By Ken Walsh
Ruby Valley National Bank is not much different from other community banks, except our risk threshold is probably higher than most. Serving a marketplace with a population of 7,800, where cows outnumber people by five to one, our community bank has developed strong agricultural lending expertise. Our loan officers are from agriculture backgrounds and keep current on the markets, trends and technology.
Ruby Valley National Bank is not a fair-weather lender, and with the volatility of agriculture, we have demonstrated that we will work with borrowers. We have a very loyal customer base, which is a strong marketing tool that allows us to maintain a strong loan-to-deposit ratio. This has caused concerns with the regulators, but we have resisted and are rewarded with the continued support of our patrons.
Twin Bridges, Mont.
ROAA in 2015: 2.20 percent
Assets: $92 million
Retail locations: Two
Our community bank heavily uses the U.S. Department of Agriculture’s Farm Service Agency–guaranteed loan program. A vast majority of our USDA-FSA guarantees are sold into the secondary market, with our bank retaining a servicing fee. In this way, we generate double-digit returns on our bank-owned portion of these loans, which frees our capital to pursue additional lending opportunities and extend our lending area.
Because of our bank’s high loan volume through the USDA-FSA program, our application process has become streamlined and we are efficient with the process.
The Farmer Mac loan programs are increasingly being used, as they streamline and automate their processes. They allow for ample servicing fees, with competitive rates and terms. This again allows us to leverage our capital and increase our bottom line, while fulfilling our customers’ needs.
Ruby Valley National also uses the Small Business Administration loan program, but to a much smaller degree than our use of the USDA-FSA program. That is mainly because of the SBA’s lower guarantee percentages, its upfront fees and a lack of local contact with decisionmakers.
Our community bank continues to strive to get better and more efficient. We don’t try to reinvent ourselves, but we learn from our mistakes. We also continue to educate ourselves by visiting with peers and participating in industry events. We try not to stray from our areas of expertise; we do what we are good at, and work hard to do it even better.
In the future, community banks will remain strong, but because of the regulatory pressures, they will continue to see consolidation. It is not only the regulations that cause undue harm, but it is the pressure from examiners who lack knowledge of or appreciation for the individual community bank model. We think that is the biggest threat to the future of community banks.
Ken Walsh (firstname.lastname@example.org) is president and CEO of Ruby Valley National Bank.