With close ties to business and consumer borrowers, bankers are often the first to know about changes in the economic climate.  Their views on their own fiscal health and that of the nation also shape the lending environment.  With that in mind, Grant Thornton LLP and Bank Director regularly examine the thoughts, challenges and plans for growth among bankers across the nation, compiling regional and national analysis, as well as trends based on past survey responses.  What follows are the results of this spring’s Bank Executive Survey based on responses from 379 bank CEOs, CFOs and audit committee members.

Prospects for the U.S. economy remain tepid

As with recent Bank Director / Grant Thornton LLP Bank Executive Surveys, we asked bank executives and audit committee members how they believe the U.S. economy will change over the next six months.  Slightly more than half of respondents (52 percent) believe the economy will remain the same over the next six months.  Another 39 percent believe it will improve and only nine percent believe it will get worse.

However, the economic outlook significantly improved since the last time the survey was conducted, in August 2010, when 15 percent of those surveyed expected economic improvement.

“This certainly seems consistent with what we are hearing in the marketplace when we speak with our clients,” says Nichole Jordan, national banking and securities industry leader at Grant Thornton LLP. “Although at first glance, that perspective does not seem overly positive, believing the economy will hold steady is an improvement, especially when far more people expected the economy to get even worse last year.”

Regulatory reform continues to vex 

The vast majority (91 percent) of respondents indicated the burden of regulatory reform on their bank as a key concern for their institution over the next 12 months, far surpassing any other concern.  Yet, almost half (48 percent) of respondents do not believe the overall financial reform will be effective in detecting broad risks to the financial system and preventing or reducing the threat of a future taxpayer-funded bailout; while a third (34 percent) only expect the reform measures to be somewhat effective. 

A mere three percent expect the reforms to be effective and only one percent expect them to be very effective.  Another 13 percent believe it is too soon to tell.  While many bank executives harbor negative views about the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), the impact may not be as bad as it seems. Jordan says she and some bankers do see positives coming out of financial reform.

Among the positives is the creation of a living will for complex financial organizations that will reduce the sort of mass chaos that ensues when a large financial organization fails, such as what transpired with Lehman Brothers, she adds.

Commercial real estate is the monster under many banks’ beds

Fifty-seven percent of respondents indicated exposure to commercial real estate losses is a concern for their institution.  Specifically, 62 percent of representatives from large banks, or those with $500 million or more in assets, named this issue as a concern compared with those representing small banks (51 percent). An interesting point to make is that more bank executives representing public (60 percent) and private (58 percent) institutions in the study are concerned about their exposure to commercial real estate losses than those representing mutual institutions (46 percent).

An interesting point to note was found in the percentage of bank executives located in the Southeast who are concerned with their bank’s exposure to commercial real estate losses (63 percent) compared to those in the Central region of the country (51 percent).

Losses are not the only specters looming. In light of recent enforcement action against mortgage servicers, 52 percent of bankers indicate that they are currently assessing their mortgage servicing procedures.  According to Nichole Jordan, “what is happening with the enforcement actions at the largest institutions will change the industry and will become the new standard, as we see it. For those charged with governance of an institution, this is an important issue to put on the radar screen. They need to be thinking about putting a plan in place for addressing and enhancing mortgage servicing procedures and ensuring that there’s a holistic solution.”

Organic is the name of the growth game

A whopping 86 percent of survey respondents expect their bank’s future growth to come through organic loan origination, not from acquisitions. The Northeast and Western regions lead this trend: 96 percent of Northeast bankers and 85 percent of Western bankers expect their institutions to grow organically.

Not surprisingly, the next most popular vehicle of growth is a traditional merger (39 percent). This percentage trends somewhat higher among those representing large banks (46 percent) and public institutions (48 percent), and is greatest among those from banks in the West (50 percent). The purchase of loan tools also ranked highest regionally among those representing Western institutions (29 percent), more than double the next-highest region, the Southeast (11 percent).

Non-lending investment activities were chosen most often by respondents in the Northeast as a path to growth (20 percent), whereas FDIC-assisted transactions were most popular with bank representatives from the West (24 percent).


Overall the results indicate that bankers are more positive than they were last August on the outlook for the national economy, but they are grappling with the burden of regulatory reform — their top concern. Different regions showed varying levels of strength, with more Northeastern and Western bankers expecting to grow organically, while more Southeastern bankers were worried about commercial real estate. A more detailed report of the Bank Executive Survey will be available later this month.  This report will take a closer look at the thoughts of bank CEOs and CFOs on national and local economies, prospects for growth and the impact of financial regulations, including Dodd-Frank.


About the survey profile

On April 19, 2,849 surveys were sent to U.S. bank CEOs, CFOs and audit committee members via email.  Of those, 379 were completed for a response rate of 13.3 percent. The Northeast (27 percent) and the Midwest (25 percent) regions are represented most strongly in the study, followed by the Southeast (20 percent), Central (18 percent), and West (10 percent) regions. Sixty-two percent of the banks represented in the study have more than $500 million in assets. The FDIC (at 54 percent) is the agency most often cited as the primary regulator of represented institutions in the study, followed by the OCC (21 percent), the Federal Reserve (17 percent), and the OTS (8 percent). Fifty-one percent of the banks represented in the study are publicly owned, with another 39 percent privately owned.

About Grant Thornton LLP

The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity. Visit

Learn more about Grant Thornton’s Banking and Securities practice

As the national banking and securities industry leader, Nichole Jordan is responsible for overseeing the service offerings to Grant Thornton LLP’s banking and securities clients around the country. She can be reached at [email protected].


Al Dominick

Board Member

Al Dominick serves on the board of DirectorCorps, Inc. The former CEO of Bank Director | FinXTech, he is a partner at Cornerstone Advisors.

Prior to Cornerstone and Bank Director | FinXTech, he ran the business development efforts for Computech, a Bethesda, Maryland-based information technology firm (now part of NCI — NASDAQ: NCIT). Before that, he worked for Board Member, Inc. in a variety of revenue-generating roles.

A 1999 graduate of Washington & Lee University, where he majored in Politics and was a four-year letterman on the varsity baseball team, he earned an MBA from the University of Maryland’s Robert H. Smith School of Business in 2007.