Can I Sign Kansas Banking Presentation

Can i industry sign banking kansas presentation now

i would like to welcome tara humpston who will be delivering our presentation today here are some highlights of her background before i pass it over to her tara humpston is senior vice president in charge of the supervision and risk management risk management division of the federal reserve bank of kansas city in this role she is responsible for the supervision of the district state member banks and bank holding companies as well as the bank's discount window and risk management functions and that in national responsibilities for technology initiatives supporting supervision staff in all districts she is also a member of the bank's management committee which is responsible for strategic planning and policy direction her full biography as well as the other biographies of other speakers from the week's conference are on the events page as well as linked in the email with all the event information thank you tara for joining us today to share updates on banking conditions and remember to ask those questions in your q a box good morning thank you carolyn it's good to see you i haven't seen caroline in a while we've worked together before so i'm in this virtual world it's great to connect and um i love that we're able to continue these conferences in this virtual capacity i wish i could see all of you um i love connecting i've loved the prior uh forum for women and banking conferences that i've participated in so really it's just an honor to be part of this excellent event alongside many successful women those of you in the audience and those uh some fellows on the agenda uh fellow panelists or speakers on the agenda it's really exciting and i'm so glad that we're able to continue on with events like this today um i i applaud you for taking time to invest in yourself i hope you're really able to engage today i know um sometimes it gets difficult for me too and i have other distractions around me whether you're vis you're you're participating in your office or from your home i know we all have different situations in in how we're working through this uh pandemic in the environment but i applaud you for taking time engaging in the in the sessions today um just a little bit about i've been at the federal reserve now for about 22 years and so boy went by like a snap i i had thought i'll disclose that i early on said you know working at the federal reserve that looked really good on a resume and so i'm still thinking how is that helping me if i've stayed uh 22 years but it's certainly been a terrific place to work and so um while i've been working though at the federal reserve being a suit in bank supervision itself this is no surprise to those of you women out there in the banking industry that it has historically been dominated uh by males and especially in some of those senior ranking positions and so it's forms like today to help build our knowledge and grow talent i'm really excited about that and that's one of the reasons i wish we could engage more in person but i love it that there's sessions like the coffee session this morning able to try and get some of that engagement going because really when i think about my session what does this have to do uh me talking about banking conditions and this women forum i really find information is power i think building your knowledge base no matter what role you have in your organization i got a sneak peek at the attendee list and the type of titles that we're attending today large variety of those of you out in the audience and so i'm really excited to gauge with you and i really think it's powerful the more you learn about banking conditions and how that can help you in your role or or your organization but more importantly you serve a particular role in your organization and you have insights others may not have and that's valuable to your organization so i encourage you to take in the information today maybe see what you could take back to your own organization if it's information that you're not familiar with or routinely looking at i mean in particular today i'm going to try to calibrate my my comments here i want to be inclusive some of you it may be new some of the data that i'm going to be displaying some of you may be well versed in it and this will just be a confirmation of things that you know so i'm i do hope that we calibrate it where everyone can feel like they're participating uh in the discussion because i think it's important for all of you uh to build this skill set if you don't already have it and trying to think about what's important if you are working in banking so um if we could advance to the next slide here let me just briefly touch on my agenda here uh pretty brief so i'm not having a lot of things but banking conditions that's a lot i will tell you all a little bit of a numbers geek so we're going to dive into some numbers and charts but it won't be the whole time but admittedly my accounting background gets the best of me and we like to talk about numbers and especially as a bank regulator we do focus a lot on numbers also going to talk about the federal reserve's response to the pandemic a lot has gone on since march and so i'm sure many of you have seen things in the news talking about actions the federal reserve has taken and i thought it might connect that a little bit better to really the banking industry in our district maybe what's been most important or relevant for some of you maybe in the audience and and just to learn about and then lastly um the importance of connecting to the small businesses in particular but overall businesses and so i think that's important to cover um how we're looking at what that engagement and the efforts that we've done across the federal reserve system so if we can turn to the next slide we're going to dive into those first numbers here and again i'm going to calibrate some of my comments so that we can um can look at what what's important ratios that not only bank