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Journal Article
The decline in core deposits : what can banks do?
In recent years, growth in traditional deposit funding sources has failed to match the growth in assets at many banks. These funding shortfalls are raising a number of important concerns, including whether community banks will have to curtail lending to small businesses, farmers, and other local customers. This article takes a look at bank funding trends and their implications for community banks. The article also examines possible explanations for the trends, such as strong loan demand, shifts in household financial portfolios, new competition, comparative returns on other financial ...
Journal Article
Strategies for banking the unbanked : how bankers are overcoming entrance barriers
As consumer demographics continue to change, an increasing percentage of the U.S. population is represented by those of Hispanic origin. For financial institutions, this change is significant because many Hispanic consumers lack formal banking relationships. The are unbanked. This article discusses future population projections and how these changes are playing out in the Tenth District states. The authors also describe survey results from the Federal Reserve Bank of Kansas City's survey of Hispanic consumers in Garden City, Kansas. These survey results help explain why many Hispanic ...
Journal Article
The relationship between loan classifications and losses : the effects of a changing economy
The agriculture and energy sectors suffered dramatic declines during the 1980s in the Tenth Federal Reserve District. Bank asset quality also declined during this time period, particularly for farm banks. Using information on loan classifications and charge-offs, this study traces classified loans over time to determine their subsequent performance. ; This study found that examiners were able to identify a majority of the problem credits prior to charge-off. Additionally, examiners were able to distinguish the relative riskiness of problem credits. Economic conditions were found to have a ...
Journal Article
The use of purchase and assumption transactions in the Tenth Federal Reserve District, 1984-1986
Special issue on problem banks
Journal Article
Community Reinvestment Act lending : is it profitable?
In 1977, Congress passed the Community Reinvestment Act (CRA) to encourage federally insured depository institutions to lend in low- to moderate-income neighborhoods and to low- to moderate-income people. Since then, the profitability of the many special lending programs designed to achieve these goals has been questioned on both theoretical and practical grounds. ; The study examines the CRA loan profitability issue in the context of home mortgage lending. We surveyed 97 large institutions to explore profitability differences between their CRA and conventional home mortgage lending. ; ...
Journal Article
How does ownership structure and manager wealth influence risk? : a look at ownership structure, manager wealth, and risk in commercial banks
Bank managers, stockholders, and directors must work closely together in deciding what risks their bank will assume and how to control the bank's overall risk exposure. Each decision-maker will have to understand the risk preferences of others in order to make mutually acceptable decisions and develop policies that reflect all of their concerns. To the extent that weak risk control is tied to management and ownership structure, bank examiners must also understand the basic components of a sound management and ownership structure if the examiner is to suggest corrective steps for a problem ...
Journal Article
The death of a bank: assuring an orderly transition
Special issue on problem banks
Journal Article
Performance and operation of commercial bank web sites
This article reviews banker experience with Internet banking based on responses to the 2001 Survey of Commercial Banks in the Tenth Federal Reserve District. The performance of bank Web sites (measured by customer enrollment, usage rate, fee revenues, and generation of new customers) has been modest but is similar to experience of most U.S. banks. Developing policies, working with vendors, regulatory requirements, security, and marketing and promotion head the list of activities that challenge banks when installing and operating Web sites. Long-term strategic factors, such as remaining ...
Journal Article
How has the adoption of Internet banking affected performance and risk in banks?
Analysis of banks in Tenth District states that have adopted Internet banking shows an adoption rate that is similar to the rate for the United States. Community banks, especially in rural areas, are lagging behind other banks in introducing Internet banking. ; Banks that have adopted Internet banking have introduced it in markets with demographic and economic characteristics that help to ensure customer acceptance. They have also used the Internet in a way that complements their business strategy. Banks who offer Internet banking rely more on non-core funding, and are developing the Internet ...
Journal Article
An overview and analysis of community bank mergers
With some of the largest mergers in history now taking place in the financial services industry, the fact that consolidation is also occurring among small banking institutions is often overlooked. The factors that are promoting consolidation in the banking industry are also relevant for the smallest banks, namely the need to spread the cost of technological and administrative overhead and the desire to maintain earnings growth. With limited growth opportunities in many rural communities, smaller banks often choose to merge with other nearby rural banks as the means to gain asset size and ...