Financial Industry Perspectives contains articles by the Supervision and Risk Management Division on a variety of banking issues and topics.


Trends in Residential Mortgage Loan Originations and Their Impact on Community Banks

By James Harvey
The residential real estate market in the United States has experienced dramatic deterioration in the last several years. This deterioration has led to large declines in lending across the board, by type and size of lender. This study examines these trends, with particular emphasis on the effect of loan securitization and how it impacted different types of lenders. The study found that insured institutions, and especially smaller banks, have seen a substantial increase in their share of the residential real estate market over the last several years. The paper analyzes the potential implications of these changes on the various providers of residential real estate finance.

Lending Competition of Community Banks and the Farm Credit System

By Eric Robbins
This study examines the sources of loan competition that community banks have faced and how the nature of that competition has changed over the years, as regulations were altered that previously limited bank branching or the activities of other competitors, like thrifts and credit unions, or nonbanks, including government-sponsored enterprises. Specifically, this study looks at how the Farm Credit System and farm credit associations are attracting increasing attention from many community banks as significant loan competitors.


Survey of Community Banks

By Eric Robbins and Forest Myers
The Federal Reserve Bank of Kansas City periodically surveys Tenth District community banks on their views of the challenges they see ahead and how their business strategies will address these challenges.  This article reviews what bankers told us about their competitive environment and future challenges, regulatory burden, and staffing and governance challenges. 

The Changing Influence of Market Structure on Performance in Rural Banking Markets 1985 Through 2005

By James Harvey and Forest Myers
This study analyzes the impact of market concentration on the performance of banks in rural banking markets and attempts to determine if the influence of market concentration has changed over the last 20 years. It offers some evidence that the relationship between traditional measures of market concentration and bank performance may be changing, which may have implications for the application of antitrust policy in markets of this type.


The Changing Banking Structure: What Expansion Strategies are Community Banks Adopting?

By James Harvey and Kenneth Spong
While much consolidation has occurred among larger banking organizations over the last several decades, the majority of acquisitions and branch expansions have involved community banks. This paper reviews these consolidation trends, concentrating on small banks that have expanded beyond their traditional markets, and analyzes how successful these strategies have been with regard to growth, earnings, capital adequacy, and other measures of performance.

Home Financing in Kansas City and Its Contribution to Low-Moderate-Income Neighborhood Development

By James Harvey and Kenneth Spong
This article explores the recent increase in home financing to low- and moderate-income neighborhoods in the Kansas City metropolitan area and the effect of such financing on neighborhood conditions and local residents.


Location, Location, Location: Has Electronic Banking Affected the Importance of Bank Location?

By Eric Robbins
This article explores trends in consumer adoption of electronic banking products and services between 1995 and 2004. The article also discusses whether increasing use of electronic banking has affected consumer sentiment regarding the importance of bank location.

Strategies for Banking the Unbanked: How Banks are Overcoming Entrance Barriers

By Eric Robbins and Patrick Contreras
As consumer demographics continue to change, an increasing percentage of the U.S. population is represented by those of Hispanic origin.  For financial institutions, this change is significant because many Hispanic consumers lack formal banking relationships.  They are unbanked.

This article discusses future population projections and how these changes are playing out in the Tenth District states.  The authors also describe survey results from the Federal Reserve Bank of Kansas City's survey of Hispanic consumers in Garden City, Kansas.  These survey results help explain why many Hispanic consumers are unbanked.  In addition, the article describes strategies used by Garden City bankers to overcome barriers that contribute to Hispanic consumers remaining unbanked.