supervised perform look at and and focus on but you at your bank i'm sure the senior leadership team is focused on and so this first chart we're looking at here is just the return on average assets how are bank earnings performing here during the pandemic and so what i've done with several of these charts i'll go ahead and explain now here but we've taken all bank performance in the blue line there and then in that tannish color line that's going to be the performance of our banks in the 10th district and i'm talking about the 10th federal reserve district here and so we cover a seven state region here if i can rattle them off at missouri and kansas oklahoma the western side of missouri colorado wyoming and northern part of new mexico that's the 10th district for the federal reserve and so sometimes we like to siphon that out and really see the performance of big community banks in the midwest as that compares to nationwide so that's why you'll see that breakout on some of these charts and hopefully you may find it valuable as you compare and contrast to really that community bank space that we often are speaking to in our district so as we look across here i've also taken the charts to look back to the last financial crisis uh some of you were in banking there the 2008 910 we definitely saw some very challenging times um i was supervising banks during that time and needless to say uh it was very busy for bankers and bank supervisors as it was very challenging uh conditions for banks and you can see that for earnings perspective significant deterioration during that time but fast forward over the last 10 years really stable increasing earnings since that time you'll see that blip there in around 2018 in the slide that was really based uh due to some tax reform issues and so that caused a little blip there but then look at our second quarter of 2020 there and we've taken a significant decline especially nationally but even with the 10th district banks you've seen a decline there and so we're going to be digging in in the presentation of what some of the drivers are for this but you know we saw on these strong earnings that we've been experiencing for 10 years really gave way as banks began to take measures really to prepare for potential credit losses due to the pandemic and again credit losses we'll talk about what that might look like in the future so if we could advance to the next slide we'll move on from our return on average assets and talk about some on the provision or the expense side here and provisions are definitely increasing as banks are preparing for credit losses and what are provisions some of you may ask that's really your expense that's building your allowance for loan losses this is those protection of you know if of course every banker on day one any loan that's extended you never think you're gonna get a loss on it however realistically we all know that oftentimes banks do experiences changes in a borrower situation and they may experience losses in the future and so now you're gonna have provisions that are building that account to protect for those eventual losses and so looking again my chart calibrating back to the last financial crisis you saw provision expenses increased significantly there 2008 2009 through 2010. that built for a while and then you saw that taper off and provision expenses have been very low for a number of years here and so then as we have entered this current economic crisis you're seeing that quick build and so as a bank supervisor we would say this is very prudent and smart of bankers to be already thinking about we know a pandemic is happening we know there's a lot of effect on our borrowers we know their financial situation may be changing and really segmenting their portfolio to say what do we need to plan for future losses and so this is their protections against that and so you um we're not seeing that yet we're not seeing losses at banks we're not seeing charge offs yet but you're going to hear me talk a lot about noise and the data a lot of uncertainty exists and so um so there are a lot of drivers here they're still be determined but i think at this point it's just good that we're taking prudent action to try and get out in front of this so let's move to the next slide um so here this is the actual reserves account level so i talked about the provision that's the expenses banks are taking now but this is the allowance account in itself the allowance for loan and lease losses and so again you're looking back and look at the last financial crisis and wow we really built those accounts up and prudently bankers had to use those allowance counts and so you saw that taper off but just in the last couple of quarters here you're already seeing that start to build there and so that tan section of the far right of the bar that's what you're going to see is that build of reserves the provisions um i will just quickly point you to that blue though that's uh the that's really the adjustment from cecil and if you're not sure what cecil is referring to i hate to say some bankers out there may be thinking that's a bad word in some forms but it's the current expected credit losses it's an accounting pronouncement for a new methodology for estimating allowances for credit losses in the future so this is a fasby pronouncement but it's got a lot of attention in the banking industry because this would be a big change for community banks to move to the cecil methodology and so now we've got some time on that community banks don't have to worry about that for a few more years but certainly the large public companies have already transitioned to this as of this year in some capacities and so um that's where you'll see some effects in the numbers from even things like cecil let's move to the next slide and look at the net interest margin here so as we saw the federal open markets committee began to increase the target fed funds rate looking back at december of 2015 you saw their net interest margins at banks were increasing at a