Contact: Media Representative 612-204-5261 Date: March 31, 2000 FOR IMMEDIATE RELEASE

Fed Poll Finds Banks Facing the Challenges of New Rules and Intense Competition Ahead

MINNEAPOLIS—Upper Midwest banks face the challenge of new rules and intense competition from other banks and financial service providers, according to a community banking poll^* conducted by the Federal Reserve Bank of Minneapolis. The poll found that the Gramm-Leach-Bliley Act (GLB) and the use of technology have intensified the challenges and opportunities faced by district banks. In addition, bankers expect strong local economies, increased investment and more technological innovations. Selected findings:

• Bankers see opportunities in GLB. Nine of 10 consider the law's restrictions against commercial firms becoming unitary thrifts very important.

• Nearly half the respondents expect to borrow more from the Federal Home Loan Bank (FHLB) as a result of GLB's provision that relaxes the FHLB's loan restrictions.

• While banks invested heavily in technology and Y2K preparations in 1999, nearly two-thirds of all respondents expect even greater technology investments this year.

• Large banks are using the Internet more than community banks, although 30 percent of all respondents indicate that they have a Web site and 71 percent expect to be on the Web within the next year.

The banking poll can be found in the April issue of the fedgazette, a quarterly business and economics publication of the Federal Reserve Bank of Minneapolis. See the fedgazette and complete poll results.

As one of the 12 Federal Reserve Banks, the Federal Reserve Bank of Minneapolis contributes to a variety of Federal Reserve System functions, including operation of a nationwide payments system, distribution of the nation’s currency and coin, supervision and regulation of member banks and bank holding companies, and serving as a fiscal agent for the U.S. Treasury. Additionally, the president of Minneapolis Fed serves as a member of the Federal Open Market Committee, the monetary policymaking arm of the Federal Reserve’s Board of Governors. Together with its branch in Helena, Mont., the Minneapolis Fed serves the Ninth Federal Reserve District, which includes Minnesota, Montana, North and South Dakota, 26 counties in northwestern Wisconsin and the Upper Peninsula of Michigan.

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*In February 942 Ninth District banks were surveyed; 391 banks, or 42 percent responded. Respondents in this analysis have been stratified by asset size. Large banks are considered to have over $100 million in combined assets (55 respondents), while community banks have under $100 million in combined assets (336 respondents).