- Associated Press - Sunday, February 28, 2016

AUBURN, Ala. (AP) - An Auburn University study said regulatory uncertainty and cyberattacks are among concerns about the chief threats to Alabama’s banking industry.

The report, “Alabama Banking: The State of the State’s Banking Industry,” examines the condition and performance of the state’s banks and incorporates data from 2000 to 2015, the Opelika-Auburn News (https://bit.ly/1WL8vuq) reported. It also outlines policy suggestions aimed at helping state banks better serve their customers.

A comprehensive look into the industry by faculty at Auburn’s Raymond J. Harbert College of Business also reveals that state banks issued $14 billion in small business loans by the end of the third quarter of 2015.

More than 386,000 small businesses in the state created more than 24,800 net new jobs as of 2012, based on the most recent data available.

Of the 131 banks headquartered in Alabama, all but eight are defined as “small” or “community” banks with less than $1 billion in assets.

The study is co-authored by finance professors James Barth, Jitka Hilliard and John Jahera and doctoral student Yanfei Sun.

The study’s co-authors say the banking industry still is coping with “a triple whammy: the impacts of the financial crisis on credit, the juggernaut of regulatory reforms, and competition in a field that reinvents itself at breathtaking speed.”

“We had major regulatory action in 2010 with Dodd-Frank and bankers have been bemoaning that ever since,” said Jahera, Lowder professor of finance. “From the bankers’ point of view, it added a lot of cost in terms of regulatory compliance.”

Seventy-three percent of bankers reported that their primary competitive threat comes from “non-bank” financial firms, which are subject to fewer regulations, while 70 percent of respondents view vulnerability to cyberattacks as a “serious concern.”

The researchers suggested an overall easing of regulations to enable banks to serve “underbanked or non-banked” consumers through short-term loans at lower rates than those offered by payday lenders. They also proposed that the harmful effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act be examined since recent regulations have increased costs for banks but not revenues.

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