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The Meeting of the Advisory Committee on Community Banking

of the

Federal Deposit Insurance Corporation

Held in the Board Room

Washington, D.C.

Open to Public Observation

October 5, 2023 – 9:00 A.M.

The meeting of the Federal Deposit Insurance Corporation 

(FDIC) Advisory Committee on Community Banking (Committee) was 

called to order by Martin J. Gruenberg, Chairman, FDIC Board of 

Directors. 

Committee members in attendance: Thomas Bates, President 

and CEO, Legends Bank, Clarksville, Tennessee; Mike Bock, CEO, 

Dairy State Bank, Rice Lake, Wisconsin; Troy Campbell, President 

and CEO, Altoona First Savings Bank, Altoona, Pennsylvania; 

Anita Drentlaw, President and CEO, New Market Bank, New Market, 

Minnesota; Susan Horton, President, CEO, and Chairman of the 

Board, Wheatland Bank, Spokane, Washington; Harold (Hal) Horvat, 

President, CEO, and Chairman of the Board, Centreville Bank, 

West Warwick, Rhode Island; Warren Huang, General Counsel, 

Amerasia Bank, Flushing, New York; Robert James II, Executive 

Vice President, Carver State Bank, Savannah, Georgia; Cynthia 

(Cindy) Kitner, President and CEO, Jefferson Security Bank, 

Shepherdstown, West Virginia; Trey Maust, Executive Chairman, 

Lewis & Clark Bank, Oregon City, Oregon; Dominik Mjartan, 

President and CEO, OPTUS Bank, Columbia, South Carolina; Arlen 

Osterbuhr, CEO and Chairman of the Board, Minden Exchange Bank &

Trust Company, Minden, Nebraska; April Perry, CEO and Chairman 

of the Board, Kentucky Farmers Bank Corporation, Ashland, 

Kentucky; Shane Pilarski, President and CEO, Alliance Bank, 

Francesville, Indiana; Kim Reigelsberger, President, Preferred 

Bank, Rothville, Missouri; Troy Richards, President, Guaranty 

Bank & Trust Company, Delhi, Louisiana; and Lillous Ann 

Shoemaker, President, Magnolia State Bank, Bay Springs, 

Mississippi.

Committee members absent from the meeting: Michael Culhane, 

President and CEO, North Cambridge Co-operative Bank, Cambridge, 
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Massachusetts; and Andrew West, President and CEO, Eagle Bank, 

Polson, Montana.

FDIC Vice Chairman Travis J. Hill also attended the 

meeting.

FDIC staff in attendance: Lisa D. Arquette, Michael B. 

Benardo, Tawanta L. Brinson, Luke Brown, Charmion L. Haley, 

Navid K. Choudhury, Suzanne L. Clair, Angela Dean, Debra A. 

Decker, Sheila R. Finlayson, Fasil Getachew, Shannon N. Greco, 

Mark L. Handzlik, Lance Jameson, Rosilyn L. King, Thomas F. 

Lyons, Krishna Patel, Mark E. Pearce, Nikita Pearson, Harrel M. 

Pettway, Ariana L. Rambuyan, Lisa K. Roy, Betty J. Rudolph, 

Camille C. Schmidt, James P. Sheesley, Nefretete A. Smith, Mona 

L. Thomas, Benjamin Tikvina, and Katrice L. Yokley.

Chairman Gruenberg opened the meeting and presided over the 

proceedings. Nikita Pearson, Deputy to the Chairman for 

External Affairs and Director, Office of Minority and Women 

Inclusion, moderated the proceedings. 

Introductory Remarks

Chairman Gruenberg began by welcoming everyone and noted 

that he looked forward to hearing the Committee members’ 

feedback. He acknowledged Vice Chairman Hill, who also welcomed 

everyone, expressing that he too was looking forward to hearing

the perspectives of the Committee members. Chairman Gruenberg 

then recognized Ms. Pearson to proceed with moderating the 

program.

Discussion of Banking Conditions

Ms. Pearson introduced Krishna Patel, Section Chief, 

Division of Insurance and Research (DIR), Benjamin Tikvina, 

Section Chief, DIR, and Camille Schmidt, Section Chief, Division 

of Risk Management Supervision (RMS), to provide an overview of 

banking conditions with particular emphasis on economic 

conditions, funding and interest rate risk, and credit risk. 

Following the briefings, FDIC staff invited members to provide 

their thoughts on these topics and any other risks and areas of 

concern to the bankers. 

