621 

The Meeting of the Advisory Committee on Community Banking 

of the 

Federal Deposit Insurance Corporation 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation via Webcast 

November 3, 2021 – 1:00 P.M. 

The meeting of the FDIC Advisory Committee on Community 

Banking (Committee) was called to order by Martin J. Gruenberg, 

Director, Federal Deposit Insurance Corporation (FDIC) Board of 

Directors. 

Committee members present at the meeting: Shaza Andersen, 

Chief Executive Officer (CEO), Trustar Bank, Great Falls, 

Virginia; Mike Bock, CEO, Dairy State Bank, Rice Lake, 

Wisconsin; Anthony Capobianco, President and CEO, American 

Community Bank, Glen Cove, New York; Sarah Getzlaff, CEO, 

Security First Bank of North Dakota, New Salem, North Dakota; 

Stephen Hayes, Chairman and President, Dakota Prairie Bank, Fort 

Pierre, South Dakota; Harold Horvat, President, CEO, and 

Chairman, Centreville Bank, West Warwick, Rhode Island; Betsy 

Johnson, President and CEO, Solutions Bank, Forreston, Illinois; 

Kenneth Kelly, Chairman and CEO, First Independence Bank, 

Detroit, Michigan; Cynthia A. Kitner, President and CEO, 

Jefferson Security Bank, Shepherdstown, West Virginia; Patty 

Mongold, Chairperson, President, and CEO, Mt. McKinley Bank, 

Fairbanks, Alaska; Gilbert Narvaez, Jr., President and CEO, 

Falcon International Bank, Laredo, Texas; Mark Pitkin, President 

and CEO, Sugar River Bank, Newport, New Hampshire; Andrew West, 

President and CEO, Eagle Bank, Polson, Montana; and John Wharton 

V, President and CEO, Yampa Valley Bank, Steamboat Springs, 

Colorado. All members attended via videoconference. 

Committee members absent from the meeting: Bruce Lowry, 

President and CEO, Ireland Bank, Malad City, Idaho; Neil 

McCurry, Jr., President and CEO, Sabal Palm Bank, Sarasota, 

Florida; Teri Messerschmitt, President and CEO, South Ottumwa 

November 3, 2021 
622 

Savings Bank, Ottumwa, Iowa; and Margaret Oldner, CEO, Stone 

Bank, Mountain View, Arkansas. 

Corporation staff in attendance: Rebecca L. Anseth, 

Jennifer M. Barozie, Amber B. Beck, Gregory P. Bottone, Sylvia 

W. Burns, Mary Calkins, Kymberly K. Copa, Diane Ellis, G. Chris 

Finnegan, Eric Fultze, Shannon N. Greco, Daniel R. Hammond, 

Martin D. Henning, John P. Henrie, Daniel S. Hoople, Arleas 

Upton Kea, M. Anthony Lowe, Sultan Meghji, Brandon Milhorn, RaeAnn Miller, Arthur J. Murton, Shayna Olesiuk, Rowie M. 

Pangilinan, Mark E. Pearce, Nikita Pearson, Harrel M. Pettway, 

Nicholas J. Podsiadly, Ariana L. Rambuyan, Ryan M. Rappa, Carlos 

D. Rodriguez, Lisa K. Roy, Betty J. Rudolph, Michael Shaheen, 

James P. Sheesley, Nefretete A. Smith, Tiffanie A. Titus, John 

F. Vogel, and Katrice L. Yokley. 

Director Gruenberg opened the meeting and presided over the 

proceedings. Arleas Upton Kea, Deputy to the Chairman for 

External Affairs and the Committee’s Designated Federal Officer, 

moderated the proceedings. 

Introductory Remarks 

Director Gruenberg welcomed Committee members and informed 

them that Chairman Jelena McWilliams was unable to participate 

due to a scheduling conflict. He noted that the Advisory 

Committee, which was established twelve years ago, has proven to 

be an invaluable resource for thoughtful and candid advice from 

a representative group of community bankers from around the 

country. Director Gruenberg also indicated that he believes the 

Committee’s input will be more important to the FDIC than ever 

given uncertainties associated with the final stages of the 

pandemic and future challenges facing community banking in the 

United States. He expressed his appreciation for the Committee 

members’ participation and time. 