more rapid pace than those of 10th district banks but it's primarily due to you saw that there's a shorter maturity of some of the assets for large bank portfolios so that's why you saw a difference there in some of that time period of the growth in the net interest margin but we're seeing that compress for both groups here in the chart that all banks and those in the 10th district banks and so um so watching closely when we are thinking as chair powell stated in his august statement the low interest rates are likely going to be needed to support the economy for years to come and so you know we can anticipate that low rates are going to be here for a while and that's one of the primary drivers for community banks is working from their net interest margin so that compression is certainly concerning for a community bank as you compare and contrast that to maybe some of the larger institutions that have more diverse diversification of their income or coming from other methods you're going to see maybe a lot more resilience or protection against that net interest margin but one of the main drivers i want to talk about here in this decline it's not just from the interest rates here is a lot of this is going to be driven from the payroll protection program hopefully you all know and probably been hearing that's the ppp and i'm going to say that a lot in my presentation the ppp the paycheck protection program lending that drove a lot in the financials the last couple of quarters and some of you may be thinking yes i know all about the ppp i was um working nights and weekends over holidays trying to implement that program as that got launched and i know community banks were all-stars on the ppp and i'm going to get into more of that later and i'll give you more congratulations for it but the ppp what's affected here is those loans weren't helping the interest income margin for banks but rather they were getting that through fee generation and so that was a different way for the revenues coming in for community banks even though they were doing a large amount of lending per se um they weren't getting the interest income from that type of loans because of the way they're set up so again i have a couple of slides you might be interested on what the results of the ppp looked like so um let's turn to the next slide and we're going to look a little bit about capital protection here um you know as a banking regulator oftentimes we focus a lot in on capital ratios in fact that capital is one of the components we rate during a bank exam and here we're looking at the tier one leverage capital ratios and you're seeing that with through the pandemic again as you're moving to the right into the second quarter of 2020 uh you are starting to see that capital ratios appear to be declining from the pre-crisis levels here um although i should caveat this we're above the last financial crisis we're above those levels and which is a fantastic position for banks to be in but we are starting to see some deterioration but we're going to dive into that because it doesn't tell the whole picture of just what we're experiencing the pandemic but when you think about capital and what's the need to keep that strong and why since the last crisis the industry itself and regulators have felt that build is so important is that capital is really part of an asset which can be used to repay depositors customers and other claimants in case the bank doesn't have enough liquidity due to losses it suffered in its operations so certainly key points of why we'd like to see that capital level stay strong at institutions but i just did want to point out that this deterioration has a couple of drivers and so let's move to the next slide and i'll break that down for you here is the different factors on this trend is on the left side of the chart that's fourth quarter of 2019 and so that's where we've got um our our uh community bank leverage ratio and so i've changed from the last the community bank leverage ratio is a new ratio that has come out this is actually i'm something that's been in flight for quite some time and just implemented at the beginning of this year and um the community bank leverage ratio minimum was set at the nine percent and you can see here fourth quarter of 201 banks were sitting at 10.9 percent go to the far right of the chart and you see second quarter of 2020 here we're down to 10.2 percent may not look like a huge deterioration here um but but that's a significant decline in that short period of time however what you need to focus on is so that tan area there where the arrow is pointing the impact of ppp loans that's going to be the significant driver here and so as we look at the the largest factor here of driving this is was the increase in average assets so all of those ppp loans coming on the book was inflating the average assets as a component of this calculation and and so what we do is we step back if you eliminated the growth of ppp loans from the average assets ratio capital levels would nearly be at the same level of 2019 so a large reason why there's not a lot of concern by regulators as we see this change because we know a lot of those ppp loans with they have a forgiveness feature attached and likely going to be rolling off the um the books hopefully in a shorter period of time that's a topic for another day on on when that's all going to actually happen but we're already starting to see some of the forgiveness applications being approved and some of those roll off bank balance sheets so um another piece i want to talk about and there's no data on the slide so forgive me i might rattle off a couple of numbers here and and get into my my geek phase of that but you know aside from just capital levels themselves there's another component that's really been helpful to community banks coming into this crisis and it's really been what credit exposure that have their balance sheets and what different credit exposures as you think back for those of you that were around for the previous