The Artisan Advisor: Q2 2026

Economic activity increased at a slight to moderate pace in eleven of twelve Federal Reserve Districts in late May and June, while one District reported no change. The pace of growth was quite close to that of last period, when activity expanded in ten Districts, was flat in one, and down in one. Consumer spending edged up as higher prices, particularly for fuel, dampened sales in other categories. Several Districts noted declines in spending on discretionary items or trading down to more affordable varieties. Tourism was up, with some Districts receiving a boost from World Cup visitors. Auto dealers reported little change in sales, but spending on repairs grew as consumers held onto vehicles for longer. Agricultural conditions deteriorated due to lower commodity prices, higher input costs, and tighter credit. In the energy sector, oil and gas drilling increased. Manufacturing production grew modestly to moderately in most Districts, led by stronger orders from the data center, machinery, and defense sectors. Manufacturers in several Districts said supply chain issues were more common. Construction and real estate activity increased slightly overall, with several Districts noting growth in data center building. Financial conditions were stable on net, and commercial and consumer loan volumes were both up modestly. Commercial loan quality was stable, but consumer loan quality ticked down. Transportation activity increased modestly amidst ongoing supply chain changes related to higher tariffs and the conflict in the Middle East. Overall, activity in other service industries also was up modestly, with Districts highlighting growth in health care and professional services. Social service providers were adjusting to funding declines while demand for basic supports—housing, food, health care—remained high. Contacts generally expected the economy to continue to expand in the coming months, but several Districts noted elevated uncertainty in the outlook for fuel costs.

The Federal Reserve Beige Book, July 2026

---

Community Banking in Transition: 5 Shifts Reshaping Strategy, Workflow, and Risk

Riley Priess in her recent article, Community Banking in Transition: 5 Shifts Reshaping Strategy, Workflow, and Risk maintains that community banks are entering a period of significant transition in which success depends on balancing technological modernization with the relationship–based service that distinguishes community banking from larger institutions. Rather than treating technology as an end in itself, banks are increasingly focused on using new tools to strengthen decision–making, improve efficiency, and support customer relationships. Key themes presented are:

1. Artificial Intelligence as a Support Tool
   The author suggests that AI is becoming a normal part of community banking operations. However, the emphasis is on using AI to
   enhance employee effectiveness rather than replacing human judgment. Banks are exploring tools that improve research, preparation,
   and workflow efficiency while maintaining human oversight for lending, risk assessment, and client relationships.
2. Technology Integration Matters More Than Technology Acquisition
   Many institutions have invested in new software and platforms, but the greater challenge is connecting systems and data so they work
   together effectively. The article emphasizes that community banks, which often operate with lean teams, must focus on workflow
   integration and practical usability to gain value from technology investments.
3. Relationship Managers Are Becoming Broader Advisors
   The article observes that bankers are increasingly expected to serve as strategic advisors rather than simply lenders. Clients are looking for industry knowledge, business insight, and guidance in addition to financing. As a result, relationship management roles are expanding to include consultative responsibilities that help businesses navigate growth and market challenges.
4. Deposit Growth Through Deeper Relationships
   Rather than relying primarily on product sales or rate competition, the author highlights the importance of understanding the full financial needs of customers. Community banks can grow deposits and strengthen profitability by building comprehensive relationships that integrate lending, treasury management, and other financial services around client objectives.
5. Continuous Risk Monitoring
   The article notes that rapidly changing economic conditions are making traditional periodic risk reviews less effective. Community banks are increasingly adopting ongoing monitoring approaches that provide earlier visibility into potential credit, industry, or concentration risks. This allows institutions to identify emerging issues sooner and respond more proactively.

Overall Takeaway
Community–bank success will be determined less by acquiring new technologies and more by how effectively institutions incorporate information, insight, and disciplined processes into everyday work. Banks that combine modern tools with experienced bankers, strong customer relationships, and sound judgment are positioned to compete effectively while maintaining the community–focused model that differentiates them.

Preiss, Riley. “Community Banking in Transition: 5 Shifts Reshaping Strategy, Workflow, and Risk.” IBISWorld, February 17, 2026. IBISWorld article.

Did you Know?

• An authentic Hoosiers jersey signed by the cast of the classic basketball movie “Hoosiers” could be yours! Stop by the Artisan booth at the CBAI Annual Convention to meet our team and enter our drawing for this special piece of movie history. See you on September 18-19 at the Indianapolis JW Marriott.
• Strategic planning season is right around the corner. Jim Adkins and Jeff Voss are ready to help you put the right plan in place for what’s shaping up to be a challenging 2027.
• Need to take a deeper dive into your loan portfolio, particularly your concentration levels? Artisan can provide your bank a detailed analysis of your credit risk. Contact Dave Larson or Jim McGrath.
• Your credit card and debit card programs could be working harder for you – and delivering profitability you are not currently recognizing. We can help. Contact Steve Heckard, Matt Bergman, or Mike Elliott.
• New technology-driven products can mean new risk – and the need for enhanced regulatory risk management. Contact Barry Wides.