Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp., noted Friday that insured banks posted $34.5 billion in net income for the second quarter, up $5.9 billion from a year earlier.
But while the number of troubled banks declined for the fifth consecutive quarter, the FDIC is aggressively addressing issues concerning the community banking segment.
Gruenberg pointed out that small banks -- especially rural institutions -- carry a large part of the economy by providing 40% of the nation's loans to small businesses.
In prepared remarks before the American Banker Regulatory Symposium, Gruenberg said the FDIC is making its Community Banking Initiative a priority with community banks expressing grave concerns about regulations under Dodd-Frank and the technology advancements they need to compete with larger institutions.
"Community bankers are concerned about their financial performance in this difficult economic environment," said Gruenberg. "Margins are low and loan demand remains weak. Management succession and the recruitment of qualified personnel, particularly in rural banks, is of great concern, as is managing the cost of meeting their regulatory obligations."
Community bankers advised the FDIC to ensure there is quality communication between banks and their examiners, according to Gruenberg.
To maintain a better grasp of the segment, the FDIC is now studying the community banking segment to analyze any return on assets and barriers to raising capital.
"We are reviewing the examination process and how we promulgate and release rulemakings and guidance to see if we can improve our processes and communications in ways that benefit community banks, while maintaining our supervisory standards," Gruenberg added.
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