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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 

April 13, 2021 - 1:00 P.M. 

The meeting of the FDIC Advisory Committee on Community 

Banking (Committee) was called to order by Jelena Mcwilliams, 

Chairman, Federal Deposit Insurance Corporation (FDIC) Board of 

Directors. 

Committee members present at the meeting: Shaza Andersen, 

CEO, Trustar Bank, Great Falls, Virginia; Mike Bock, CEO, Dairy 

State Bank, Rice Lake, Wisconsin; Sarah Getzlaff, CEO, Security 

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

Hayes, Chairman and President, Dakota Prairie Bank, Ft. 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; 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 

Savings Bank, Ottumwa, Iowa; Patty Mongold, Chairperson, 

President, and CEO, Mt. McKinley Bank, Fairbanks, Alaska; 

Gilbert Narvaez, Jr., President and CEO, Falcon International 

Bank, Laredo, Texas; Margaret Oldner, CEO, Stone Bank, Mountain 

View, Arkansas; Mark Pitkin, President and CEO, Sugar River 

Bank, Newport, New Hampshire; Andrew West, President and CEO, 

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

CEO, Yampa Valley Bank, Steamboat Springs, Colorado. All members 

attended via videoconference. 

Director Martin J. Gruenberg attended the meeting. 

Corporation staff in attendance: John M. Anderlik, James L. 

Anderson, Bobby R. Bean, Sylvia W. Burns, Mary Calkins, Glenn E. 

Cobb, John P. Conneely, Kymberly K. Copa, Debra A. Decker, Paola 

L. Diaz, Doreen R. Eberley, Diane Ellis, Kristie K. Elmquist, G.

Chris Finnegan, Jasa J. Gitomer, Ledina Gocaj, Shannon N. Greco, 

Patricia S. Gurneau, Martin D. Henning, Christine Hsu, Frank R. 

Hughes, Arleas Upton Kea, M. Anthony Lowe, Christopher Lucas, 

Sultan Meghji, Brandon Milhorn, Jonathan N. Miller, Rae-Ann 

Miller, Arthur J. Murton, Shayna Olesiuk, Elizabeth Ortiz, M. 

Rowie Pangilinan, Eric Parker, Mark E. Pearce, Nikita Pearson, 

Harrel M. Pettway, Nicholas J. Podsiadly, D. Evelyn Rainey, 

Ariana L. Rambuyan, Ryan M. Rappa, Lisa K. Roy, Betty J. 

Rudolph, Ryan C. Senegal, Michael Shaheen, James P. Sheesley, 

Maureen E. Sweeney, Mona Thomas, John F. Vogel, and Katrice L. 

Yokley. 

Chairman Jelena Mcwilliams opened and presided at the 

meeting. Arleas Upton Kea, Deputy to the Chairman for External 

Affairs and the Committee's Designated Federal Officer, 

moderated the proceedings. 

Introductory Remarks 

Chairman Mcwilliams welcomed members to the Committee's 

first meeting of 2021 and thanked them for making time to 

participate. She noted much had happened since the Committee 

last met in October 2020. She briefly commented on the FDIC's 

focus on core safety and soundness principles and its COVID 

response. She noted that bank regulators issued many 

rulemakings in 2020 to ensure banks had the flexibility to 

support the economy and their communities. While optimistic 

about the economic outlook, she said the FDIC will continue to 

monitor economic conditions and the state of the banking

industry. 

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toward reopening. This included many member reports of loosened 

restrictions and return to in-office work at their institutions. 

However, the reported experiences varied, with some members 

reporting full reopening and others describing continued lobby

closures and reliance on virtual meetings to conduct some 

business. Member Andersen's comment that, "there is positive 

momentum in this country in fighting COVID, and in our economic 

rebound," was a common sentiment expressed by various members. 

