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Interview with a
Community Banking
Professional
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 Mark
WilliamsonPresident
High Point
Bank |
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Q: High
Point Bank is a family-owned bank. Has that
offered special advantages to your bank during the
recession? If so, what are they? Any
disadvantages?
A: High Point Bank is
fortunate. We were founded in 1905 and since then
we have had very patient capital behind the bank.
Our shareholders are in it for the long haul, so
they are not looking at the numbers exclusively
from quarter to quarter. Additionally, our
shareholders have been very smart in their
appointment of the Board of Directors. The bank is
blessed to have a very capable, smart and patient
Board at the helm.
If there are disadvantages,
it is that we have an abundance of capital.
However, we are unwilling to accept the dilution
of our stock. In other words, we can't use our
stock as currency in order to grow through
acquisition. Therefore, we intend to continue to
grow organically into the Triad
region.
Q: What do
you think the community banking industry will be
like in the next ten years?
A: Well, I
am not very good at predicting the future, but it
is my belief that there will be a lot fewer
community banks in ten years. I also think there
will be less branch offices. However, the
remaining branches will be more important. They
will be less about transactional activities and
more strategic, supporting all lines of business -
in our case, business and mortgage lending, trust
and investment services and insurance.
Q: You
recently attended the North Carolina Banker's
Association Washington Caucus. What was your
primary take away from it?
A: It was
a pretty depressing trip. My biggest take-away is
how some in Washington believe that every problem
can be fixed through more legislation and
regulation; although it is not surprising. It only
serves to make the community banks weaker and
damage the entrepreneurial spirit of the bankers.
Community banks did not cause the problems, but
are definitely bearing the brunt of the
"cure."
Q: What do
you enjoy most about being a community
banker?
A: Despite
what Washington says or tries to do, I clearly
believe that community banking is a high calling.
We are a fundamental grass roots part of our
community economy. My dad was a community banking
executive, and I am proud to follow in his
footsteps.
Q: As a
whole, what do you think community banks are doing
right? Where are they falling
short?
A: Doing
right. We are meeting the credit needs of our
neighbors and small businesses. But equally
important, community bankers do a great job
supporting their communities financially and
through supplying a volunteer base for community
programs and non-profits. The bankers I know work
hard to make their communities a better place for
everyone.
Falling short. It is pretty
clear that community banks need to do a better job
of telling their story. We do so much good in our
communities. Community bankers are not Wall
Street, and we should not allow the media or the
government to paint us with the same brush as
those on Wall Street.
Q: What
are the best opportunities for growth of community
banks?
A: Small
and medium-sized businesses and institutions need
a "banker" more than they need a bank. Community
banks need to be sure that they have qualified,
caring and smart people who know the businesses of
their customers and provide their customers a
direct person to contact. They need to do what
they do best, provide financial solutions and
serve the needs of individuals and small and
medium-sized businesses.
Q: What
should be the focus of community
banking?
A:
Gathering local deposits and meeting the credit
needs of their customers and those in the
community.
Q: How is
High Point Bank addressing the onslaught of new
regulations being issued?
A: Like
every other bank, we are adding compliance staff
and will continue to do so for the foreseeable
future. The cost of the onslaught of excessive
regulation puts pressure on earnings and requires
us to grow simply to absorb the increased cost
burden of compliance. Each bank will have to
determine its magic number for being big enough to
absorb the increased cost of regulation. It is
going to force a lot of community banks to grow or
merge with others; otherwise these regulations can
put you out of business.
Q: Bankers
and banks (regardless of the size of the
institution) are being demonized by politicians
and the news media. I think you would agree that
this is unfair but what can and should community
bankers do to rehabilitate their
image?
A:
Community banks need to continue to donate time to
the community, volunteer and be deeply involved
with their neighbors. Community bankers usually do
not like attention, but we all need to be a little
less modest. Most bankers do things because they
are the right things to do, not necessarily to get
attention. But now community bankers need to get
their stories out and let everyone know how they
positively impact their communities. It really is
critical to draw a distinction between the
public's perception of Wall Street and what we do
as community bankers.
Q: If
community banks would substantially decrease in
number, through consolidation, failure, etc., what
effect, if any, do you think it would have on the
communities that they presently
serve?
A: It
really hurts those smaller communities when their
local community bank merges or goes away. We have
seen it time after time. Those small towns are not
as vibrant without the support of a local
bank.
Q: What
would you tell someone wants to be a community
banker?
A: I would
tell them that they need to truly believe in the
purpose of community banks - to serve small
businesses and neighbors; otherwise you will not
survive because it is challenging and tough work.
One has to be committed to it, because like I
said, it is a calling. You have to keep your
spirit up and press forward.
High Point
Bank was founded in High Point, NC in 1905 by a
small group of local businessmen. Since then, it
has grown to 8 full service branches plus a
commercial office in Greensboro, N.C. As of
December 31, 2011 it had assets in excess of $792
million. Finally, its financial strength is
showcased in that it did not accept TARP funds.
