Pub. 12 2023 Issue 3

As community banks struggle to compete with the industry’s largest banks, as well as an ever-increasing number of fintechs and nontraditional lenders, offering attractive deposit pricing is key. At the end of 2022, banks were competing for $18T in deposits, according to the Federal Reserve Bank of New York. While there have been multiple rate hikes by the Federal Reserve, with July’s rate hike bringing rates to a 22Y high, deposit rates among banks have been slower to increase, although that is changing. In Q4 2022, the average Fed funds rate had climbed to 3.7%, compared with interest-bearing deposit rates of only 1.4%. As of July 17, the FDIC shows deposit rates have increased significantly in 2023.

If your responsibilities include your community bank’s bond portfolio, you’ve been confounded by several elements of its performance in the last 18 months. To the extent your portfolio has mortgage-backed securities (MBS) and government agency bonds, and the clear majority of all bonds owned by banks are in these two categories, they’ve certainly lost value since 2022. It is easy enough to put the “blame” on the Fed’s Federal Open Market Committee (FOMC), which as of this writing has taken overnight rates up fully 500 basis points (5%) since March of last year.

Technology continues to insinuate itself into almost every facet of our daily lives, whether it is personal or work-related. As a result, protecting data privacy has become increasingly more relevant to every consumer and business. In 2022, 422 million people were affected by data breaches at U.S. companies, with an average of 4.8 breaches per day.1 Stolen data included bank account numbers, medical histories, Social Security numbers and more. Personal data is continuously being collected, shared or sold, so it is crucial that everyone understands how to protect it.

Home Equity Line of Credit (HELOC) scams continue to be a costly and challenging issue for financial institutions. Wire transfer fraud can easily reach millions of dollars, and with advancements in technology, such as online databases for county clerk records, online banking and online title searching, data commonly used by financial institutions to verify customer identity for wire transactions is routinely and easily compromised.

VACB and ICBA Can Help!
In today’s work landscape, where “quiet quitting” and “act your wage” have become buzzwords, more employers are investing in professional development opportunities to help their employees feel valued and connected to their work. According to a 2022 survey conducted by the Society for Human Resource Management (SHRM) and Talent LMS, more than 76% of the employees surveyed stated that they are more likely to stay with a company that offers continuous training. Furthermore, almost half of employees reported that training opportunities were a crucial factor in choosing their current employers.

On October 1, community bankers from across the state will gather at the beautiful Hotel Roanoke for the 46th Annual Convention and Trade Show. I really hope you, and even other members of your team and board, can join us for this year’s convention. It’s a great opportunity to reconnect with each other, as well as our associate members, and to hear presentations that will be both entertaining and provide valuable take-homes for your banks.

From the “too close to the forest to see the trees” department …