, competition, and liquidity.

CSBS President and CEO Brandon Milhorn noted that while last year banks were concerned about a recession, this year their focus has shifted to the cost of compliance due to increased federal regulatory and supervisory activity over the past 18 months. He emphasized the need for regulators to concentrate on core financial risks and avoid unnecessary regulatory burdens on community banks.

Other significant concerns reported include cost of funds reflecting a high-interest rate environment, net interest margins, and deposit growth. Cybersecurity continues to be viewed as the highest internal risk. Bankers also indicated that inflation-related challenges are expected to persist but are manageable. The most significant impacts of inflation are on the costs of deposits, personnel expenses, the value of securities investments, and operating expenses.