All members touched on community banks' role in supporting

businesses and individuals through the pandemic. Member 

Getzlaff noted that, "COVID proved more than ever that our 

banking system works really well and community banks are 

especially strong." She continued by stating that "they meet 

all the needs of our main streets and our communities." On this 

point, all but one member described their experiences with the 

Paycheck Protection Program (PPP). Members provided statistics 

on their loan originations in each stage of the program, with 

Members Lowry, Oldner, and Hayes noting recent extensions of 

such loans to farmers and ranchers. Member Horvat said that the 

PPP program offered community banks an opportunity to 

differentiate themselves from the larger competition. Member 

Wharton also identified PPP as an opportunity for community

banks to shine compared to the mega banks. Member Mccurry

described his pride in his institution's efforts to educate the 

community on how to access PPP loans. It was evident that 

service opportunities extended beyond loan origination, with 

members discussing the loan forgiveness process and 

institutions' efforts to assist customers in navigating the 

process. Member Narvaez commented on recent improvements in the 

process by the Small Business Administration. 

Member Kelly noted that there was still opportunity for 

improvement with the PPP. He described indications from the 

National Bankers Association, Urban League, and NAACP that the 

PPP did not reach deeply into some communities. He called on 

bankers to take a leadership role in addressing the challenges

that led to such disparities and noted the FDIC's Mission Driven 

Bank Fund as a measure intended to increase this reach. 

Economic Conditions. Members reported improved economic 

conditions, especially compared to the challenging period at the 

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outset of the pandemic. Several members noted improved 

employment statistics, though a few noted that employment had 

not recovered to pre-pandemic levels. Members Bock and Johnson 

noted uneven employment conditions in different regions within 

their states. Many members reported robust housing markets, 

with heightened single-family home sale prices and increased 

volumes. Some described housing shortages and affordability 

challenges, especially in states experiencing population growth

that some members attributed to COVID-19 pandemic-driven shifts. 

Member West observed some improvement in the hospitality 

industry in his state, following help by the PPP and forbearance 

agreements earlier in the pandemic. Member Bock noted that, 

within the sector, bars and restaurants were able to rebound, 

but hotels continued to struggle. Other members expressed 

concern regarding this sector, as well as hopes for improvement 

with the summer tourism season. Members described monitoring 

risk in other CRE sectors. Member Andersen said office 

vacancies remain high, but she also noted that transaction 

prices have been high, too. Member Mongold described her CRE 

risk management efforts but noted low delinquencies in that 

portfolio. 

Members from institutions with significant agriculture 

portfolios reported generally positive conditions. Member 

Messerschmitt said that both crop prices and land values were 

high. Member Hayes made similar observations regarding 

commodity prices, as did Member Johnson regarding land. Members 

West and Getzlaff expressed concern regarding drought conditions 

in their states. Most of the members who spoke about 

agriculture conditions mentioned the importance of government 

support to the sector's outlook. 

Banking Conditions. Members reported healthy banking 

conditions despite the challenges posed by the COVID-19 

pandemic. According to their reports, the increase in assets 

and deposits experienced earlier in the pandemic has continued. 

Some members reported continued asset growth, though Member Bock 

said his institution's loan growth was flat outside of PPP 

loans. Member Wharton reported that his institution had 

budgeted for a balance sheet reduction in 2021, but is now 

focusing on growth management. Members noted competition in 

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combining efforts to complete due diligence on these entities. 

Member Johnson explained that her institution relied on two 

FinTechs to originate PPP loans given that her institution was 

not a Small Business Administration lender. Members Mccurry,

Oldner, and Pitkin mentioned cybersecurity threats as management

challenges, with a reference to the recent SolarWinds, Finastra, 

and Microsoft incidents. 

Other Topics. Member Kelly noted interest in minority

banking and referenced Wells Fargo's $50 million investment in 

minority depository institutions (MDis). Members Johnson and 

Messerschmitt discussed merger activity involving their 

institutions, with Member Johnson relating brokers' comments 

that activity will increase due to a COVID-driven backlog.

Member Kitner commented on a local university's participation in 

the FDIC's Academic Challenge. She also called for regulatory

guidance on banking cannabis businesses given increasing statelevel legalization, noting that full resolution may require

Congressional action. Members Getzlaff and Johnson discussed 

state-owned banks, with Member Johnson expressing opposition to 

such an institution in her state and Member Getzlaff explaining

that her state might not need one if it had a bankers' bank. 

