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Staffing, policies and vendor relationships will draw scrutiny as community banks look for new ways to make money.
March 13 -
William Loving believes that the banking industry will shrink at a much slower rate than what many predict.
March 8
LAS VEGAS — Community bankers are trying to make the most of a difficult situation.
Most attendees at the Independent Community Bankers of America's annual conference are doing their best to put a positive spin on their circumstances. Rather than wallow in misery, more bankers are making a concerted effort to focus on improved credit quality and steady job growth, among other things.
"People are starting to spend money again," Jennifer Beard, president of Farmers State Bank in Elmwood, Ill., said during a break, adding that the $58 million-asset bank had a strong year in 2012.
Conditions are "getting better all the time," added Jim Lynch, chairman of First National Bank in Alamogordo, N.M. While there is plenty of loan demand, a number of potential borrowers are still falling short of the $330 million-asset bank's credit standards, he said.
Lynch's perspective cements another reality. Bankers harbor lingering concerns about the future even as they try to put on a brave face at the conference.
Beard, who was headed to a presentation on a Farmer Mac loan program, was also struggling to see her glass as half full. After touting her bank's financial strength, she quickly lamented that Farmers State is "behind the eight ball" on fee income. "We still have a weakness in noninterest income."
The ICBA and many of its presenters are doing what they can to keep spirits high.
"The fog is lifting," Gabriel Krajicek, chief executive of BancVue, said during a break. "It's not fist pumping, but banks have finally learned how to manage the current environment."
Some presenters went even further to try and energize the crowd.
Scott Brown, regional sales manager for Banker's Dashboard, blasted "Eye of the Tiger" to kick off his Tuesday presentation on "The Five Metrics That Matter Most in 2013." He followed it up by showing a clip from one of the "Rocky" movies where cinematic underdog
"We have slowly turned the corner," Brown declared in his opening remarks. "We're back in fighting shape."
Despite those efforts, bankers are also discussing their mounting concerns about loan demand and competition. A growing worry is that growth-starved banks are cutting prices and relaxing underwriting to compete for business.
"The real thing that keeps me up at night is trying to rationalize some of the loan pricing out there," Thomas Combs, president and chief executive of the $203 million-asset Union Bank & Trust in Oxford, N.C., said during a break. "It seems like we are almost our own worst enemies. As soon as we clean up our credit, we go back out being aggressive again."
A Tuesday roundtable involving executives at banks with more than $500 million of assets highlighted the unreliable state of loan demand. For the most part, borrowers are cautious, though some stepped up to finance real estate deals late last year because of tax issues.
Roundtable participants also discussed concerns about pricing's influence on customer loyalty and difficulties finding talented lenders. Unfortunately, lenders who once worked at big banks are not always a good fit for smaller banks, David Crader, chief executive of Bank of Missouri in Cape Girardeau, said.
"The culture just doesn't fit," Crader added. Lenders at big banks "are under the gun to get loans closed and they don't necessarily see the big picture."
Regulation remained a hot topic. It's hard to "make plans because of the unknowns" tied to
Brenham National, much like Farmers State, is keen on generating for fee income, Borchardt said. The $271 million-asset bank's securities portfolio has outgrown its loan portfolio in the recent years, he added.