financial crisis a lot of the deterioration and problem credits were in the commercial real estate area and we've seen a significant shift in what some of the banks particularly when you look at like construction and land development category back in if we compare back to 2007 about the 2007 time frame 117 percent of a bank's capital was invested in those types of loans fast forward to 2019 that was from 117 in 2007 down to 47 in 2019 that was definitely a shift in risk so banks had higher capital levels or less invest investment into those riskier loan categories and i call it riskier in the sense that they've experienced higher charge offs or non-current rates in the past it peaked around 15 percent in some prior historical periods versus where some banks have shifted their investment to other commercial real estate and those would be things um and some other like owner occupied loans non-owner occupied multi-family properties and those have had lower l loan losses i'm experienced maybe more four percent compared to the 15 to 19 percent in some of these other categories so i just highlight that that's a whole different risk structure structure on balance sheets but it also highlights that this crisis is not the same as the last crisis each one can produce their own risk and so where that will end up coming out we're still uh watching the environment as it's no surprise to any of you the hotel and tourism sectors certainly have taken a significant hit same as restaurants and so those that type of lending is definitely more exposed than what we might have seen in some of the other sectors uh let's move on to the loan growth here and again we can't get away from that ppp we're going to talk about it boosting loan growth here in this particular slide and and so what we have here is we're looking at the loan growth uh same time period we've been focused on but at the right it looks very positive because you're going to see that well there's an uptick in both 10 district banks and all banks are seeing an increase in loan growth it's really quite i guess more muted than what you would see from this chart and so in particular if you look at that little breakout i've done on the right just by the quarter and if you took the ppp loans out of the loan growth it would be where those small triangles are and if you had to extend out the line it would really be down at a much more flattened uh looking picture here if you took that out so there was some year-over-year growth if we took back from june 9 2019 numbers compared to june 30 you saw some a little bit of growth here i i would highlight cre and one to four family both had about seven percent aggregate year over year growth but again when you look at uh cni lending that's where the ppp loans would be categorized right now it looks like there was 48 growth but you back out those ppp loans and it was actually about a negative 1.9 growth so again just keeping into perspective what that change did when you factor in and out the influence of the ppp um let's move to the next slide please now here's where we we talked about those provision expenses and the importance of building that allowance and it's really here for non-current loans and as the slide titles it does remain benign right now but there's so much uncertainty when i talked about there's so many unknowns and i want to highlight a couple of things here as we looked at you know the past several credit years we've been you know we've banks have been able to help support their bottom lines because they haven't been experiencing losses they've maintained low provision expenses and so as we look at year in 2019 your the current loan uh non-current loan number there that just stood at historical low levels for all commercial banks and so as you look at year in 2019 levels comparing favorably to even the pre-2008 crisis levels it remains to be seen with this longer-term impact on the for the of the pandemic on big borrowers and problem asset levels but what i want to highlight here and i don't want this to sound like doom and gloom the way we've looked at this but it was really just maybe a way to do a gut check or calibrate but you see that we've done a little slice the chart on the left there we have year to date but then we pulled out that quarter and then you see those diamonds that are sitting much higher on the non-current loan levels and it's pointing saying those are the the 4013 loan modifications so banks were given an opportunity to um and regulators encouraged this is that if they had a borrower that was experiencing financial difficulty early on in this pandemic and the creditor had granted some type of of concession um as long as it wasn't a significant delay in payment which has been somewhat interpreted to about a six-month delay and so it's looking at those borrowers and saying if it was coveted 19 related that those could be pulled those modifications would be very prudent regulators were to encourage that type of assistance to borrowers and then in fact uh would not be classified on the call report as a troubled debt restructure which we'll we'll get into a slide in a moment but i want to say that what this 4013 loan modifications is as it's reported on the call report if we were to just theoretically say all of those loans that had that type of a concession or modification ended up going non-current that would be the levels that it would trend up to and again we're already hearing anecdotally from our bankers that in fact they're pleasantly surprised that they're not experiencing that extreme level of borrowers needing additional loan modifications they're rolling off some borrowers were extended those payment delays whatever that looked like and some haven't even needed to take advantage of it um others took advantage of it and have caught up or not needed any other types of concessions and so i think we've been hearing a lot of good information from banks that there's not been a strong need for this but we're going to talk about how that played