Pub. 3 2013-2014 Issue 4

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S January • February 2014 5 The Vanishing Community Banker … no, the Vanishing Community Everything Recently, the crippling impacts of current regulatory policies were driven home while at the funeral of a long-time family friend in Sterling, Colorado. He was a pillar in the community having served on numerous boards, including the Merino School District Board. In essence, he was one of those people who held a community together. Like my own family, he also had the blessing (and curse) of being a farmer. Included in the program was a poem he had written in 1974, proclaiming the joys and sorrows of farming, that ended with the eternal small business rallying cry of “one more year.” My family’s experience was very similar. For every ten years of farming we hoped for a couple of okay years and one great year to make up for the other losing seven. This con- stant struggle required the wonderful traits (found in all good small business people) of perseverance, integrity, grit, and yes, optimism. However, it also required those same traits in our community banker. During the incredibly difficult times in agriculture of the 1980’s and 1990’s, our family was blessed to have a banker who understood this issue. First at the local bank, and then later as the local leader of a Denver based bank, our banker understood the challenges that farmers and other small businesses face. He was a common sense lender, who lent not just on the numbers, but also the story and there is always a story. Due to his under- standing of the cycles, our banker was essential in providing guidance, advice, and more than once extending “benefit of doubt” loans so that our family farm operation could rise again for “one more year.” As I sat in the pew listening to the many tributes to our friend, I could not help contemplating the current state of community banking and small businesses. Due to eco- nomic and competitive pressures, many community banks are reeling, yet most community banks have found ways to survive these pressures. However, after battling to survive the worst economic crisis since the great depression, a recent survey revealed that 40% of Colorado banks self identified in the continuum of very likely to somewhat likely to not be in existence in five years. How can this be? What could be worse than the recent economic crisis? Why would these community bankers battle through the last six years, only to give up now? Amazingly, it is the friendly fire fromCongress and bank regulators (those charged with protecting the banking system) that appears to be the final straw. The prescribed cure of the 2008 economic collapse, for many community bankers, is clearly worse than the disease. As community bankers we knowwe are in a cyclical busi- ness, and like our small business brethren, we plan accord- ingly so that we can work through lean years and thrive in the good years. However, with bank regulators proscribing literally tens of thousands of pages of new regulations (that mandatemore capital, more systems, more disclosures, more policies, more red-tape and seemingly infinite amounts of new expenses while also putting numerous limits on income sources), many banks are discovering that there will no longer be any good years. The new levels of overhead simply cannot be overcome… thus the vanishing community banker. While consolidation and elimination of community banks may be occurring, it does not have to be our fate. As com- munity bankers, we must draw on the same grit and determi- nation displayed by our small business and farm customers. We must continue to push back on over-regulation. We must make 2014 the year to make meaningful amendments to Dodd-Frank and other banking laws. There is more at stake than just our industry. For if we fail, not only will community banks be in peril, so too will many small business people, pil- lars in their community, who need us for “one more year.” n Koger Propst, CBA Chairman President, Sturm Financial and ANB Bank