According to the Conference of State Bank Supervisors (CSBS) Community Bank Sentiment Index (CBSI), community bankers nationwide maintained a pessimistic view of the economy, but the third quarter outlook improved.
“Community bankers’ ongoing concerns over high inflation, tepid economic growth, and a potentially more burdensome regulatory environment continue to weigh heavily on overall sentiment,” CSBS Chief Economist Tom Siems said. “The good news is that all seven components that comprise the CBSI rose from the previous survey, with the profitability outlook markedly higher.”
The analysis, which assesses what community bankers think about the future, showed the third quarter 2022 CBSI rebounded seven points from the all-time low of 84 experienced in the prior quarter, but acknowledged that at 91 points, community banker sentiment remains pessimistic.
The breakdown involves participant answers being analyzed and compiled into a single number. An index reading of 100 indicates a neutral sentiment, anything above 100 indicates a positive sentiment, and anything below 100 indicates a negative sentiment.
Per the CSBS, the present value rests nine points lower than a year ago and has been below 100 throughout this year. There is an expectation the Federal Reserve’s monetary policy decisions will negatively impact market conditions and continue to keep the overall index down.