out across the u.s even on the next slide i'll point to just looking at what that loan modification activity looked like across the country you can see it was really widespread geographically across the nation as the pandemic raised needs among all communities a lot of different sectors in our economy and so um overall if you had to look from a percentage basis nationwide it was about a nine percent of total loans modified um particularly in our district you see colorado with a higher level inching up close to 14 so those darker colors definitely have more loan modification activity but in other regions you saw that it wasn't quite as necessary so i thought this was a good calibration so you can see how widespread this is but there were some areas or pockets of communities or states that needed additional modifications extended i would also say though it also differentiated in the banks we've had some banks say that they took really proactive measures widespread offering these loan modifications to their borrowers very early on while others maybe waited a little bit for more to see the needs of their borrowers so even just the different way that banks started extending this was a driver behind these numbers of why we also see some differentiation let's move to the next slide here and just talk about some deposit inflows so as i think most in the audience probably know that bank community banks in particular leverage the deposits they come in to be able to fund their loan activity and you see on the dark colored bar there or the line that's the lending activity loan growth and the tan line is deposit growth and you can see that trended pretty close together for a number of years and that's what you expect if you're going to have more loan activity you're going to need more deposits to fund that well you can see here at um first quarter or second quarter of 2020 deposit growth was significant and that's really changed and affected some of the balance sheets for banks and let me just give you a couple of the drivers for that is you have a lot of those stimulus payments coming in and some families were reserving that in their their deposit accounts and not using it really saving it for what's going to happen next there is a lot of unknown even from households and so you saw that deposit activity increase for that reason you also saw those getting those ppp loans those businesses many of them were uncertain of should i use this money how is this forgiveness feature gonna work am i going to be able to comply with all the rules around this and so many of them left that money sitting there not utilizing it yet we still hear some stories of that today that some of that money is still sitting there as i guess you might call a reserve for that business um looking at the uncertainty and then in for some entities and this is maybe for the larger businesses those that had lines of credit coming into this pandemic we saw a quick drawdown and that immediately some and some businesses were taking advantage of that line of credit unsure if that would get pulled or changed their availability that line of credit so they're going ahead and taking advantage of it and so i'm just a couple of drivers that i thought would give you some insights of what was really driving that increase in the deposit inflows let's move to the next side here slide here and uh so from a regulator standpoint this did drive an increase in asset liquidity overall which is a good thing because we do want to see the asset liquidity at a bank that's really going to be the protection to be able to repay depositors when they come in and demand their deposit the bank has to be able to provide that funding back to the depositor and so what we're looking at here is we saw that increase the left chart is all banks in the u.s the right chart is 10th district and you can see that on both that second quarter 2020 you've seen increase but particularly i find it interesting is where that was going and you look at that blue section of the bar there to interest bearing bank balances for so on a bank's banks balance sheet here they were not necessarily putting that excess funding into long-term investments or assets even banks are a little skeptical is how long is some of this funding gonna sit on my books you know are these these uh households are they gonna start feeling more comfortable with their economic position and decide to draw down on those funds use those for purchases are those small businesses are they ready to use those ppp funds they had so there's a number of factors of uncertainty where and then the other aspect is there's not been extreme loan demand in any of the institutions so that money is sitting there for many as kind of a temporary measure if you will because i think there's uncertainty of how long that those funds that funding will stay in the institutions so um i i know i've talked a lot about the uncertainty in the numbers and so we had to find other mess that methods to figure out what's going on with our banks what are they really experiencing through this pandemic and so on the next slide here if we can turn i want to talk about the bankers and it's some of you in the audience today but if not if you're not a federal reserve member it may have been with another regulatory agency that you were helping but it was the bankers providing real-time information on your local banking and economic conditions so this just shows a progression over the time starting in march when our pandemic was really in front of us up until now what's been happening because as you look at march that was when things were shutting down we ceased doing on-site examination activity in fact most of the regulators took a pause because we knew you were out there all hands on deck trying to figure out how to work with your customers how to try to have a remote staff posture and you were really responding to the pandemic so a lot was at your feet to deal with the last thing you needed was a regulator coming in asking you for reports