January 1, 2015
No one would ever walk up to a stranger on the street and hand over their life's savings. "Here…take care of this. I'll be back in 30 years."
And yet, that's as much thought as many people put into choosing a bank they will trust with their retirement, their children's education, their business, or their home. What makes people trust a bank? Or, after the financial meltdown of 2007, not trust a bank?
People choose a bank for any number of reasons. It might be convenience - lots of ATMs - or it might be a slick advertising campaign with a catchy jingle.
Or it might be something much more difficult to build: trust.
IBC Bank was founded in 1966 to serve small businesses in Laredo. And serving those small businesses is still a big part of what we do. They've enabled us to grow to a $12.1 billion company serving 88 communities in Texas and Oklahoma. How does that happen, especially when you consider we're serving small towns like Port Lavaca and Broken Arrow?
Texans and Oklahomans are known for being straightforward. What you see is what you get. And that's IBC Bank. We don't have a New York megabank or an offshore management team. We're part of the communities we serve. We know our neighbors and they know us. We know what makes our local economy tick. That's why IBC bankers make the decisions impacting their communities locally, not in some far-off "financial center."
We've been in the communities we serve for years, in some cases for decades, and we've built honest, trustworthy relationships with our customers. They are people we know and call by name. We are your community bank!
We're not a multinational megabank and we don't want to be treated like one. And yet, we are.
Created in response to the Great Recession of 2008, the Dodd-Frank Act was meant to safeguard the U.S. banking industry from near collapse. While that's a worthy objective, the Act is also having the unintended consequence of making it almost impossible for community banks to exist.
The Consumer Financial Protection Bureau (CFPB), stress testing, new compliance regulations and cumbersome reporting requirements are all taking a toll on community banks. We don't have the operating margins large banks have and simply can't afford the overhead those guidelines cause.
The challenges faced by community banks like IBC and the regulatory burden they're shouldering is costing America the loss of one community bank a day. And it's making it difficult for the remaining community banks to provide the services our neighbors have come to rely on.
As a community banker, I live and die on the lending decisions I make. I deal with a relatively small pool of borrowers. My one advantage over the megabanks is that I can make local lending decisions, based on my knowledge of the community and my customers. I know the local economic climate and I know the people I'm lending to. I know their families, their employers, and their reputations. But, by today's standards, if a loan applicant doesn't fit in the prescribed government lending "box," it's not possible for me to give that person a loan. That's a big reason mortgage lending is down 30 percent for first-time homebuyers, and consumer lending is an endangered product.
If community bankers are required to ignore that local market knowledge, then we've lost our decision-making discretion. That impedes our ability to compete with the big banks and contribute to our community's growth. We might as well be just another bank-in-the-box where lending decisions are made hundreds of miles away at a centralized loan processing facility with limited understanding of how that loan will benefit both the borrower and the community.
And that doesn't benefit anyone or our nation. We must save community banking to save America. Reach out to your Congressional representative and Senator and tell them to save community banking because without your help, community banking will continue to die daily.