Throughout my career I have spent a lot of time traveling through cities and small towns throughout the United States and I am simply depressed more each day!
Having lived a big part of my life in the “Big City”; I am certainly a fan of the city and what it offers to its residents; but my home is still stuck in the sticks. I grew up on a farm in a rural area but have been fortunate to have seen a major part of our country having actually visited 38 states…and it saddens me to see our small towns continue to die.
When you live is the “City” it’s easy to forget the small towns that surround you. Sure we can all live without the nosey neighbor who knows more about your business then you do, but there’s something about a small town that I will never be able to explain completely. Maybe it is the small town community environment, or the safe feeling that I get walking the streets at night, or one of many other things a small town offers up in exchange for a Starbucks on the corner; but to see them disappearing one town at a time simply scares me and deeply saddens me for my future and the future of this great country.
When we lose a small town, we lose part of America and who we are and where we came from. And, one of the most important parts of a small town is its Community Bank, and unfortunately they are dying too!
Here is a question for you: “When you think of your Bank, what do you think of?” Certainly you don’t think of Bank Wal-Mart or Bank McDonalds…these mega businesses took away our local diners, corner general stores, local pharmacies and so much more and organized them into neatly organized isles filled with miles and miles of “Stuff”. But, if we don’t stop the FDIC your local Community Bank will be gone too, becoming a McBank!
Sure, when we watch TV or search the web and become accustom to the trademarked advertising thrown at us and we become accustom to the branding. All these Mega Bank’s fight to be your Bank and sell you their products claiming to be your hometown Bank…but don’t be fooled. A McBank is still a Mega Bank. Personally, I’d rather have a choice and I’d choose a local Bank to support me; not someone 10 states away! But, if the FDIC gets their way you’ll only have your local McBank because the FDIC believes that we only need a handful of Banks in the nation and Community Banks are not needed at all.
“The FDIC, is doing everything they can to drive community banks out of business.” www.wsj.com
Now, in the FDIC’s defense I have never specifically seen or read any publication to this fact, but here are some statistic’s that will alarm you. By the late 1980’s, the FDIC oversaw more that 16,000 banks throughout the country, today that list is down to 7,760 by February 2011. That’s approximately 600 Community Banks closing a year.
What happens when 600 Banks a year are closed and all their branches are taken out of small towns. I see the effects first hand as I drive through the hundreds of small towns throughout the United State and I simply get saddened more and more. When a Bank leaves a small town the last hope for Main Street USA is gone with it. Seeing an empty main street is one of the hardest things to see. When the Bank closes, the Library’s closes, the local school closes, and basically the whole town is closed. What’s even more disheartening is not only are these small towns losing their Main Streets, in the end they lose their churches, their post offices and even their people.
Yes, here is a sortable list of 491 post offices the U.S. Postal Service was closing starting at the end of 2010. If you don’t have a Post Office, you don’t have an identity as a small town?
I was watching “Larry the Cable Guy” on the History Channel recently and he highlighted a small town in Nebraska called Monowi, Nebraska. Monowi once had a few hundred people, but now has simply all but disappeared leaving only one person, Elsie Eiler. I for one hope that we don’t allow this to continue to other towns; sure there are some things that are out of our control, but not closing our small town Banks is in our control!
Remember there are many benefits to dealing with a Community Bank!
The major benefit is that customers can get direct access to decision makers. Also, local Bank Officers are usually deeply involved in local community events and affairs. Sure, big Bank require their staff to provide token community service, but they’re still not the decision makers…those guys are several hundred miles away and probably will never set foot in your town. Having the decision makers accessible to the customer has a direct impact on the customer–allowing him access to the resources of the Bank locally to meet their needs, but also to grow to community as well.
I have worked for several mega Banks in addition to small Community Banks and I can tell you from my experience local Community Banks take the resources of the community and redirect the same resources to local businesses and families. For example, deposits from local customers and businesses are loaned to families in the form of mortgages, personal loans and student loans. I can also assure you that when I worked for worked the Mega Banks, the majority of the deposits were sent to what is called the Big 38, or the biggest metropolitan areas of the country with very little of your money actually staying local. Odds are if you Bank at a Mega Bank, your local Bank branch is what’s called a Deposit branch…ask yourself why is a borrower located in one of the Big 38 more important then you?
