ARLINGTON, Va., May 15, 2019 /PRNewswire/ -- More than 8 in 10 respondents to a recent deep-dive survey of bankers nationwide by Promontory Interfinancial Network said that the federal government should allow banks to serve businesses that sell marijuana commercially.
Thirty-three states and the District of Columbia have enacted laws that broadly legalize marijuana in some form, but federal law still treats marijuana as an illegal substance. Eighty-two percent of the executives surveyed at 453 unique banks said they want to be able to serve businesses that commercially sell marijuana. Support was highest in the West (89%) and the Midwest (85%).
The results strongly suggest that bankers eye marijuana-based business as an opportunity for growth.
Legislation has been introduced in the House and the Senate to address the issue. At the end of March, the House Financial Services Committee approved legislation to increase marijuana-based businesses' access to banks by a 45-to-15 vote. Both the American Bankers Association and the Independent Community Bankers of America have called on the federal government to address the split between state laws and federal laws.
Promontory Interfinancial Network conducted the Bank Executive Business Outlook Survey between April 2 and April 12, 2019. The 453 banks responding in the survey represent more than eight percent of the banks in the country.
On other issues, the survey found that while bank leaders remain glum about the future of the U.S. economy, they expect improved conditions for the banking industry as they look ahead 12 months.
"Like the rest of us, bankers are on the fence as to which direction the economy is headed," said Mark Jacobsen, President and CEO of Promontory Interfinancial Network. "The good news is that bankers may be feeling more positive about their industry as this quarter's survey shows banker confidence on its first upswing in five quarters."
The survey also found:
- Nearly half (48%) of responding bank leaders (CEOs, presidents, and CFOs) believe economic conditions for their bank will be the same 12 months from now. However, only 17% expect conditions to improve. That represents a 5-point drop from last quarter and a 38-point drop from the same time last year, revealing growing pessimism.
- At the same time, the Bank Confidence IndexSM (a composite measure of deposit competition, funding costs, loan demand, and access to capital looking ahead 12 months) recovered somewhat from the record lows recorded in the fourth quarter of 2018. The Index, which landed at 46.3, remained below the benchmark of 50.0 for the fifth quarter in a row, but reversed a downward trend recorded for four straight quarters. Much of this reflects a change in banker expectations for funding costs; while a majority (58%) expect funding costs to rise in the next 12 months, the Q1 2019 number is down substantially from last quarter (-30 points) and from Q1 2018 (- 34 points).
In other survey highlights:
- Although more than one-third of respondents (36%) indicated that tech giants (like Facebook, Apple, Amazon, Netflix, and Alphabet's Google) have too much power and agreed that breaking up these companies would strengthen the U.S. economy, nearly two-thirds (64%) disagreed.
- When bank executives were asked which one subject they would recommend to a college student who aspires to work in a similar position, more than three-quarters (77%) recommended focusing on Finance & Accounting (54%), Business Management (17%), or Economics (6%). Few picked Technology/Computer Science (6%) or liberal arts subjects, with Communications scoring the highest among those (11%) and Mathematics, History, Sociology/Psychology, and Political Science each chosen less than 2% of the time.
- Fifty percent of respondents reported that commercial real estate loans — not commercial and industrial loans, home mortgages, or consumer loans — represent the biggest credit risk for their banks if the next economic downturn happens later this year.
Read more, including what bank leaders thought of the recently announced merger of BB&T and SunTrust, and see details, including trend information and geographic and asset-size variations for banker experiences (over the past 12 months) and forecasts (for next 12 months) with respect to deposit competition, funding costs, loan demand, and access to capital measures, in the full Q1 2019 Bank Executive Business Outlook Survey report.
The report incorporates responses from CEOs, presidents, and CFOs from 453 unique banks across the country. This is the 17th survey published by Promontory Interfinancial Network. New data is released every quarter and annual summaries are available. An archive of all previous surveys can be found on Promnetwork.com.
About Promontory Interfinancial Network, LLC
Promontory Interfinancial Network – the inventor of reciprocal deposits and the nation's largest deposit allocation service provider – provides balance sheet and liquidity management solutions to help financial institutions grow franchise value. The company has been chosen by thousands of banks and since its founding nearly two decades ago, has assembled the largest bank network of its kind.
SOURCE Promontory Interfinancial Network