Member Reigelsberger began the discussion by stating that

her institution has raised deposit rates, but not by much, which 

has allowed the institution to keep loan rates low. Member 

Mjartan commented that interest expense at his institution is 
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increasing, but he is starting to see the yield on earning 

assets rise almost in sync. A few members noted they have 

increased their certificate of deposit (CD) rates, with some

offering CD specials. Member Perry mentioned that credit unions 

are huge competitors for deposits in her area and have expanded 

their reach. Several members added that they have lost deposits 

to investment firms.

Members Richards, Mjartan, and James expressed that the 

definition of core deposits is outdated and should be updated.

At the conclusion of this portion of the discussion, Ms. 

Pearson called for a short recess at 10:04 a.m. The meeting 

resumed at 10:21 a.m.

Discussion of Banking Conditions (Continued)

Member Shoemaker commented that growth in commercial and 

residential real estate is strong in her area. She noted an 

increase in the number of people moving into the state, which is 

a contributor to the strong real estate market. Several members 

commented on the decline in residential real estate loans. 

Member Perry mentioned that loan demand is still strong, but 

that she is seeing a shift in the types of loans they are 

making, with greater numbers of short-term and installment 

loans. However, Member Drentlaw commented that she is starting 

to see a lack of loan demand for various reasons, such as higher 

interest rates, increased wages, and elevated equipment prices. 

Some members noted that they are tightening their lending 

standards, particularly the debt service coverage ratio, while 

Member Perry stated that her institution is making exceptions to 

the loan policy for auto loans due to the premium that consumers 

are having to pay for vehicles. 

Several members expressed concern about the current and 

future economy. Member Bock stated that senior housing and 

assisted living are loan portfolios that he is concerned about 

in the next three to five years.

2022 Financial Institution Diversity Self-Assessments

Ms. Pearson provided a briefing on the Financial 

Institution Diversity Self-Assessment for 2022, issued by the 

FDIC in accordance with Section 342 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act of 2010. She 

encouraged the members to have their institutions complete the 
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voluntary self-assessment by the extended deadline of 

October 20, 2023. She also shared how the self-assessment could 

benefit the members and their FDIC-supervised institutions by 

helping them to assess and enhance their diversity policies and 

practices. Members followed up by asking questions regarding

how to access the self-assessment and the anonymity of bank

submissions.

Update from the Minority Depository Institutions Subcommittee

Ms. Pearson then recognized Betty Rudolph, Director, Office 

of Minority and Community Development Banking, and Warren Huang,

General Counsel, Amerasia Bank, who serves as a Committee member

and a member of the Minority Depository Institutions (MDI) 

Subcommittee. Ms. Rudolph and Mr. Huang provided an overview of 

the MDI Subcommittee and a summary of its meeting held the prior 

day, October 4, 2023.

Ms. Rudolph began by providing background information about 

the purpose, goals, and composition of the MDI Subcommittee.

Member Huang announced that the MDI Subcommittee had no 

current recommendations for the FDIC. He then provided a 

summary of the discussion topics from the MDI Subcommittee 

meeting. 

Member Huang also mentioned that the Subcommittee received 

information about the upcoming Interagency MDI/Community 

Development Financial Institution Bank Conference. There were 

no questions from Committee members.

At the conclusion of this report, the meeting stood in 

recess for lunch from 11:33 a.m. to 1:07 p.m.

Supervision and Policy Updates

The proceedings resumed with Ms. Pearson recognizing 

Suzanne Clair, Associate Director, RMS; Lisa Arquette, Deputy 

Director, RMS; and Mark Pearce, Director, Division of Depositor 

and Consumer Protection (DCP), to begin the briefing on various 

supervision and policy matters and updates.

Ms. Clair began by highlighting various asset-liability 

management charts detailing trends in liquidity and interest 

rate risk at community banks. She then discussed the addendum 

to the 2010 Interagency Policy Statement on Funding and 

Liquidity Risk Management.
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Member Richards asked about expectations regarding banks 

having access to the discount window.

Chairman Gruenberg responded by discussing lessons learned 

from failures earlier this year and banks being prepared to

access the discount window during a stress event. He asked the 

Committee members to discuss their views on whether there is a 

potential stigma associated with accessing the discount window.

A number of members noted that they have discount window 

access and that there is no or very little stigma attached to 

using the discount window. Member Richards expressed more 

concern about regulatory views than a public stigma.

Member Maust asked about the regulatory view of the use of 

reciprocal deposits. Ms. Clair answered that reciprocal 

deposits are viewed as wholesale, but highlighted that it is 

difficult to compare to other funding sources.