Director Gruenberg then acknowledged the forthcoming 

retirement of Ms. Kea, who serves as the Designated Federal 

Officer of the Committee and the FDIC Advisory Committee of 

State Regulators. He listed her prior positions, which include 

Deputy to the Chairman and Chief Operating Officer, Director of 

the FDIC’s Division of Administration, Ombudsman, and a series 

of senior positions in the Legal Division. He said Ms. Kea 

played a major leadership role at the FDIC over her 35 years of 

service and epitomizes the “can do” spirit of the FDIC. 

November 3, 2021 
623 

Director Gruenberg underscored that Ms. Kea’s contributions 

to the FDIC are historic. He noted that she has been a 

trailblazer for women of color to rise to senior positions of 

leadership at the FDIC and lead with courage and grace. He said 

her devotion to the FDIC, its mission, and its employees has 

been second to none, and she will leave a mark on the agency 

that will stand the test of time. He thanked Ms. Kea for her 

service and emphasized how much she will be missed. 

Director Gruenberg then turned the program over to Ms. Kea, 

to moderate the meeting. 

Ms. Kea thanked Director Gruenberg and said she felt 

blessed to have worked with him during his time as Chairman, in 

addition to ten other Chairmen of the FDIC. She recounted that 

she assisted in resolving two financial crises, and she is now 

working through the pandemic. She noted that working as a 

public servant in all her capacities has been a special 

opportunity. 

Addressing the Committee members, Ms. Kea said interacting 

with them had been an absolute pleasure. Though she had not met 

all in person, she said she has felt their presence and bonded 

with them through the virtual meetings this year and last. 

Ms. Kea emphasized that she will always have a great love 

for the FDIC and looks forward to what is yet to come. 

Community Banking Conditions 

Ms. Kea then turned the meeting over to the Committee 

members for a roundtable discussion on local banking trends and 

issues. The Committee members discussed a broad range of 

topics, including the following: 

COVID-19 Pandemic and Response. 

Most of the members discussed the continuing impact of the 

COVID-19 pandemic on their communities and banking operations. 

Members provided updates on the rates of infection and 

hospitalizations, as well as vaccinations. Several members 

reported improvements in such metrics, while other members noted 

that COVID-19 cases continue to remain high in their 

communities. 

Members discussed varying levels of reopening for bank 

branches. Members Pitkin, Horvat, and Kitner noted that their 

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624 

banks’ staff are on-site, while Member Andersen noted that her 

bank has remained open throughout the pandemic, but in a hybrid 

model. Member Johnson indicated that lobbies remain closed at 

her bank, but appointments can be made. Member West said that 

his bank’s lobby reopened in June, but that closing the lobby 

for a year did not affect his bank’s performance in 2020 or 

2021. 

Member West observed that customers have changed how they 

interface with his bank, using mobile banking and the drivethrough. Member Capobianco noted an uptick in mobile banking 

customer enrollments and an increase in the number of deposits 

made through the mobile application. He indicated that once 

customers migrate to his bank’s digital products, they continue 

to use them. 

Economic Conditions. 

Members discussed inflation, labor shortages, and supply 

chain challenges. Members Wharton and Bock indicated they do 

not believe inflation is transitory. Member Horvat expressed 

concern with wage inflation, because, unlike commodity prices 

that fluctuate, once wages increase, they tend to stay at the 

new, higher levels. 

Member Mongold noted that high COVID-19 cases and exposures 

have contributed to labor shortages, as employees are required 

to stay home until they are healthy or a sufficient amount of 

time has elapsed after exposure. Member Bock stated that some 

of the bank’s larger businesses indicated that a potential 

COVID-19 vaccine mandate may exacerbate the labor shortage. 

