Community bankers will soon have another tool they can use to gauge market conditions and prospects for growth.

The Conference of State Bank Supervisors today announced yesterday that it is creating an ongoing sentiment index of community bankers based on its annual survey. CSBS outlined how it will build the new Index of Community Bank Sentiment in a paper authored by noted Temple University economists William Dunkelberg and Jonathan Scott.

“The indicator will show how bankers are feeling about the future and provide us with an important barometer of the state of the industry,” CSBS Senior Executive Vice President Michael Stevens said in a statement. “That is important, as community banks are key instruments of the economy, especially when it comes to small business and agriculture lending.”

The number of community banks has dropped from 14,000 to fewer than 5,000 banks in the past 30 years, and large banks today hold 65 percent of the market share. And yet community banks provide nearly one half of all small business lending, 75 percent of lending in rural America and are the only banking service in 20 percent of the nation’s counties.

Dunkelberg and Scott will work with CSBS to create the index, building on the national community bank survey, which CSBS and the state bank regulars have conducted for five years. The results are released each year as part of annual Federal Reserve-CSBS-FDIC research conference on community banking.