Another plus of a Community Bank is the wiliness to look beyond the Credit Report and at the applicant’s character, family and banking history when making a loan. You’re really just a number to a Mega Bank. Sure, they seem nice and say hello but Wal-Mart has Greeters too.
Mega Banks have underwriting department that uses a formulas or matrixes to see if you deserve a loan. They rely on various financial ratios to approve you, the borrower, and the department surely is in another city or even another state. Don’t get me wrong proper underwriting is important, but that is a tool for a Community Banker, not policy…you really mean something to a Community Banker.
But, knowing the benefits of a Community Bank I ask you why not stay local…remember Community Banks need you just as you need them. Remember, your Community Bank could be on the main street of your small town or even on the corner block just off of Lake Shore Drive in Chicago or any other major city…Community Banks are everywhere!
Everyone in the United State is certainly still angry over the Mortgage debacle, but who caused it…does Countrywide Financial Corp. and Wachovia Corp sound familiar…to name a few! What happened to them by the way; well they were acquired by Mega Banks like Citigroup Inc. and Bank of America Corp to avert failure of the system and of course they were propped up by the government using your money. Remember the phrase: “To Big To Fail”…I don’t buy that one.
The Dodd-Frank Act which was passed recently promised to work well for Community Banks while providing safety for the consumer has actually placed major burdens on Community Banks. The new changes are cumbersome, causing more overhead and more staff requirements; yet the Mega Banks who caused the problem get buy for less due to the economies of scale. On top of added compliance and staffing requirements, the FDIC is pounding Community Banks with major increases in FDIC Insurance Premiums that have gone up as much as 100% or more for some Banks. Also, Capital requirements for Community Banks are going up causing major stresses on profits leading to closings—you can see the dilemma? In a recent exam that I was part of, the Lead Examiner said they’re looking at 10% to 12% capital requirements for all Community Bank, but many Mega Banks continue to struggle to maintain healthy ratios far below this and without the Federal Bailout would never come close…but they are “To Big To Fail”, remember! Why the double standard I ask?
Community banks are fighting for survival and they need to survive! Whole communities depend on them!
“Community banks are the life-blood of small business, and small business employment is the life-blood of our economy. By showing such favoritism to large banks, our government is in essence undermining our fragile economy. 8,000 community banks serve 10,000,000 small businesses.” www.wsj.com
With that said, the FDIC does not seem to be a friend of the Community Bank. Audits that are over the top only end to attack the customer with Banks trying to comply with FDIC rules that seem to change every six months only compound this problem.
Remember when I said that Community Banks work with borrowers and help grow the communities that they work within…a lot of the new rules Banks are subject to by the FDIC forces Bankers to put decade long Borrowers with histories of good standing and performing loans; now to be categorized as problem loans only to be forced out of the Bank and in some cases causing good customers out of businesses and into bankruptcy.
Mega Banks certainly don’t care if this happens because you’re a number to them. One Banker I talked to said many people who have never missed a payment on their loans are not being renewed and forced out of the Bank by these Mega Banks or they force them into foreclosure or even into Bankruptcy…Like I said Community Bank’s are subject to the same FDIC rules, but your odds of getting help in my opinion are best served by a Community Bank then a Mega Bank.
Also, I found these charts below that I thought were interesting which shows the population concentrations for the United States as of 2010, and then review the concentration of failed Banks…wow! Small town America certainly isn’t causing the problem in my opinion?
To conclude Mega Banks are still reeling from the foreclosure mess, fraudulent documents and robo-signing; which they created and we bailed them out. But Community Bank are ready to get you back into their offices and to support you and your town. If your small town has a few people in it, or a few million in it; your best partner in banking is and will always be your Community Bank. Through trust, through service, and by banking with your neighbor, the Community Banks will survive with your help! So, do what you can and support your local Bank as they support you!
JR
New Vienna Services, Inc.
www.newviennaservices.com
Solutions for Today’s Bank!
www .reuters.com, www.wsj.com, www.nytimes.com, www.census.gov, www.forbes.com
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