Members Getzlaff and Oldner also expressed opposition to special

charters. 

Following the committee member roundtable, 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 Frank Hughes, Regional Director, New York Region, and 

Kristie Elmquist, Regional Director, Dallas Region, presented

regional perspectives. 

Following this discussion, Ms. Kea announced the Committee 

would briefly recess. Accordingly, the meeting stood in recess 

at 3:10 p.m. 

Update from the Minority Depository Institutions Subcommittee 

The Committee reconvened at 3:20 p.m. Ms. Kea introduced 

Member Narvaez and Ms. Rudolph, National Director, Minority and 

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Community Development Banking, to present an update on the MDI 

Subcommittee, which met on April 12. 

FDIC Tech Lab Update 

Ms. Kea next introduced Sultan Meghji, FDIC Chief 

Innovation Officer, who provided an update on the FDIC's Office 

of Innovation (FDiTech). 

Following the presentation, Member Andersen asked how the 

recent decision by the Office of the Comptroller of the Currency 

to approve the first FinTech for a national banking charter 

would affect community banks, the FDIC, and banking in general, 

in light of the proliferation of FinTechs. Specifically, she 

asked Mr. Meghji's thoughts on a bank charter for a company 

without FDIC insurance. 

Mr. Meghji said he admires innovation in the banking 

sector. He noted that the FDIC is seeing tremendous innovation 

in FDIC-insured institutions, including innovation on their own 

as well as in collaboration with other banks and FinTechs. 

Member Pitkin praised regulators' openness toward banks 

working with FinTechs. He contrasted this openness to his 

experience years ago when his community bank partnered with the 

largest unsecured lender in the nation. He then asked how the 

FDIC is conveying its openness and transparency for innovation 

to examiners. 

Mr. Meghji indicated that some of the most interesting

innovations he has seen did not come from the biggest banks, but 

from community banks. He asked for patience as the FDIC 

communicates information to its approximately 6,000 employees

nationwide. 

Member Mccurry observed how cyberattacks have evolved from 

individual hackers to state-sponsored efforts and asked how 

banks can innovate and embrace technology given the need to 

partner with other organizations and grant access to the banks' 

systems. He also asked how to collaborate to ensure banks' 

systems are safe and perceived safe by customers. 

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Mr. Meghji agreed that banks and regulators need to act as 

a community to combat cyberattacks. He compared cybersecurity 

to innovation in that neither is primarily about technology, but 

combines people and processing with technology. He noted that 

banks need to extend their risk management programs to include 

training and communication about cybersecurity as well as 

process evaluations. He referenced the FinCyber Program at the 

Carnegie Endowment for International Peace, which addresses how 

to secure the global financial system and created a toolkit that 

included a communications and education program. 

Mr. Meghji further discussed resilience, the SolarWinds and 

Microsoft hacks, as well as ransomware technologies and service. 

He agreed cybersecurity is probably the greatest threat to our 

banking system. 

Member Mccurry then recommended that the FDIC consider 

forming a subcommittee akin to the MDI Subcommittee, allowing

bankers across the country to work together on cybersecurity 

issues. 

Member Hayes asked about overcoming smaller banks' 

resistance to technology innovation and whether education plays 

a role. Mr. Meghji cited people, processing, and technology as 

the key components. Recognizing that for many smaller banks, 

technology expense is second only to annual interest expense, 

Mr. Meghji recommended investing in people, by ensuring they 

hear about things like the FinCyber Program and receive 

continuing education. Second, he recommended evaluating 

processes, using resources from other institutions, trade 

associations, and other agencies and organizations. Third, he 

suggested that banks consider their strategy as they evaluate 

technology solutions. 

Member Wharton asked whether Mr. Meghji has interacted with 

the Independent Community Bankers of America (ICBA), recalling 

the first business day in January, when the core technology 

provider for many of its members went down. He said that 

incident inspired his participation in the ICBA ThinkTECH 

Accelerator Program, where bankers hear pitches from multiple 

providers. He encouraged interaction between the FDIC and the 

ICBA on that program. 

