In a packed room in Nashville, Tenn., earlier this week, community bankers had the chance to air their concerns about the industry. They focused largely on working with regulators and recruiting millennials.
The four-day Independent Community Bankers of America conference covered everything from the current expected credit loss model, a new accounting method, to the M&A environment. In a final breakout session that promised to answer "almost every community bank question," attendees were given the reins to ask questions of Jeff Gerrish and Philip Smith from consulting firm Gerrish Smith Tuck.
The session attracted a full house and even required extra chairs to accommodate all the bankers who came to listen to the consultants. At one point, the panelists asked the audience who was from a bank with more than $3 billion in assets — no one raised their hand.
Unsurprisingly, regulation was a big topic on community bankers' minds at the conference. At the final session, Gerrish and Smith said regulators tend to treat small institutions much like their larger regional peers, often missing the nuances of community banking and being "condescending" toward this subset of the industry.
The consultants advised banks to use all available channels to make comments or complaints about regulator behavior, including going to ombudsman offices, state agencies or even approaching a regulator’s boss. Banks should not worry about retaliation from regulators, according to Gerrish and Smith, who said reporting complaints or concerns may actually help on future exams, as it shows regulators the banks are taking their exams seriously.
"We all know [the Bank Secrecy Act] is a pressure point with examiners … what else are they looking at right now?" asked one attendee. Gerrish and Smith said they had seen increased concerns from regulators over liquidity, the Community Reinvestment Act and consolidation of family ownership.
Regulators are also monitoring expenses more, the panelists said. Attendees said this can go both ways with examiners: Banks may be seen as spending too much money, but on the flip side banks might not be spending enough on compliance and IT, one audience member commented.
Another attendee asked about the adoption of the community bank leverage ratio, which would allow institutions to simplify capital reporting requirements. Gerrish and Smith said they expected less than 50% of banks to take the option of the new 9% leverage ratio.
Recruiting younger bankers
Hiring younger bankers and succession planning was also a recurring theme at the conference. A session earlier in the week focused on how millennials at banks view the future of community banking, and the topic of recruiting and retaining this younger demographic came up during the final session.
One attendee commented that his bank had started having "game day" for employees during Friday lunch breaks. "It's helped morale," he said.
Gerrish and Smith pointed out that millennials are concerned about changing the world with their jobs. Helping people buy homes or start businesses is one way that community banks make an impact, they noted.
"If we're trying to recruit a new generation of bankers, we've got to sell them on that idea, that working at a community bank has a social aspect to it," one panelist said.