The 2020/21 ICBA executive committee is chock-full of experienced, ambitious and inspired community bankers. From reining in credit unions to championing the SAFE Banking Act, they’ll be leading the charge this year to make sure community banks can flourish. We asked them about their priorities—and what they’d be if they weren’t community bankers.
By Molly Bennett, Photos by Stephen Gosling
Symbolically speaking, 2020 is a big year—and the ICBA 2020/21 executive committee has plans to match. In this new decade, these dedicated community bankers want nothing less than a level playing field for their industry, ensuring a robust and flourishing network of community banks that brings relationship-based, tech-forward financial services to customers in every corner of the United States.
There’s no doubt that the newly elected leadership team has the community banking chops to help ICBA and its members achieve their aims. “Their varied backgrounds and deep experience in our industry means this year’s leadership team lives and breathes community banking,” says Rebeca Romero Rainey, ICBA president and CEO. “I’ve known this group of leaders for years, and their passion for our great industry never ceases to amaze me. We’re fortunate to have them on our side as we work to create and promote an environment where community banks flourish.”
“Their varied backgrounds and deep experience in our industry means this year’s leadership team lives and breathes community banking.”
—Rebeca Romero Rainey
Independent Banker asked the 2020/21 executive committee members for their views on effective advocacy, regulation and more. Read on to see what they said.
What do you see as the most crucial legislative and regulatory issues for community banks in the next 12 months?
Noah Wilcox: There are always a number of legislative and regulatory priorities, but as we look ahead to 2020/21, I think a couple of the top priorities are our continued efforts to level the playing field, particularly with credit unions, and to create a safe harbor for community banks who provide cannabis and cannabis-related businesses with financial products and services in states where it has been legalized.
Bob Fisher: Legislation tailored to community banks is critical to the future of our industry. We need to continue to promote legislation and regulation that is customized to the risk and business model of community banks in order for us to flourish. It is imperative for the FDIC to take a new approach to de novo banking applications. Since the Great Recession, only 30 new banks have been chartered (or an average of three new banks annually), a stark contrast to the average 149 new banks chartered annually prior to the recession. Finally, we need to highlight and fight the continued inequity of and power grab by the credit union industry.
Brad Bolton: First, we need Congress to support community banks by passing the ECORA Act (H.R. 1872/S. 1641). This act would result in additional protections for community banks making home loans in populations less than 2,500 and would grant tax-exempt status to all agricultural real estate loans. Passing ECORA would be a huge victory for community banks and would help level the playing field against credit unions and the Farm Credit System. Advocating the passage of this bill is one of my personal priorities. Second, the SAFE Banking Act (S. 1200) is a crucial legislative priority. The Senate must be properly educated in evaluating this bill and understand it is not pro/against cannabis but rather gives every bank in America safe harbor protection for bringing cannabis-related operations’ cash into the financial system. Third, continued pressure to exempt community banks from CECL should remain a regulatory priority. We should also stay focused on H.R. 5574, which would repeal Section 1071 of the Dodd-Frank Act on small business data collection. Finally, we need continued advocacy for ICBA’s Wake Up campaign to highlight tax-subsidized credit unions abuses.
Greg Deckard: There is no question that cybersecurity and data security issues will remain a top concern during this next year. In addition, the impact on community bank capital from CBLR and CECL, as well as compliance-related issues such as BSA and CRA, will be important. However, the most pressing concern in the threat to our business model is posed by the tax-exempt, growth-obsessed and minimally regulated credit unions.
Alice Frazier: We must have a unified voice regarding credit union tax subsidy reform. The original purpose of credit unions has been replaced with a de facto bank model. Yet they are not taxed like banks. It would be easy to say, “We have beaten that drum. It didn’t work.” However, the egregious actions by credit unions are beginning to accumulate to a level legislators can no longer ignore. Additionally, effecting change to the Community Reinvestment Act is another area of critical importance in 2020/21. CRA should acknowledge the good work community banks inherently do within their communities and provide a consistent approach to examinations, increase the thresholds for asset size and level the playing field with credit unions.
“The egregious actions from credit unions are beginning to accumulate to a level legislators can no longer ignore.”
Pres Kennedy: It is crucial that we make substantial progress toward enacting FedNow, the Federal Reserve’s real-time payments network. Also, we must continue to safeguard against so-called housing finance reform that would disadvantage community banks.
Tim Zimmerman: There are so many issues we are working on for community banks that it is hard to name just a few. But if I have to highlight a couple, I’d say multiple issues related to credit unions, from the tax subsidy and acquisitions of community banks to unbridled expansion beyond their approved authority. Also, CRA, BSA, GSE reform and the Fed’s faster payments project.
