Joseph V. Rizzi

Community banks' prospects will improve if they accept that the financial services industry is changing. They must re-examine strategies and business models, and experiment and improvise to exploit new opportunities.

Properly measured and appropriately set capital levels have a long way to go before becoming excessive.

Many private-equity firms hoped to capitalize on the financial crisis through two waves of bank investments. The first, in 2007-8, focused on large investments in major banks. These disappointing investments were too early as industry conditions worsened dragging down these investments.

Many blame the current banking industry malaise on the economy. Its problems, however, involve deeper structural issues.

Bankers are frustrated by lackluster earnings and low stock prices despite improving balance sheets. Many long for the return of pre-crisis earnings growth and pricing multiples. Some will be tempted to pursue increased earnings through misguided expansion strategies rather than returning excess capital to investors.

The MF Global collapse provides an important lesson concerning the effectiveness of the principal or proprietary banking model.

Stock repurchases have increased in popularity among banks. Large institutions like Chase and Citi and smaller banks like First Horizon have or are considering open market repurchase programs.