and so we really we recognized that however we needed to stay in tune with the industry and so as bankers you rely on that relationship banking we were relying on on our relationship with our bankers in the sense that we have a central point of contact assigned to our institutions and we call them cpcs and they were reaching out not just to demand information we hope it was more that tell us what's going on how can we help what's our role in this and help us better understand what you're dealing with so those conversations were critical as it was information for me and my role and then reporting up to our reserve bank president esther george who you're going to be hearing from i think uh for lunch today but um it was critical for us to be informed of what's happening out here so again so that esther could take this information as she's making decisions and talking to the fomc or just about the economy and what has been the impact in our district so it's been especially important the other thing i would highlight is you can imagine the stress that caused someone that loves numbers like i do i wasn't getting any numbers because you think about the call report for march 30 at the end of march um first quarter data would typically have been due or coming out at the end of april but we gave banks an extra 30 days and so it really wasn't coming in until um june it was really june before we were getting data so we went this whole time not really having data to leverage and so um but then even when we got it it was just a very small snapshot of what had happened in that first quarter you only really had the first couple of weeks of mart or the first last two weeks of march that might have started showing some of the impact and so i think it's going to be this next quarter of data we're really going to start seeing um broader impacts that might be more telling what's going on but as you look on the right there and uh this september you know i may be almost hesitant of that very first bullet there stabilization stabilization and credit conditions that's probably a pretty stretched statement but there there has been a lot of state stabilization and we're kind of bracing for what the future might hold not only for uh the virus the stimulus that might come out and how that's going to influence uh the whole industry itself um so there's a number of things that are happening very positive and in fact i might reflect o we have um as every reserve bank has a cd at council community depository advisory council and uh one of our participants made a great analogy that i've used several times recently but he said you know conditions they're really bright and sunny right now for for my bank a lot of the conditions and a financial performance is quite bright and sunny but he's like there's this cloud out there and i'm not sure what's in that cloud and i thought that was great because we feel the same way we're not sure what is out there on the horizon and how significant that cloud might be but i think it's an important factor to keep in mind so let's move to the next slide here so so don't be scared i'm not going to go through all of these actions here but this really is just to show you a picture of some not all of the federal reserve's response to the pandemic and what we can do to help support not only the flow of credit and encouraging bank lending and in particular we have some of these highlighted with a red bar around them and those are more closely related to bing supervision and so um there's just a couple here i want to talk about in particular is is on the top right quadrant there actions to support the flow of credit you've got the ppp liquidity facility that's a little bit different than the ppp loans it's the liquidity facility the fed stood up and then at the bottom of that little quadrant a main street lending facility i just want to talk briefly about those couple of um facilities to give you perspective of what happened if we want to turn to the next slide and here's where bankers get a big kudos i'll just quickly go through this slide here the left pie chart you're looking at that's total banking industry assets and how that slices out according to bank size so the big red chunk there at 70 those are banks over 100 billion that's how much of the industry assets they have in banking whereas you look at the teal and the tan segment there combined that makes up about 15 that's really what we consider our community banks that's how much they make of industry assets just 15 but then look at the chart on the right the pie chart for the ppp loans look at that terrific teal and tan lines there 40 of ppp loans were extended by community banks that is the share of the participation in community banks really knocking it out of the parks they were the ones with the relationships with the small businesses and able to meet their needs and get them in the program it was a very hard haul i know meeting the needs of all these customers but really this is where the shining of community banks and their ability to reach out and get to those small small businesses and helping them was just integral in this program so i wanted to make sure and highlight that component of it um but the piece of it is that the fed stood up the liquidity facility behind that and um it really has not needed to be used near to the extent that maybe some thought and a lot of that's for the reasons i talked about the flush liquidity that many sat out there with and haven't needed to leverage the program um let's turn to the next slide and it's another one this is picture here is really for informational for you but it's just showing you the structure of the main street lending facility um main street lending program mslp some of you have heard about it really out there hoping helping main street the small and medium-sized businesses i'm not going to go through the picture of all the interactions but i just wanted to highlight this is really a unique structure for the federal reserve to do more so of direct