Community bankers are feeling slightly better about the health of their local economies, but still far short of their pre-pandemic level of confidence, the most recent Community Bank Sentiment Index (CBSI) reveals. The Conference of State Bank Supervisors released the third-quarter results in early October, collecting data from 334 community banks across the nation during the month of September. The results showed a sentiment index of 97 points, up from 90 in the second quarter. Prior to the pandemic, the sentiment index hovered in the low 120s.
The CBSI captures on a quarterly basis what community bankers nationwide think about the future. Participant answers are analyzed and compiled into a single number; an index reading of 100 indicates a neutral sentiment. Anything above 100 indicates a positive sentiment, and anything below 100 indicates a negative sentiment.
Key findings from the third quarter 2020 results include:
- The regulatory burden component is at 57, the same as for the second quarter and again at a record low.
- Regulatory burden drove the uncertainty category to its highest at 44 points, up from 32 in the second quarter.
- Bankers reported an improved outlook in business conditions, up to 103 points from 93 in the last quarter, and franchise value, up to 116 points from 98 in the same period.
- Their profitability outlook remains a concern, despite showing a 13-point increase to a value of 68 in the third quarter.
“The slight increase of community bankers’ overall optimism is notable; however, the fallout of the pandemic continues to create uncertainty for local communities,” says John Ryan, CSBS president and CEO. “Policymakers should note their concern about future profitability and regulatory burden.”