The 2004 survey of community banks in the Tenth District

Periodically, the Federal Reserve Bank of Kansas City surveys Tenth District bankers for their views on a variety of matters. In February 2004, we solicited banker opinion on a number of topics pertaining to governance and staffing practices, vendor management practices, competitive environment and future prospects, interest rate risk management practices, internet banking services, and payments system issues. This article briefly sets out the survey methodology and describes the applicability of survey results to the entire population of District banks. It also reviews what bankers told us about their environment, competition, and future challenges. Broadly speaking, survey results can be generalized for all Tenth District banks. The representative community bank in the District has assets less than $150 million, is family-owned and locally controlled, and is headquartered outside a metropolitan area. The economic and competitive environment these banks face depends, in part, on growth prospects and diversification opportunities within their communities. Their most intense loan and deposit competitors are other community banks. Their greatest challenges involve basic aspects of successfully managing a bank: funding, income sources, and meeting competition. Despite identifying many problems, all but a few bankers expect their banks will remain in business and succeed.