Borrowing attitudes are posing a challenge for community banks in Kentucky and across the nation.
Community bankers recently provided input at town hall meetings hosted by state regulators in 27 states, including Kentucky.
Charles Vice, commissioner of the Kentucky Department of Financial Institutions, says borrowers are still hesitant to take the risks they were willing to take prior to the recession.
"People are still paying down debt and saving more, and because of that, it doesn't give our banks the lending opportunities that they had in the past," Vice told WKU Public Radio.
Other challenges include the regulatory climate and competition from non-bank sources.
"What banks are telling us is that marketplace lending or peer-to-peer lending is creating a lot of competition for them," added Vice. "Many banks had stories of neighbors funding loans for other neighbors to buy cars and homes."
The Community Banking in the 21st Century report was released at the third annual Community Banking Research and Policy Conference, hosted Sept. 30-Oct. 1 at the Federal Reserve Bank of St. Louis.
Vice notes that while community banks control less than 20 percent of total banking assets right now, they make more than 50 percent of the loans to small business and they issue 70 percent of the loans for agricultural production.
He adds community banks are important especially to small and rural towns where access is limited to large national banks.