Community banks dispel myths and adapt to borrower behaviors.

Community banks are debunking myths about lending, emphasizing that a decline in new loan activity does not necessarily mean that banks are not willing to lend. Instead, the decline in lending can be due to reduced demand for refinancing and new projects, as well as lower deposit balances. Borrowers are also being cautious, using cash reserves for debt repayment or investments rather than taking out loans at higher rates. Community banks remain ready to help customers, but sometimes the right solution does not involve taking on additional debt. In terms of commercial lending, while the business may slow down in 2024, it does not necessarily mean that loan growth will be reduced. Banks can achieve growth with fewer new loans, especially if they experience an increase in deposit growth. Risk management is a priority for community banks, and liquidity and deposit diversification are key focus areas. Community banks have experienced more stable deposit levels than mid-sized counterparts due to their deep relationships with customers and their communities. Regulatory changes and digital transformation continue to impact community banks. The regulatory landscape is constantly evolving, and community banks must prepare for uncertain regulatory adjustments. Digitalization in community banking is gaining momentum, with customer-facing initiatives becoming more common. Despite the digital influx, community banks continue to leverage a “high tech, high touch” approach that blends online convenience with personalized service. Finally, community banks advise small business owners to adopt a careful investment strategy in 2024 due to the increased cost of capital. The goal is to support sustainable growth and prudent decision-making.