Scott Heitkamp: The obvious issue is leveling the playing field with credit unions, and ICBA has taken this challenge head on with our Wake Up campaign. I am 100% behind this movement. I am also concerned about the pace of technology and how current regulation will be applied in the future for our institutions.
Jack Hartings: There is not just one crucial bill or regulatory issue; we tell our legislators and regulators that we are dying from 1,000 cuts. But, as I consider current legislative and regulatory issues, crucial ones are the SAFE Banking Act for cannabis banking; keeping the GSEs’ framework and recapitalizing them to preserve the secondary market for community bank mortgage lenders; and leveling the playing field and making our communities stronger by including CUs in the federal, state and local tax base.
From left to right:
ICBA vice chairman Brad M. Bolton, President, CEO and senior lender, Community Spirit Bank, Red Bay, Ala.
ICBA secretary Alice P. Frazier, President and CEO, Bank of Charles Town, Charles Town, W.Va.
ICBA treasurer Gregory S. Deckard, President, chairman and CEO, State Bank Northwest, Spokane Valley, Wash.
ICBA Consolidated Holdings chairman Jack A. Hartings, Chairman, The Peoples Bank Co., Coldwater, Ohio
What’s the story you’ve shared with a policymaker that helped move the needle on community bank advocacy?
Wilcox: I have shared a lot of community banking success stories over the years, but a recent one was the harm inflicted on consumers by the qualified mortgage rule and why community bank loans that are made and held in portfolio must be treated as qualified mortgages. As we all know, that was included in our landmark tiered-regulation victory known as S. 2155.
Fisher: I’ve shared many stories over the years with legislators that show real-life examples of the, albeit unintended, consequences of legislation. Many of the mortgage regulations that were implemented after the financial crisis forced many community banks to discontinue or limit their mortgage lending, especially for nonconforming mortgage loans. The result was that many customers living in rural markets had far fewer choices, or even no choices, to finance their homes. These very regulations were intended to help consumers but instead have limited their options. Sharing stories like this brings legislation to a human level.
Bolton: Community banks have survived without the help of a tax subsidy like credit unions receive and without the implied government guarantees that the “too big to fail” firms enjoy. We survive based on our relationship-driven model of local people making local decisions and being held accountable to those decisions by our customers and our regulators. Our industry should be proud that we don’t have to have regulations to tell us to reinvest in our communities; we do it every day. I think members of Congress recognize this and know that supporting community banks and the customers they serve is, and should continue to be, a bipartisan issue.
Deckard: As the past chair of ICBA’s Legislative Affairs subcommittee, I had the opportunity to work closely with ICBA staff and legislators in crafting some of the language preserving the pass-through tax treatment to Sub S banks, of which mine is one. I also was able to share with the members of the House Financial Services Committee, during congressional testimony on the SAFE Banking Act, specific stories of public safety concerns, including the murder of a family member, right outside the business entrance, of a friend of mine who owns a legal cannabis business in my market. I was pleased to communicate the industry perspective and safety considerations and proud that the bill was ultimately passed in the House.
“I was pleased to communicate the industry perspective and safety considerations and proud that the [SAFE Banking Act] was ultimately passed in the House.”
Frazier: During the 2017 ICBA Capital Summit, I spoke with Sen. Mark Warner (D-Va.) about the impact that mergers and acquisitions have on jobs in the area. I shared a proxy document listing the reasons why one bank’s board of directors recommended a sale. The first and most prominent reason was compliance and the regulatory burden. I also shared with him that a lasting result was the number of workers displaced in Virginia, enough so that the Worker Adjustment and Retraining Notification (WARN) Act applied. I believe that was the first time Sen. Warner connected the dots between the cost of regulation and the resulting impact of fewer local, community banks.
Kennedy: I have explained to regulators that community bankers can be trusted to make what would become known as subprime loans. Our customers are our friends and neighbors; there is no incentive to making harmful loans to them. But many people, for various reasons, cannot qualify for conventional loans. These customers need a community bank that understands their challenges and is willing to extend credit.
Zimmerman: At a recent meeting with a senator about the SAFE Banking Act, I told a story about how having one tenant in a building that was even peripherally involved with cannabis prevented us from making a loan without the risk of legal or regulatory problems. The senator was surprised that the current situation was that far-reaching and agreed to take a fresh look at the proposed legislation. I emphasized that we want to keep the cannabis business inside the banking system for a whole host of reasons but can’t unless the law is changed.
Heitkamp: I’m not sure a story I shared has really moved the needle, but I had the opportunity, along with a few other ICBA community bankers, to share our stories of how regulatory burden was harmfully impacting the way we deal with our customers to President Trump. We were in the Roosevelt Room, and there is a bronze sculpture of a buffalo being attacked by wolves. I saw it sitting behind the president, and I used it as visual to explain that we (community bankers) were like the buffalo and the wolves were like the regulators who were “nipping” at us. I stressed that we needed help to survive (S. 2155).
