Like community bankers, ICBA adapts to the times

Northwestern Financial Review, Oct 1-Oct 14, 2004 by Bengtson, Tom

Q: You are the chief spokesman for the Independent Community Bankers of America. How are you being received by elected officials?Do they understand what community banking is about?

I have found them to be quite receptive on regulatory burden relief. I think they really want to hear reasons why they should enact some burden relief.

Over the years, ICBA has transitioned from an organization fighting bank structure issues to one that is now working on a broad array of issues. The structure issues are behind you now.

We still have some structure issues, such as industrial loan companies. But I think ICBA has just adapted to change. As the industry is changing and consolidating, so too does the trade association. Its focus really hasn't changed. It has always been trying to make sure we have the strongest possible environment for our members.

How important is deposit insurance reform to ICBA members?

Clearly it is important; we need to have a bigger amount. I have heard some people - even regulators - say: "$100,000 is a lot of money. Why do you need more?" Well, if a rancher sells his cattle once a year, he may get a check for $300,000. He is not a wealthy businessman. That's his one-year product where he has to pay off all his loans. It simply does not make sense that they should have to take that money to a bank that is too big to fail if they really want to be sure that they wouldn't lose it if the bank got into trouble. It's a very important issue to all community banks, my bank included.

What is the most important issue community bankers face?

I don't think I could be pinned down to pick just one issue. You can't say GSE reform is more important than the issue of deposit insurance reform. They are both very important to us. Federal Home Loan Bank advances have become so much more important to banks. So anything that has anything to do with GSEs has got to be a very important issue. And so is reg burden relief. So I wouldn't say there is one that clearly overshadows the others.

Home Loan Bank advances - are banks too dependent on them? Have those advances made community bankers lazy about working to attract deposits?

I heard that from FDIC Chairman Don Powell. He made that comment at a meeting I was at recently. I don't think it's got anything to do with making bankers lazy. I think it has given us a source of funds we didn't have before because we can buy 15-year money and match a 15-year loan to that. People aren't willing to buy a 15-year certificate of deposit. So I don't know where people are coming from saying that has made bankers lazy. I just think it is one more arrow in the quiver of products we have to access. I know in our case it's allowed us to make roughly $20 million more in loans than we would have been able to make otherwise, so we have had to add people and increase our business because of it.

Tell us about your own bank and y our key challenges.

We are a 103-year-old bank with three offices, located in a county of 6,000 people. We are in an area that is not gaining population. So our biggest challenge is how we continue to grow. We're an agricultural area and we are seeing water sold off from our communities, which dries up the agricultural land, which means fewer people making their living in that community. Our biggest issues are dealing with the local issues of the West, and the lack of water, and population decline.

The Independent Community Bankers of America has a new executive vice president in Cam Fine. Any thoughts on how he's doing do far?

Cam is doing a fantastic job. He is a people person. He's got a good grasp of the issues. There are clear differences with Cam's style compared to the way Ken [Guenther] used to run things. Cam has a background of serving as a banker, so he has actually been there and dealt directly with many of the issues that we have. Of course, Ken came out of government and had not had that same experience. Cam had been very active in the ICBA before he was hired here, so he knew a lot about what was going on at the ICBA. But I think the most important distinction, clearly, is his background as a banker.