CYBER

CYBER

CYBER

Cyber

CyberREGULATION

REGULATION

REGULATION

Regulation

SECURITY

SECURITY

SecuritySecurityBANK

BANK

BankBank

BANKS

BANKS

Banks

BanksFuture

Future Future

Future

Board

Board

BoardBOARD

BOARD

Financial Worry

Financial Worry

Financial WorryF

inancial Worry

Custom

er Managem

ent

Customer Management

Customer Management

Credit

Credit

Credit

Credit

CREDITCREDIT

Succession

Succession

SuccessionSuccessionConcern

Concern

Concern

Director

Director

WorriesW

orriesWorries

WORRIES

Ability

Ability

Ability

Changing

Changing

Changing

Changing

The overwhelming word that came up again and again was “cyber.” Directors said they are worried about threats to digital infrastructure and the security of their customers’ data.

Said one director: “What worries me the most is cyber/fraud incidents that could be external or internal. We must be vigilant in our discussions with bank leaders to ensure that every protection that is available has been considered and adopted or ruled out for valid reasons.”

CYBER

In terms of what worries directors the most, regulation is a close second to cybersecurity. One director said he is most worried about “oppressive regulation that paints with a wide brush and causes inordinate expense to my bank through additional compliance.”

Another director said, “I’d rather see my bank get out of mortgage lending entirely than risk the [Consumer Financial Protection Bureau] and the [Department of Justice].”

REGULATION

Succession planning also was a widespread concern. One director complained that no one in management was willing to take the CEO spot. Another said his questions include, “What is the bank doing to prepare people from within to take new top management positions? How is the board identifying and locating qualified board candidates?”

SUCCESSION PLANNING

Still others worried about nonbank competitors, which aren’t as heavily regulated as the banking industry, but offer some of the same services, such as loans. “If we are not on a level playing field with nonbanks, we are in trouble,” said one director.

NONBANKCOMPETITORS

Digitization also was a top concern. “Our customers demand banking services virtually anywhere, anytime, and the changing threat environment and consequential risks involved keep me up at night,’’ said one director.

TECHNOLOGY

A few directors mentioned the low rate environment as a threat. One said the “days of 4 [percent] to 5 percent margins are long gone,” and it is “very difficult for community banks to compete when margins are thin, cybersecurity is a 24/7 concern, and the regulation filed just keeps getting longer [and] steeper.”

LOW RATES