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Mr. Meghji confirmed that he recently spoke at an ICBA 

event, and agreed that many "amazing" resources exist, including 

trade associations. 

Concluding that session, Ms. Kea provided FDiTech's email 

address, innovation@fdic.gov. 

Supervision Update 

Next, Ms. Kea introduced a panel of RMS representatives to 

provide updates on supervisory matters. Doreen Eberley, 

Director, RMS, outlined the topics to be discussed. 

Next, Ms. Eberley provided an overview of the FDIC 

supervisory response to the pandemic, then John Vogel, Deputy 

Director for Operations and Chief of Staff, RMS, discussed the 

FDIC's conversion to offsite supervision during the pandemic. 

Then Rae-Ann Miller, Senior Deputy Director, Supervisory 

Examinations, RMS, described recent changes to the brokered 

deposit regulations and interest rate restrictions. 

Christopher Finnegan, Acting Senior Deputy Director of 

Compliance and CRA Examinations, Division of Depositor and 

Consumer Protection, concluded the panel presentation with 

insights regarding a pilot program relating to consumer 

compliance reports of examination, particularly for low-risk 

institutions. 

At the conclusion of the supervisory update, Ms. Eberley 

asked Bobby Bean, Deputy Director, Capital Markets and 

Accounting, RMS, to address comments members had raised about 

the CBLR during the roundtable discussion. 

Mr. Bean first discussed how the FDIC and other agencies 

are thinking about CBLR, particularly in light of large deposit 

growth and lending increases under the PPP, which led to 

significant balance sheet growth at community banks, posing a 

potential challenge to comply with the CBLR requirement as it 

transitions back to 9 percent. 

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He said the FDIC and other federal banking agencies will 

continue to actively monitor banking conditions, including

assessing balance sheet dynamics, reserve levels, and the 

potential strain on community banking organizations. He noted 

that the agencies want to ensure the CBLR framework reduces 

regulatory burden for qualifying community banks, in a manner 

that is consistent with safety and soundness principles and the 

goal of providing credit to households and businesses over a 

range of economic conditions. 

In response to a question from Member Hayes, Mr. Bean 

confirmed that the CBLR is in the process of transitioning back 

to 9 percent. 

With regard to the regulation on brokered deposits, Member 

Lowry asked whether the FDIC plans to further address the 

disparity between the high proportion of deposits held by

national banks (approximately 80 percent) versus the relatively

small portion held by community banks (approximately 20 

percent), and the disparity of rates. He expressed appreciation

for changes that had already been made, with hope that future 

changes might go further, with more opportunities for banks to 

provide input. 

Ms. Miller noted that the law requires a market rate and 

that larger institutions control more of the market. She 

explained that the FDIC made some changes to the regulation

based on comments received, including the addition of credit 

unions to the calculation. She further explained that the 

national rate is just one piece of the puzzle, and since the 

rate cap becomes effective when institutions become less than 

well-capitalized, the FDIC created additional flexibility within 

the rate cap, allowing the higher of the national rate plus 75 

basis points, or a comparable Treasury rate plus 75 basis 

points. Ms. Miller described that as a robust way for less than 

well-capitalized institutions to compete, within the law, while 

subject to restriction. She added that a much more flexible 

local rate cap exists for institutions that wish to compete

locally with specials, different types of maturities, etc. 

Member Lowry expressed a concern based on his view that the 

definition of well-capitalized is subjective, since an 

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institution can meet the statutory numbers and still be deemed 

less than well-capitalized. 

Ms. Miller explained that the definition of wellcapitalized is not subjective, as the capital ratios are defined 

by regulation. Acknowledging the text of the Prompt Corrective 

Action (PCA) thresholds with respect to enforcement actions, she 

said capitalization is not a subjective calculation. She added 

that experiences of subjectivity with respect to capital 

calculations and deposits are not appropriate and should be 

brought to the FDIC's attention. 

Next, Member Horvat praised the guidance issued at the 

outset of the pandemic, and he asked whether additional guidance 

with regard to asset quality will be issued as we are a year or 

more into the pandemic. He also sought insight into how 

examinations are currently handled with regard to asset quality, 

in light of financial statements from last year showing reduced 

income and companies not meeting their financial covenants. 

