Financial Update (Second Quarter 2006)


 Guynn Notes Growth,
 Some Uncertainties

 Conference Explores
 Markets, Institutions

 Economists Propose
 Fannie, Freddie
 Portfolio Limits

 Kohn Nominated
 as Fed’s
 Vice Chairman

 Atlanta Fed 2005
 Annual Report
 Remembers Katrina

 Fed Announces
 Changes to Cash
 Inventory Services

 Agencies Issue
 Advisory About Flu

 Exploring Credit,
 Debit Cards’
 Payment Process

 Atlanta Fed to
 Maintain Presence
 in Birmingham

 Barron: Community
 Banks Face

 Fed Gov. Olson
 Addresses Importance
 of Banks

 Board Launches
 Web Site
 Geared to Kids

 New Fed Product
 Helps Mitigate
 ACH Risk

 FDIC Ups Insurance
 Limits on Some


  Data Bank

  Circular Letters



Barron: Challenges, Opportunities Exist for Community Banks

Pat Barron

The banking industry has changed dramatically during the past 20 years, and community banks today face a variety of challenges and opportunities.  So said Federal Reserve Bank of Atlanta First Vice President Patrick K. Barron in remarks to a February meeting of Southeastern community bank executives in Savannah, Ga.

Barron said that the biggest change the banking industry as a whole has seen in the past 20 years has come from geographic deregulation and expanded product lines, which ushered in an era of consolidation and greater deposit concentration. That concentration is now heavily weighted toward the nation’s largest banks.

Keeping pace in a fast-changing industry
In today’s changing banking landscape, management at community banks faces a number of challenges. According to Barron, these challenges include making sure institutions effectively manage technological advancements, comply with regulatory changes, differentiate themselves from new competition, and ensure their investments enable them to navigate today’s changing payments landscape.

Pat Barron’s speech
Pat Barron’s bio

As technology touches more areas of the banking business, risk management continues to grow in importance. As a result, banks are spending more money to meet ever-increasing market requirements and risk management regulations pertaining to, for example, the Sarbanes-Oxley Act, the Patriot Act, and the Bank Secrecy Act. While large banks are leading in risk management efforts, Barron noted that some impressive new risk management products are available for smaller banks.

Other regulatory issues, including complying with the Sarbanes-Oxley Act, the Bank Secrecy Act, and the Home Mortgage Disclosure Act, are also affecting smaller banks, Barron said. In addition, new competition—from retailers experimenting with new payments options to nonbank competitors such as PayPal—is nibbling away at banks’ traditional businesses.

Payment system shifts demand focus
The nation’s payments system is also in the midst of dramatic changes as electronic payments gain in popularity, check usage declines, and new check technologies reduce paper in back-office check processing operations. Banks must decide what investments to make in this changing environment, and Barron said that he’s pleased to see many smaller banks enthusiastically embracing new options, including Check 21 and check conversion programs.

Barron also encouraged community bankers to seek out their competitive advantages and then “find the will and the means to push hard in the right direction.”