lending to businesses we're doing it through community banks but it's more of a direct lending vehicle and so i just want to highlight that that's a very different structure and on the next slide please we'll talk about the uptake of that's been i think a lot slower than expected a lot of questions and concerns about the development of that program and i just might remind this was out of um there's really only a total 2.2 billion out of the entire program here of the 600 billion allowed that has been taken up thus far and so why is that i think there's been some ex uh muted interest even if conditions deteriorate further because you know there's some have the perception and some is written into the the fed's legal authority is what we're even able to offer um you're looking at are are those utilizing programs like this unable to secure adequate credit accommodations from the market or other banking institutions and then we also have to charge a penalty rate or an interest rate that would be more in the market in normal conditions and those made it challenging to for the design of this program working with the treasury to be able to retain those features that really is prescribed in law um so turning to the next slide here i just want to quickly highlight if you want to learn more really build your power of knowledge that i talked about at the beginning um you know here are some references i would refer you to and the one on the top left is community banking connections it's a publication by the supervision and regulation of the federal reserve and there's great articles and as the title suggests they're focused on community banks there's an article in this last edition that just came out recently by one of our federal reserve governors michelle bowman mickey bowman if you've met her um and just how community banks are responding to covid19 and steps to prepare for the cessation of libor and so um and even a little bit on cyber security so a lot of great articles that are focused to how a community bank would need to digest or or use that information and then i would highlight on the right to ask the fed program those have been running at a pace that we've hardly seen before of really trying to quickly get these calls stood up that bankers can participate in ask questions things about accounting for loan modifications main street lending program like the lenders and the borrowers help us understand the program giving ag updates a lot of great information so i encourage you to watch for those programs and sign up for them there's of course no charge you can participate ask questions a lot to learn and a lot of them are recorded sessions so i encourage you to build your knowledge and participate so um carolyn with that i would be happy to take some questions if there are any thank you so much tara and first of all um i know you kicked up kicked it off by telling us that you had been at the fed for 22 years so bravo that is pretty fantastic and i am a numbers person myself so i do appreciate most of your slides wonderful so we actually do have um some great questions uh that i would love to ask you so i will just go ahead and start off by asking you um what is an example of a challenging situation you have faced as a woman in leadership oh goodness well you know i think all leaders face challenges that's just part of leadership but you know because this is a a women and banking conference you know i might highlight a couple of of particular things that i think has been challenging i mentioned that um you know being in a male-dominated industry historically and i love it that we're seeing more and more women entrance into this and even top positions but as i looked at even the registration participation for this conference itself it disappoints me that we don't have enough that have ceo president in the titles of the female bankers and so i think we're growing that network um so we're behind you but i think some of the challenging situations is for those of you that attend those banking association conventions or meetings they're terrific filled with a lot of information but many of those um i think have they have you know dinners the evening before really trying to celebrate the transition of leadership of these associations and i know when i've gone with my colleague who was a male i succeeded his position about a year and a half ago and um i often times i know looked like i was his wife accompanying him to the dinner or i was often looked to i must not have the information and i think that just shows the importance of an advocate that in this particular case would often say tara is the one you need to talk to she knows a lot about this or she knows a lot about that and it was of banking expertise prompting me to share my expertise to try to build my value and so that you could get that um recognition that i'm not there as just a participant or a wife uh accompanying in the com the the conversation so i think that's important that um it sometimes feels a little dismissed at some of those events until you get to know and you're able to share your expertise and that can be hard to do you can't just jump right in and start sharing facts and and you know trying to to engage in that way so i think that uh it has been awkward at some times in trying to engage in the industry when you don't have a lot of other even females there to help with that engagement across both categories absolutely i think we've all kind of come in uh encountered with situations like that so we definitely appreciate your input um we have a question from tatiana and this was a pretty popular question she thanked you for the excellent information what would you say in general are the weak spots for banks in economic crisis concentrations credit administration leading practices reporting and analytics for credit trends organizational structure cetera okay that was a lot to that question narrowed it down i'm trying to uh listen i've just you know even how our banks are looking at credit transit