Ms. Arquette then discussed banking cannabis-related 

businesses. She emphasized that the FDIC recognizes the 

importance of ensuring public access to financial services for 

consumers and businesses. She noted that the decision to open, 

close, and decline particular account relationships is made by 

the bank and should be based on business objectives of the bank, 

the evaluation of associated risks posed by individual customers 

on a case-by-case basis, and implementation of controls to 

manage the relationship commensurate with the risks. She 

stressed that as a general matter the FDIC does not direct how 

banks should handle certain accounts without regard to the risks 

presented by an individual customer or the bank’s ability to 

manage those risks. Ms. Arquette also discussed regulatory 

requirements regarding marijuana-related businesses.

Members commented on the difficulty in monitoring 

businesses that may sell cannabis-derived products and expressed 

concern about the depth of review in Bank Secrecy Act 

examinations, particularly regarding indirect relationships with 

marijuana-related businesses. 

Ms. Arquette affirmed that the level of risk tolerance is 

at the discretion of each institution. She also noted that 

current guidance does not address indirect relationships, only

direct relationships between banks and their customers.
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Next, Thomas Lyons, Associate Director, RMS, and Luke 

Brown, Associate Director, DCP, were recognized to discuss 

recently issued guidance.

Mr. Lyons first provided an overview of the Policy 

Statement on Prudent Commercial Real Estate Loan Accommodations 

and Workouts, issued on June 29, 2023.

Member Richards addressed the regulatory request for 

comment regarding Call Report changes and shared his view that a 

definition for modification for borrowers experiencing financial 

difficulty should be kept simple.

Mr. Brown and Mr. Lyons then provided an overview of the 

Interagency Guidance on Third-Party Relationships.

Member Maust requested feedback regarding how to oversee 

third-party activities as if the bank were conducting the 

activities. Mr. Lyons stated that banks need to understand the 

ramifications of contracts into which they enter and perform 

appropriate due diligence. Mr. Brown added that the guidance 

provides a helpful framework that applies to different types of 

relationships.

Member Richards inquired how far FDIC responsibility 

extends as it pertains to notifying banks of bad actors within 

the financial services industry. Ms. Arquette noted that, to 

date, the focus has been on issues that may impact the bank’s 

ability to continue to operate, but that the FDIC is exploring 

ways, with its counterparts at the other agencies, to handle 

things differently given the complexities that have entered into 

the financial system and what may be critical to an institution.

Members expressed interest in the FDIC providing a list of 

acceptable or unacceptable Fintechs or third parties to keep

bankers informed. Mr. Pearce responded that the FDIC would not 

provide such lists, and he outlined the FDIC’s lack of direct 

regulatory authority over Fintechs and non-banks.

Ms. Pearson next introduced Lance Jameson, Product Owner, 

FOCUS, DCP, to provide a briefing on the Banker Engagement Site, 

a secure portal for consumer compliance and Community 

Reinvestment Act examination activities.

Lastly, Mr. Pearce provided an update on the FDIC’s “Return 

to Banks.” He shared that about a year ago the FDIC returned to 

in-person on-site examinations at state non-member banks. He 
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emphasized that prior to the pandemic, the FDIC had a hybrid 

approach to examinations, with some work done in-person and some 

done remotely/virtually. He noted that the FDIC continues to 

refine the mix of on-site versus off-site bank examination work. 

Members followed by sharing their views, experiences, and 

preferences regarding on-site versus off-site examination work 

of FDIC staff.

Closing Remarks

Chairman Gruenberg thanked the Committee members and 

presenters for their time, commitment, and meaningful engagement 

in today’s discussions. He then thanked the following members 

who would be rolling off of the Committee at year-end due to 

term expirations: Mike Bock (Dairy State Bank, Rice Lake, 

Wisconsin); Hal Horvat (Centreville Bank, West Warwick, Rhode 

Island); Cindy Kitner (Jefferson Security Bank, Shepherdstown, 

West Virginia); Arlen Osterbuhr (Minden Exchange Bank & Trust 

Company, Minden, Nebraska); Shane Pilarski (Alliance Bank, 

Francesville, Indiana); and Andrew West (Eagle Bank, Polson, 

Montana). 

There being no further business, Chairman Gruenberg 

adjourned the meeting at 3:00 p.m.

________________________________________

Debra A. Decker

Federal Deposit Insurance Corporation

Executive Secretary

and Committee Management Officer

FDIC Advisory Committee on Community Banking
The Meeting of the Advisory Committee on Community Banking

of the

Federal Deposit Insurance Corporation

Held in the Board Room

Washington, D.C.

Open to Public Observation via Webcast

October 5, 2023 – 9:00 A.M.

I hereby certify that, to the best of my knowledge, the attached 

minutes are accurate and complete.

________________________________

Martin J. Gruenberg

Chairman

Board of Directors

Federal Deposit Insurance Corporation