Member Andersen noted issues with supplies and materials, 

acknowledging that it took four months to get glass for the 

window at a bank branch. Members Hayes and Johnson reported 

increasing input costs and supply chain issues for agricultural 

customers. Member West noted that hay has increased from $100 

to $350 a ton, and as a result, ranchers are selling their 

herds. 

Members discussed rising housing costs and shortages. 

Member Johnson indicated that in the residential market, supply 

still trails demand. Member Horvat observed that home prices 

continue to be very strong and inventory levels remain very low. 

He also noted that residential lending has been strong 

throughout the year, and refinancings make up almost all of 

their lending volume due to the aforementioned housing inventory 

November 3, 2021 
 

 

 

 

 

 

 

 

 

 

 

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shortages. Member West said real estate lending has begun to 

taper in his area due to fewer sales because of low inventory 

and a decreased demand for refinancing. Member Mongold 

indicated that labor shortages and supply chain issues have 

impacted housing construction. Member Wharton observed that the 

cost per square foot has increased from approximately $300 to 

$500, and in the past three years, construction costs have 

increased between 40 and 60 percent. Member Wharton also noted 

that bank employees commute significant distances due to a lack 

of affordable housing in the area. 

Members reported varying levels of commercial lending 

activity. Member Horvat observed commercial real estate lending 

continues to be very strong with investors taking advantage of 

low interest rates. He also noted that there has been a 

considerable increase in construction projects during the year, 

with an increase in demand for high-bay industrial properties. 

Member Andersen noted that customers and businesses are turning 

their buildings into condominiums. Member West indicated 

commercial loan demand has been moderate compared to prior 

years. Member Bock indicated that commercial lending volumes 

have been impacted by declining inventory levels, which have 

reduced financing needs. 

Regarding agriculture, members described varying results 

for harvests. Members Bock and Johnson observed strong yields 

and commodity prices. Member Hayes noted that yields are down 

primarily due to a drought, but commodity prices have been 

consistent. Member West reported that agriculture has been 

difficult across all of Montana due to a tremendous drought and 

a sizeable grasshopper hatch. Member Getzlaff explained that 

despite crop failings, her bank’s portfolio remains strong due 

to crop insurance, stimulus payments, farm payments, and 

Paycheck Protection Program (PPP) loans. 

Some members described improvement in the hospitality 

industry. Member Mongold noted that the summer tourist season 

had far fewer visitors than pre-COVID years, but was better than 

2020. Member Horvat shared that the summer tourism season was 

strong. However, he indicated that restaurants had to close for 

more hours than anticipated due to staffing shortages and, 

therefore, could not take advantage of strong customer demand. 

Similarly, Member Bock noted that the hospitality industry 

considerably improved; however, labor shortages are forcing 

businesses to close two or three days per week. 

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Banking Conditions. 

Several members reported strong banking conditions in their 

institutions and local markets, but some expressed varying views 

on whether such conditions will continue into 2022. Members 

also discussed the effect of asset and deposit growth on capital 

and earnings. 

Many members reported strong capital positions at their 

institutions, however, some members did report a decline in 

capital ratios due to asset growth. Most members reported a 

rise in deposits. Member Pitkin reported that some bankers are 

begrudgingly turning away large local community deposits to 

limit future capital erosion. 

Members Pitkin, Kelly, Wharton, and Johnson discussed 

leverage ratios. Member Pitkin expressed concern about 

continued leverage ratio pressure, especially as it relates to 

regulatory thresholds. Member Wharton echoed Member Pitkin's 

sentiments concerning the community bank leverage ratio. Both 

members asked the FDIC to continue to closely review this 

matter. Member Kelly said that the regulatory agencies may want 

to look at how they can help banks that have more assets on 

their balance sheets as this may impact them negatively as it 

relates to equity. Member Johnson indicated that leverage 

ratios are a primary concern for every banker that she talks to. 

Some members reported strong profitability, while other 

members expressed concerns regarding margin compression stemming 

in part from high liquidity levels and lower loan demand. Some 

members attributed lower loan demand to government payments and 

decreased inventory levels. Member West observed low demand for 

consumer loans due to stimulus payments provided by both the 

tribal government and the U.S. Government. Member Kelly noted 

challenges with loan growth in the minority market. Most 

members reported that delinquencies and deferrals remain low. 