right you know i think one of the key things and the advice i would give is we've seen some particularly well done analysis right now by some of our institutions because again i keep using these there's a lot of unknowns still but really segmenting their portfolio and doing the best they can looking at that borrower by a borrower situation and really trying to understand what you can know in today's environment because that's one thing as regulators when we're coming in and doing exams now we're really trying to look at what does the bank what can they possibly know right now in the financial reporting of their borrowers because there's many things you can't know maybe they got ppp loans and that's you know holding them for three or six months but maybe not in the future and so if our bankers have done the best job they can in trying to obtain that information we understand there's going to be some unknowns but segmenting where are those riskiest portfolios you know how where is the hotel loans where are the restaurant loans you know some restaurants have been able to rebound and adjust to this environment and do takeout but for many that's just not been enough and so knowing these borrowers well enough that they understand who's more exposed than others and so i think that's going to be important is really doing the work which is a lot at an individual basis but doing the work to understand the impact to not only individual businesses but then segmenting maybe your portfolio a little differently than you previously had you may have categories that you've always looked like you might need to slice that just a little bit different and really say what do we think is is the risk we need to be looking at today so so those would be a couple of things i'd offer fantastic i'm going to switch it up to something a little bit lighter and please tell us and i know you touched a little bit on your background but a little bit more about your background and how you became a leader within the industry so i i will full confession that coming out of college i wanted to work at the federal reserve because number one i thought it would look good on a resume and then here i'm here 22 years later what have i done with that on a resume but um you know coming out of college i had applied for a management career program and i didn't make the cut and so um you know and i think there's other leaders at the federal reserve that you know we've applied and we're really um excited about a job with the federal reserve and didn't make the cut but so i went out and and was working at a bank a commercial bank for a couple of years and which was great experience and grounding for me but then came back and made another run at it i saw another position and so a couple years later uh and got in at the fed and so you know again i'm kind of like well look where i am now but uh i they didn't want me the first time but it's it's high standards and really it's an encouragement i guess i'm sharing the story that you know sometimes you might not make it at the first run keep going it doesn't mean that you don't have the skills it might have been the right place the right time the right opportunity and so i think about the opportunity i did get coming in it was different than the first one i applied for and that was the right one for me and i think it launched a lot of my interests and ability to grow my career and we do a lot of rotational programs at the fed in giving opportunities uh to participate in expanding your own skill set and other departments and the way we manage them and i would say credit a lot to my success i've always had interest in management and developing others but that ability to take a leap of faith and start new roles that i had no experience in i think has just really built my ability to have confidence in leading even over functions i may not be familiar with but i can translate my leadership skills over any of these areas so i think that's been important in my interest in career development that's pretty impressive um okay so we have another question from elizabeth she of course thanks you for your presentation uh she was wondering after reviewing the information if when you reflect on pre pandemic to now has there been anything that stands out to you that was surprising or a banking condition impact that you didn't expect that we didn't expect well i i will tell you and and i've said the word so many times but in my day the ppp i mean that was a surprise that was a different program you know as a reminder that forgiveness feature um what a great stimulus for small businesses and i think it was just fantastic to have and now again i will fully recognize those bankers sitting out there saying hey we're not through that yet no you're not there's this forgiveness feature and challenges that we're still making it through but with the optimistic hope i'm gonna have that a lot of that's gonna happen here in the coming months or year you know i think that that was something unexpected that i didn't think that might be a tool we would use uh so when i think about the impact that has had it's just been amazing of the help it's had but is that enough um probably not more needs to be done so i'm not at all shortchanging that there's not still a lot of front of us i think that will be maybe another surprise is what's that going to look like but when i think of conditions it wasn't really a surprise but i think of wow the community bank space had prepared themselves and taken a lot of lessons from the last crisis and really position themselves differently and that was refreshing and reassuring that maybe taking some advice from regulators at times and that hey some of these prudent actions were really for the own good and the strength of the organization absolutely well tara that actually we are going to wrap up the q a we are out of time i feel like everything is just going so quickly today already but we really appreciate you joining us today and i know everybody has enjoyed your presentation