SURVIVAL OF THE FITTEST: Community banks have plenty of opportunities to succeed despite the challenges posed by regulation and higher technological and staffing costs, according to Continuity Control's Andy Greenawalt. He looks at Federal Deposit Insurance Corp. data on how banks with between $100 million and $130 million of assets are performing and finds that "the outlook for small community banks appears to be shockingly good." The banks that are struggling are those that have failed to modernize, he claims. Some readers concurred with Greenawalt's analysis. "Bankers can turn anything into an excuse for failing," wrote commenter and BankThink contributor David Gerbino. Another commenter was less optimistic about small banks' prospects for the future. "I would imagine that most will continue to sell out or fail," wrote another reader. "The cost of technology and compliance is hurting however, poor management will be the primary reason for the <$150 million banks to close."

OUTLOOK FOR CLEAR ACT IS MURKY: A bill that would help pave the way to tiered regulation appears unlikely to get through Congress despite bipartisan support, according to Rob Braswell, the president and chief executive of the Community Bankers Association of Georgia. Still, he explains why the Community Lending Enhancement and Regulatory Relief Act would benefit smaller banks and puts in a plea to legislators to rally behind the bill. Commenters were unanimous in their agreement with the op-ed.  “With community banks providing nearly 40% of all small business lending, the portion of our business economy that is the engine of job creation, where will our economy be when the lights on the last community bank sign go dark?" wrote Brad Swickey, the head of Valliance Bank in Oklahoma City. Chris Cole, who serves as senior regulatory counsel for the Independent Community Bankers of America, had a few other recommendations. "As part of tiered regulation, the banking regulators should also completely exempt community banks from some of the Dodd-Frank rules, such as the Volcker Rule and the final incentive compensation rule, as Governor Tarullo has suggested," Cole wrote.

Also on the blog: A New York appeals court last week overturned U.S. District Judge Jed Rakoff's 2011 decision to reject a $285 million settlement between Citigroup and the Securities and Exchange Commission. Rakoff rejected the deal to settle allegations that Citigroup fraudulently sold mortgage securities in the run-up to the financial crisis because he believed the bank was getting off too easy. The Appeals Court ruling "sends the signal that you can commit fraud and help drive the U.S. into recession but still keep your share of the out-sized and fraudulently obtained gains," according to economist William Michael Cunningham.

Adjustable-rate mortgages are making a comeback, and regulators should act now to reform the products in order to avert another housing crisis, according to John Bryant and Robert Gnaizda. Among the authors' recommendations: require low- and moderate-income families to complete a mandatory financial education program before signing onto an ARM and ban financial institutions from offering interest-only mortgages to borrowers with less than $5 million in net worth.

Banks that are looking to get a leg up on their competitors should pursue emotive messaging and branding strategies, writes financial services strategist Edmond M. Ianni. That could mean getting involved in with local charities or sponsoring fundraising events. " Emotive messaging and branding is largely based on the simple truth that if the consumer likes you, she will be willing to do business with you," Ianni writes.

Maintaining a sufficient loan-loss reserve is crucial for every financial institution—but there are no official guidelines as to what constitutes an adequate level of reserves. Bank consultant and economist Kenneth H. Thomas argues that banks need an official standard and offers up his own guidelines as a useful tool.

Commercial real estate bubbles may have gone the way of the dinosaurs, according to economist Timothy Riddiough. He argues that publicly listed real estate investment trusts have helped curb the boom and bust cycle. The reason? "Unlike private real estate players, REITs receive instantaneous feedback on operating and investment plans as their share prices rise or fall on corporate announcements." In this way, they act as a signal of market demand, helping to prevent over-building.

Key to a successful payments strategy is finding a way to monetize customer data while respecting their privacy concerns, according to consultant Mary Beth Jameson. She explains why and offers other tips for financial institutions looking to integrate newer options like online bill pay with payments standbys.