ABA Banking Journal - May/June 2015 - (Page 32)

FEATURE > Q&A An Interview with FDIC's Martin Gruenberg A BA President and CEO Frank Keating asks the FDIC chairman's views on the future of community banking, cybersecurity threats, regulatory burden, too-big-to-fail and more. Q Where do you see the banking industry going over the next few years? Do you see any slowdown in the downward trend in consolidation? What can the FDIC do to help arrest this decline? So I think we have turned a corner. Banks have taken the opportunity during the post-crisis period to rebuild their balance sheets, and their capital and liquidity positions are strong. That means that banks are well-positioned to meet the expected improvement in loan demand. Consolidation in the banking industry has been a growing trend for the past 30 years. Our research has shown that most consolidation has occurred within the community banking sector. We have also found that there is significant underlying strength in the community The banking industry has been showing banking model and that community gradual but steady improvement over banks play a critically important role the past several years, and I would in our financial system and economy. expect that trend to continue. Banks Some 93 percent of FDIC-insured are reporting improved earnings, institutions met our community bank better asset quality, and higher loan definition at the end of last year, the balances. Also, the number of banks highest percentage ever. While they on the problem list declined to the hold 13 percent of industry assets, lowest level in six years at the end of community banks account for 45 2014. One important trend to note is percent of small loans to U.S. farms and that community banks are reporting businesses. The FDIC is the lead federal greater improvement than the overall regulator for the majority of community industry. Earnings at community banks banks and is committed to maintaining were up significantly from the previous a strong community bank sector in year at the end of 2014, and the pace the U.S. financial system through our of loan growth at these institutions were supervisory program, extensive technical appreciably higher than the industry. assistance, and research. 32 ABA BANKING JOURNAL | MAY/JUNE 2015 Q What impact will threats to cybersecurity have on banks? What tools can the FDIC provide to help community banks protect themselves? Cybersecurity has become one of the most significant issues facing banks, government agencies, and individuals. I know it is a particular concern for community banks, and it is a top supervisory priority at the FDIC. The FDIC has been active on a number of fronts in helping to promote cybersecurity at the banks we supervise. For the past year we've been participating in a broad interagency cybersecurity assessment to determine how well the banking industry, and particularly community banks, manage cybersecurity and their preparedness to mitigate cyber risks. The assessment included a pilot program conducted at more than 500 community banks and technology service providers. We also work with banks to help strengthen their preparedness for a cyber attack. And we regularly alert the institutions we supervise to emerging cyber threats and discuss ways to be prepared. For example, we recently co-sponsored and conducted

Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015

CHAIRMAN’S VIEW
UPFRONT
ECONOMIC OUTLOOK
LEGAL BRIEFS
PICTURE THIS
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
INVESTOR PERSPECTIVE
MARKETING/RETAIL
PAYMENTS
ADVOCACY
ABA COMPLIANCE CENTER INBOX
CYBERSECURITY
MORTGAGES
OPERATIONS
BOARD MATTERS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - May/June 2015