Hartings: In 2009/10/11, when many FIs stopped lending, we continued to lend to and work with our customers. We did not walk away or make a strategic decision to sit on the sidelines. My community bank, like many others, is the backstop for our community when times get tough. You can’t regulate that!
From left to right:
ICBA past chairman Timothy K. Zimmerman, CEO of Standard Bank, PaSB, Monroeville, Pa.
ICBA immediate past chairman Preston L. Kennedy, President and CEO, Zachary Bancshares Inc., Zachary, La.
ICBA past chairman R. Scott Heitkamp, President and CEO, ValueBank Texas, Corpus Christi, Texas
If you weren’t a community banker, what would you be?
Wilcox: As a fourth-generation community banker, I cannot imagine doing anything else. Now, if you asked my wife that question, she would say I would be a professional chef.
“As a fourth-generation community banker, I cannot imagine doing anything else. But if you asked my wife … she would say I should be a chef.”
Fisher: As a fifth-generation banker, it is hard to imagine my life doing anything else. I really enjoy helping people and seeing firsthand the good the bank can do for our communities. It has been extremely rewarding. However, I would have loved to have been a fighter pilot, but a lack of 20/20 vision stopped that career before it even took off. All my life I’ve also dreamed of being a race car driver. I loved going fast as a kid and still do to this day. I am still hopeful to one day be a race car driver, but for now, I’m just as joyful watching the bank help our community thrive as I was when I joined the bank 27 years ago.
Bolton: I honestly can’t imagine being anything but a community banker. However, if that wasn’t an option, I think I would have seen some success as an attorney. I am a results-driven person who takes no task without a plan, a follow-through and a follow-up—and having the documentation to back it all up every step of the way. I often tell my attorney that my documentation is pretty good for a rural, “shade tree lawyer.” He is quick to remind me to stick to what I am good at: being an accessible and responsive community banker to my customers. I think that is good advice, and I am fortunate to have the opportunity to serve my customers every day.
Deckard: While in college, I had a goal of being a business consultant, so I could learn various types of business in several industries, view different management styles, observe unique models for success and add value to the client. During my junior year, I started working at a community bank and realized that I could achieve all of these goals, and more, by being a community banker. I realized that every bank’s color of money is the same and that the critical distinction is the value of what we community bankers put with the green money to make a difference.
Frazier: The quick answer: a bartender. Great bartenders engage with the customer, provide local insights to newcomers, get to know their regulars, connect others around the bar and, oh, by the way, a bartender serves others. I see many of the same attributes in a passionate community banker. However, the late-night hours are not my “shining” time, so I would probably opt for something in marketing. I also enjoy finding unique ways to develop and distribute messages about great companies.
Kennedy: Easy! I would be a writer of some sort. Writing has always been a passion of mine.
Zimmerman: That’s a hard one, because I love being a community banker. It is an honorable profession that gives you back more than you give. Seeing the impact of the difference you can make and the dreams you help come true is very fulfilling. If I had to pick something else, it would probably be teaching or something similar where I could feel that I was really making a difference through education.
Heitkamp: I often joke and tell people that if I left the banking industry and you wondered where I went, you would probably find me selling snorkel equipment in St. Maarten. In all seriousness, there really is not another job that I would choose. I love what I do. I am passionate about our bank, the people who work with us, our customers and most of all our communities. Community banking is who I am.
Hartings: Maybe a CEO/CFO for a small, locally owned business. I really enjoy working with people, building efficient processes and workflows. Removing the bottlenecks or inefficiencies by using common-sense decision-making. I love the local tie to the community of a small business; doing the right thing is second nature, especially when it comes to donations or lending a helping hand. We all beam with pride when our local community grows and flourishes.
What actions do you think community banks must take in 2020/21 to win customers of all ages?
Wilcox: Community banks must be actively engaged in their communities and with their state and federal legislative delegations. They should recognize that community banking is a wonderful fit for the younger generations, not just as customers but particularly as the future leaders of community banking.
Fisher: We need to be adaptive to each generation’s needs. Let’s face it, today, all of our customers want to do their banking when and where it is convenient for them. For our younger generations, especially this new Alpha Generation, who never knew a time without tech, that means providing them with quick, tech-driven, mobile options. They need everything a click away. However, as our bank has experienced, many of our customers still enjoy coming into our offices to see their favorite customer service representative and grab a cup of coffee. Overall, we need to be able to provide all the access points with high-tech and high-touch solutions. The ICBA ThinkTECH Accelerator is an invaluable tool to help us find some of these new solutions.
Bolton: Technology is the key to success and sustainability. It can also be the great equalizer between larger banks and smaller banks. Community banks will need to continue improving the way banking is delivered to and interacted with by customers. All things mobile must be the goal while maintaining the relationship model that defines our industry. This will be a delicate balance; offering modern technology to on-demand customers, while preserving the attentive, accessible relationships that our customers expect.
