Iowa bankers note past, plan for future at convention

Northwestern Financial Review, Oct 15-Oct 31, 2003 by Bengtson, Tom

Iowa bankers met at the crossroads of the past and the future, where the Iowa Bankers Association conducted its 117th annual convention in Des Moines, Sept. 14-16. Bankers honored one of the greats from their past and laid out a roadmap for addressing issues in the future.

IBA honored Arnold Schultz with its fourth annual James A. Leach Award, a kind of "banker of the year" recognition. Schultz, 72, is the retired chairman of Grundy National Bank in Grundy Center, Iowa. Schultz had been at the bank since 1959 and he served in several volunteer industry positions - Chicago Federal Reserve Bank board of directors, treasurer of the Independent Community Bankers of America, member of the Financial Accounting Standards Board, president of the Iowa Independent Bankers and a member of the Iowa Bankers Association's board.

"Arnie led one of the greatest community banks in Iowa," commented U.S. Rep. James Leach (R-Iowa). Noting Schultz's work with the FASB, Leach said: "People who apply integrity to numbers are the people who make America work."

Leach praised Schultz as an outstanding community banker, a profession for which he has great respect. "At the heart of everything is trust, and if you think of the places where trust is taken for granted, it's in the banking industry in the Heartland," Leach said. "Great leadership in the country comes from the private sector. Nowhere is it greater than in community banks. In honoring Arnie, we are really honoring the finest of the finest."

Last year's award recipient, Ed Tubbs, made the presentation. Tubbs, of the Maquoketa State Bank, is another venerable name in the industry, with a history extending back decades. The two bankers provided the historical context for the future which bankers face today - a future that bankers discussed throughout the remainder of the meeting.

Positive Outlook

"The economic picture is increasingly positive," said 2002-2003 American Bankers Association Chairman Aubrey Patterson, chairman and CEO, BancorpSouth, Tupelo, Miss. He said the combination of cheap money, fiscal stimulus in the form of tax cuts, an accommodative Federal Reserve, and the lowest interest rates in 45 years, is producing economic strength. But as pressing as the economy, Patterson noted several issues bankers are watching in Congress.

The Fair Credit Reporting Act, he said, is a top industry priority. He said it must be re-authorized this year. "The alternative is a patchwork of state laws that would balkanize our credit system," said Patterson, adding: "I am optimistic it will be dealt with positively this session."

He was not as optimistic about deposit insurance reform. He said an increase in deposit insurance coverage is unlikely and Congress probably won't pass a bill this year. A reform bill must index coverage for inflation and resolve the "free-riders" issue, he said.

Patterson said perhaps the most significant issue bankers face is the battle over real estate powers. He acknowledged that many banks are not interested in getting involved in the real estate business, but he said the battle is really about the integrity of the Gramm-Leach-Bliley Act. The 1999 law left it up to regulators to determine the business lines open to bankers. If Congress capitulates to the real estate agent lobby by specifically banning banks from real estate, it gives other industries reason to believe they can go to Congress to ban bankers from those businesses.

Patterson also described the ABA's recently-filed lawsuit regarding the expansion of credit unions in Utah. Patterson said ABA is "in this for the duration," referring to the industry's fight for a level playing field with credit unions. He noted, however, that the industry is divided among three groups -those who are adamant about fighting credit unions, those who are moderately interested in such a battle, and those who do not believe the battle is worthwhile. He said the industry will have to be unified in any effort against credit unions. Patterson said ABA will be studying the opinions of members to determine the best course of action on credit union competition.

Dwight Conover, the 2002-03 IBA chairman, called the association's legislative efforts "bitter sweet." He noted successes but said the industry needs to present its message in a broader context to win the support of the public. "We need to be able to look at things from the consumers' point of view," said Conover who is chairman of the First National Bank of Creston. "I know we are not held in high esteem by the public. Well, let's do something about it. I think the legislators know the value of community banking, but I am not sure the public knows. We need to put a different spin on the ball and Jeff Plagge will be very good at that."

Plagge, president of the First National Bank in Waverly, became IBA chairman at the convention. Plagge is coming off a year as chair of the ABA government relations committee and head of its credit union task force.

State Legislation

IBA President John Sorensen said IBA was successful getting three bills passed "quietly" during the last legislative session. One bill preserved a state tax exemption of ATM surcharges, another clarified the use of a 360-day lending year for the purposes of figuring interest, and another defined when late fees can be paid on loans.