Members indicated that their banks’ PPP loans have mostly 

been forgiven or paid off. Member Capobianco expressed a desire 

to find new revenue sources to replace the fee income from PPP 

loans as such loans diminish. He also noted that proceeds from 

many PPP loans have not been used; therefore, the funds remain 

on deposit with the bank, which is contributing to excess 

liquidity. Member Johnson touched on audits regarding PPP 

loans. 

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Member Pitkin expressed concern about the increasing number 

of retiring workers with banking experience. Member Pitkin said 

that many community banks in New Hampshire are finding that 

remote working options are necessary to retain and attract 

employees and overcome staff shortages. However, his bank 

continues to embrace the importance of having staff on-site to 

allow for personal interactions with customers. Members Wharton 

and Capobianco discussed increasing wages at their banks. 

Member Kitner indicated that, as a small community bank, staying 

competitive and finding talent are becoming increasingly 

challenging. 

Examinations. 

Members Kelly, Hayes, Horvat, Johnson, and Mongold 

expressed a preference for a hybrid format for examinations. 

Member Mongold elaborated on her bank’s virtual FDIC 

examinations this year. She noted that the examination team 

worked with her bank to reduce the number of uploaded documents. 

At the same time, Member Mongold stressed the importance of 

face-to-face meetings and the ease of providing additional 

information on loans or reports to on-site examiners as opposed 

to uploading information. 

Innovation and Technology. 

Members Capobianco and Kelly expressed concerns about 

cybersecurity. Member Kelly said there needs to be a more 

collaborative effort from the regulatory agencies regarding how 

banks deal with cybersecurity. 

Member Pitkin discussed partnerships with Fintech firms, 

including for lending, as a response to low margins, intense 

lender competition, and fewer investment alternatives. Member 

Pitkin was encouraged by the direction that the FDIC is taking 

to embrace the prudent use of financial technology and 

innovation to enhance customer experience and to create a more 

diverse and equitable banking system. Member Kelly said that 

the banking industry and regulators should be thinking about 

cryptocurrency. 

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Other Topics. 

 

Member Getzlaff expressed concern about the impact on 

smaller lenders of the Consumer Financial Protection Bureau’s 

(CFPB’s) proposal regarding small business lending data 

collection per Section 1071 of the Dodd-Frank Wall Street Reform 

and Consumer Protection Act. Member Getzlaff noted that since 

some communities have only one dentist, hair salon, or butcher, 

the proposed reporting requirements for small business loans 

might result in disclosure of the identities of borrowers. 

Member Getzlaff also noted that, as a result of such data 

collection, customers may avoid hometown banks and instead 

choose larger, out of area banks to maintain privacy. She hopes 

the FDIC will advocate on behalf of community banks so that the 

CFPB’s proposed regulation establishes tiers based on bank size. 

Following the Committee member roundtable discussion, Ms. 

Kea introduced FDIC staff members to discuss national and 

regional observations. Shayna Olesiuk, Associate Director, 

National and Regional Risk Analysis, Division of Insurance and 

Research (DIR), presented on the national economy and banking 

trends. Then John Henrie, Regional Director, Atlanta Region, 

and Greg Bottone, Regional Director, Chicago Region, presented 

regional perspectives. 

Following this discussion, Ms. Kea thanked the members and 

FDIC staff for their presentations. She then announced that the 

meeting would stand in recess. Accordingly, the meeting stood 

in recess at 3:10 p.m. 

Update from the Minority Depository Institutions Subcommittee 

The Committee reconvened at 3:25 p.m. Ms. Kea introduced 

Member Narvaez and Betty Rudolph, National Director, Minority 

and Community Development Banking, to present an update on the 

Minority Depository Institutions Subcommittee, which met on 

November 2, 2021. Ms. Kea pointed out that Ms. Rudolph is the 

new Director of the FDIC’s recently created Minority and 

Community Development Banking Office. 