Deckard: As an industry, we need to continue our involvement in the fintech space and collaborate with partners providing the most convenient access to our products and services. We also need to identify, hire, retain and develop the next generation of community bankers in all areas of the bank, including long-term management succession committed to remaining independent.
Frazier: Access to information using an internet-connected device has dramatically changed how consumers are making purchasing decisions. Convenience, certainty and reviews all play key roles in those decisions. Having a digital banking and payments strategy that addresses those three elements of decision making will go a long way in ensuring community banks are relevant today and in the future. Along with a digital banking and payments strategy should be a digital marketing strategy that incorporates an ability to encourage customer reviews digitally. Community banks hold the highest ratings in customer service, and our customers are our biggest advocates. Digital reviews are the modern word-of-mouth reputation. Now more than ever, community banks have access to affordable and deployable technologies that support such initiatives.
Kennedy: We must embrace technology at every reasonable opportunity but not lose sight of our greatest asset: our ability to relate to all our customers genuinely, personally and face to face.
Zimmerman: This revolves around technology, local focus and service. The community bank mission fits perfectly with today’s younger consumer: straightforward, honest, locally focused, and high tech and high touch. We just need to find effective ways to reach younger customers and tell our story.
Heitkamp: We need to be able to offer the full digital experience to our customers. We must be able to serve the younger generation with their technology expectations and continue to serve the older generation with the personal touch that they expect. I refer to this often as “traditional banking with a modern twist”. I believe we can offer both of these experiences and do it exceptionally.
Hartings: Community bankers know their customers and are great with high-touch customer service. We need to meld that with high tech. I am so excited by the ICBA ThinkTECH Accelerator; this is a game changer with the high-tech customer experience solutions that are being developed. There is not one solution that fits all, but all community bankers need to embrace technology to level the playing field and remain relevant.
What’s your elevator pitch for why a strong community banking industry is so important?
Wilcox: Community banks are the cornerstone of the American economy. In fact, one in three counties is ONLY served by a community bank. With more than 52,000 locations nationwide, community banks are responsible for providing access to the financial system across the country.
Fisher: Community banks are the economic engines of thousands of local communities throughout this entire country. Community banks make more than half of all small business loans and nearly 80% of agricultural loans nationwide. When community banks thrive, our local economies also thrive. We not only provide local jobs but also keep money flowing locally by lending and funding within the communities we serve. Our unique business model, built on relationships, helps us to better understand and support local businesses and entrepreneurs.
Bolton: A robust and flourishing community banking industry translates into vibrant and growing communities, ones in which farmers, small business owners, consumers, and homeowners can reach their dreams and potential while dealing with bankers they know and trust! Community banking is important, because without it, there is no assurance of making sure Main Street is as strong, relevant and viable as Wall Street. We as community bankers make this happen, because we will always demand a tiered regulatory approach based on risk to protect the relationship-driven model of seeing through the numbers to the actual customers we serve.
Deckard: I believe our local businesses and farmers depend on community banks to assist them in creating and preserving wealth. We have the unique responsibility of being the trusted advisors to our customers, and in many cases these relationships span generations. Our community bank is also a small business and invested in our market from a financial, economic and social standpoint.
Frazier: Our communities thrive by having strong community banks embedded in the fabric of local economies. Community bankers generally have their ears closer to the ground, because they participate and volunteer countless hours with local organizations. As a result, they understand the real needs and opportunities of the communities they serve. While all banks can make loans, provide deposit accounts and other services, community bankers reach further by serving the person, the family, the business behind the products. Community bankers help each reach financial success.
Kennedy: Community banks build better communities. Urban, suburban or rural; every community in America has better prospects for success if it is supported by a locally owned and managed community bank.
Zimmerman: Community banks have a symbiotic relationship with their communities—the success of one depends on that of the other. We only thrive when our customers and communities do the same, so looking out for their best interests is ingrained in the way we do business. Our shared values create value for all those we serve.
Heitkamp: We all know that a vast majority of small businesses receive their financing from a community bank. It is also known that several major American corporations got their first start from a community bank. We are vital to the economic landscape of this country. Community banks also offer the products and services that today’s entrepreneurs need, and we provide the customer service component that goes along with it. We don’t just check boxes or make transactions; we form relationships.
Hartings: If you see a strong, vibrant, growing community, even in some seemingly improbable places in rural America, you will likely find a community bank. We are the backstop when things get tough, and the catalyst when communities grow and prosper. They say the key to success is getting everyone on the boat rowing in the same direction, so community banks have one mission: community. Community banks prosper when their community thrives.
Molly Bennett is executive editor of Independent Banker.