Bloomberg Surveillance: Jill Castilla on Regional Banks
Jan 30, 2024
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Jill Castilla, CEO of Citizens Bank of Edmond, discusses the outlook for the banking sector in 2024, commercial real estate, and car loans. They explore the importance of smaller banks and diversity in the banking sector. They also discuss the impact of relationships between regional banks and the economy, failures in bank regulation and oversight, and the current state of auto lending and consumer debt.
Relationship bankers with intimate borrower knowledge are less vulnerable to weakening commercial real estate markets.
Smaller banks bring social capital and relevance to their communities through strong relationships and local sponsorships.
Deep dives
The Importance of Relationship Bankers in Commercial Real Estate
Relationship bankers who have intimate knowledge of their borrowers and have been disciplined in the last few years are not as vulnerable to weakening commercial real estate markets. Banks with distance from borrowers or outside the banking system are more susceptible to this weakness.
The Strength of Smaller Banks in America
Smaller banks in the United States have strengths such as diversity of deposits, low average deposit amounts, and non-interest-bearing deposits. These banks also have strong relationships with their local communities, including sponsoring local events and revitalizing downtown areas. The presence of thousands of small banks brings social capital and relevance to their communities.
Concerns and Considerations in Banking Regulations
The CEO of Citizens Bank of Edmond is concerned about the unintended consequences of new capital rules targeted at low-archer institutions. She believes that greater specificity in the rules can lead to transactions moving out of the banking system, potentially causing more harm to the economy. She also emphasizes the importance of decentralized regional examiners who understand local economies and can assess risks effectively, suggesting a need for regulatory structure that allows for autonomous risk assessment.
Citizens Bank of Edmond CEO Jill Castilla speaks on the outlook for the banking sector in 2024, commercial real estate and car loans with Bloomberg's Jonathan Ferro and Lisa Abramowicz