FDITECH Update 

Next, Ms. Kea introduced Sultan Meghji, Chief Innovation 

Officer, Office of Innovation, who provided an update on the 

FDIC’s ongoing technology initiatives. 

November 3, 2021 
Ms. Kea then introduced Diane Ellis, Director, DIR, and 

Daniel Hoople, Financial Economist, DIR, to share an update on 

community bank research. Ms. Ellis provided an overview of the 

2021 Community Bank Research Conference. Next, Mr. Hoople 

focused his presentation on how community banks’ use of 

technology supported loan and deposit growth during the 

pandemic. 

 

Ms. Kea then introduced Martin Henning, Deputy Director, 

Operational Risk, Division of Risk Management Supervision, to 

provide an update on information technology supervision. 

Following the presentation, Member Pitkin indicated that 

the challenge as it related to technology is not necessarily 

banks themselves, but their customers, whose primary concern is 

the two-factor authentication process. He inquired about 

potential avenues for communicating with consumers regarding the 

importance of two-step authentication. 

Mr. Henning asked Member Pitkin whether he senses any 

change in consumer reaction to authentication requirements. 

Member Pitkin indicated that initially, customers are resistant 

to setting up two-factor authentication; however, they seem less 

concerned once the process is complete. He emphasized that 

better communication with consumers is needed. 

Mr. Henning noted that he has heard that over time the 

technologies for providing the second factor of authentication 

are becoming easier to use. Therefore, the problem may be 

improving across the industry. He stated that he appreciated 

Member Pitkin’s feedback. Citing prior FDIC publications 

directed specifically to consumers, with many articles about 

information security and how consumers can protect themselves, 

Mr. Henning said the new FFIEC publication provides another 

opportunity to educate consumers on the importance of security. 

 

Next, Member Kelly thanked Mr. Henning for his remarks and 

encouraged continuing the discussion. Member Kelly recalled his 

earlier characterization of cybersecurity as an arms race, which 

community banks will have to continue to deal with, more 

strongly as a collective body than as individual institutions. 

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Community Bank Research 

Information Technology Supervision Update 

November 3, 2021 
630 

Closing Remarks 

_____________________________ 

Ms. Kea thanked all of her FDIC colleagues who presented, 

and expressed her deepest gratitude to the Committee members for 

their insights and open, honest sharing. Then Ms. Kea turned 

the meeting over to Director Gruenberg for his closing remarks. 

Director Gruenberg thanked all Committee members for their 

participation, and he said their input and impact on the FDIC 

over the Committee’s years of existence cannot be overstated. 

He thanked Committee members whose terms expire at the end 

of the year, and for whom this is their last Committee meeting: 

Shaza Andersen, Sarah Getzlaff, Stephen Hayes, Kenneth Kelly, 

Patty Mongold, and Mark Pitkin. On behalf of everyone at the 

FDIC, Director Gruenberg thanked them for the time and effort 

they devoted to the Committee. He noted that the FDIC has 

benefitted greatly from their service and looks forward to 

continuing engagement with them as distinguished alumni of the 

Committee. 

There being no further business to discuss, Director 

Gruenberg adjourned the meeting at 4:46 p.m. 

(Whereupon, the above entitled matter went off the record 

at 4:46 p.m.) 

Debra A. Decker 

Federal Deposit Insurance Corporation 

Deputy Executive Secretary 

and Committee Management Officer 

FDIC Advisory Committee on Community Banking 

November 3, 2021 
 

 

________________________________ 

Minutes 

of the 

Meeting of the FDIC Advisory Committee on Community Banking 

of the 

Federal Deposit Insurance Corporation 

Held in the Board Room 

Federal Deposit Insurance Corporation Building 

Washington, D.C. 

Open to Public Observation Via Webcast 

November 3, 2021 – 1:00 P.M. 

I hereby certify that, to the best of my knowledge, the attached minutes are accurate and 

complete. 

Jelena McWilliams 

Chairman 

Board of Directors 

Federal Deposit Insurance Corporation