Ms. Eberley said the FDIC is not seeing significant asset 

quality deterioration, though there is some, along with some 

downgrades in internal ratings, indicating institutions 

themselves are recognizing increased risk among some borrowers 

for some of the situations cited. She said the level of that 

migration is not meaningful nor is it anything that is leading 

to significant changes in composite ratings. Ms. Eberley 

emphasized the importance of recognizing that if a loan will not 

be repaid in part or in full, it should be placed on non-accrual 

regardless of whether it is called a troubled debt 

restructuring. She noted that institutions may need to take a 

partial charge-off or rework the note. She said examiners are 

hearing such banker conversations now. She noted that the 

federal banking agencies are interested in updating interagency

guidance on CRE workouts. 

Ms. Miller pointed out that while the FDIC issues guidance 

to institutions, it also trains examiners, uses scenario 

analysis, and gives examiners instructions that are publicly 

available. Institutions can access the information and read 

about how examiners look at risk management and risk assessment. 

For example, she said even where loans might meet the definition 

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of substandard or worse, examiners will recognize where longerterm improvements might be possible even though near-term 

improvements may not be. As long as bank management is working 

to improve the situation, she emphasized, both the bank and 

borrower benefit. She added that banks went into the crisis 

with fairly strong risk management frameworks, healthy levels of 

capital, and strong earnings, all of which served the system

well when the pandemic hit. 

Next, Member Pitkin asked about "Fed Accountsn (Federal

Reserve Bank accounts for individuals, as proposed by some 

public policy writers). He noted that local community banks 

work hard to provide accounts to everyone in their communities 

and to obtain and retain those local deposits. He also observed 

that many community banks are located next to post offices, 

which might offer access to such Fed Accounts. He asked how the 

FDIC sees Fed Accounts affecting community banks going forward. 

Ms. Eberley responded that the competitive landscape is 

constantly changing for community banks, with a new competitor

always around the corner. She noted that community banks' 

competitive strength is their focus on local consumers and the 

wide range of services they provide in addition to deposit 

accounts, such as loans and other products and services based on 

relationships with the bank. 

Mark Pearce, Director of the Division of Depositor and 

Consumer Protection, then added that the FDIC has been working

hard to enhance customers' awareness of their options, including

the benefits of accounts at insured institutions, as evidenced 

by the "Get Bankedn initiative launched earlier in the month 

with a consumer-facing website. Noting that many banks offer 

low-cost accounts without some of the fees that affect people

living paycheck to paycheck. He said now is the best time for 

consumers to consider their options, given federal benefits, 

economic impact payments, and other factors directed toward 

consumers. A bank account linked to Internal Revenue Service 

information allows direct deposit, he explained, with funds 

accessible much faster than by mail. 

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Division of Insurance and Research Update: FDIC Community 

Banking Study and Agricultural Lending 

Ms. Kea then introduced John Anderlik, Assistant Director, 

National and Regional Risk Analysis, DIR, who presented on the 

FDIC's Community Bank Study published in December 2020 and the 

recent FDIC Quarterly article, "Farm Banks: Resilience Through 

Changing Conditions." 

Closing Remarks 

Ms. Kea invited closing comments from Director Gruenberg, 

who thanked the Committee members for their participation and 

noted that the Committee has existed for quite a while and 

proven itself a valuable asset to the FDIC and its supervision

of community banks. 

Chairman McWilliams closed the meeting by thanking the 

Committee members and presenters for their valuable time and 

feedback. Then she specifically thanked two people whose terms 

on the Committee ended the prior month: Dick Beshear, Chairman 

of the Board of First Security Bank and Trust Company in 

Oklahoma City, Oklahoma; and Cathy Stuchlik, Chairwoman and 

President of Clackamas County Bank in Sandy, Oregon. 

Having no further business to discuss, the meeting 

adjourned at 5:10 p.m. 

Debra A. Decker 

Federal Deposit Insurance Corporation 

Deputy Executive Secretary 

and Committee Management Officer 

FDIC Advisory Committee on Community Banking 

April 13, 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 

April 13, 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