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Mr.
UNTERMYER: Is not commercial credit based
primarily upon money or
property?
Mr.
JP MORGAN: No, sir; the first thing is
character.
Mr.
UNTERMYER: Before money or
property?
Mr.
JP MORGAN: Before money or anything else.
Money cannot buy it.
Mr.
UNTERMYER: So that a man with character,
without anything at all behind it,
can get all the credit he wants, and a man with
the property can not get it?
Mr.
JP MORGAN: Because a man I do not trust
could not get money from me on all the bonds in
Christendom.
I
recently finished The House of Morgan by Ron
Chernow. It contained this exchange between JP
Morgan and Samuel Untermeyer, which took place at
the Pujo Hearings in 1912 and 1913. Morgan's
comments struck me because of his emphasis on
character, which is that variable that many
community banks, who know their customers, are
best situated to understand and take into account
(obviously, I am not advocating against the use of
strict underwriting requirements too). This
understanding and flexibility is what community
banks can bring to the table for their
customers.
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Creditors'
Rights
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Top 10 Bankruptcy Truths
Bankers Should Know
by Rayford K. (Trip) Adams
III
Bankers confront the bankruptcy
world regularly. It can be a world of somewhat
unfamiliar, if not confusing, concepts and terms.
Unfortunately, it can also be a world fraught with
risk associated with taking actions (or not taking
actions) that run afoul of the rules or jeopardize
the bank's rights against the borrower. Here are a
few of the "truths" that bankers need to keep in
mind in the bankruptcy world. 1.
The automatic stay is, well,
automatic.The automatic stay goes
into effect automatically (no order is issued!)
from the moment that the petition is filed, even
at 3:07 a.m. on a Sunday morning. Any collection
action that is taken after the filing of the case
is technically a violation of the automatic stay,
even though the bank is without actual notice of
the filing of the case. 2. The
automatic stay is broad and probably covers
whatever the bank has already done or wants to do
soon.The automatic stay is the great
equalizer: it gives the debtor relief and
breathing room (at least temporarily), and it
levels the playing field among the creditors by
stopping the first-come-first-served, "winner
takes all" collection scheme of state law.
Therefore, the automatic stay is intentionally
broad and applies to all actions to collect debts,
perfect liens, attach property, repossess
property, setoff accounts, etc.
Read the full article on our website.
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Regulatory
The
Consumer Finance Protection Bureau: What Community
Banks Need to
Know
by R. Scott
Adams |
A creation of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Pub.
Law 111-203 ("Dodd-Frank Act"), the Consumer
Financial Protection Bureau ("CFPB") is charged
with regulating consumer lending activities of
financial institutions and, in partnership with
state attorneys general, enforcing numerous
federal consumer protection laws. Despite recent
assurances by CFPB Director Richard Cordray that
smaller community banks and credit unions will not
face unnecessary regulatory burdens, it is
important for bankers in such institutions to
understand how the CFPB alters the regulatory
landscape. I. STRUCTURE, PURPOSE
AND ENFORCEMENTPreviously,
agencies charged with enforcing various consumer
protection laws were spread across the government,
including Federal Reserve, the Office of the
Comptroller of the Currency, the Office of Thrift
Supervision, the FDIC, the Department of Housing
and Urban Development, and the National Credit
Union Association. (Pub. Law 111-203, § 1061; 12
U.S.C. § 5581.) Some of the 17 laws
previously enforced by these agencies that will
now be enforced by the CFPB include the Fair Debt
Collection Practices Act ("FDCPA"), the Fair
Credit Reporting Act ("FCRA"), the Equal Credit
Opportunity Act ("ECOA"), the Truth-in-Lending Act
("TILA"), and the Real Estate Settlement
Procedures Act of 1974 ("RESPA"). (§ 1002; 12
U.S.C. § 5481.)
Read the full article on our website.
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Regulatory
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The JOBS Act Provides
Opportunities for Community
Banks
by Hugh B. Wellons
The U.
S. House of Representatives overwhelmingly passed
the JOBS (Jumpstart Our Business Startups) Act
Tuesday, March 27, after receiving it from the
Senate. The President signed the bill April 5,
2012. The JOBS Act is best known for its
crowdfunding provisions, which I will address
shortly, but it also is a boon to many community
banks. Community banks often are formed with many
investors. Some state regulators encourage
maximizing local shareholders, because local bank
shareholders often do business with the bank they
own. Banks and holding companies become "public"
and must file with their federal regulator (banks)
or the SEC (holding companies) when the
shareholders of record exceed 500. Even banks with
fewer shareholders at formation, over time,
through sales and inheritance, find themselves
over the 500 shareholder limit. Accordingly, a
large number of community banks and bank holding
companies must file periodic reports with either
the SEC or the federal regulator, in addition to
call reports and other filings with the state and
federal regulator. As public companies, Sarbannes
Oxley and difficult provisions in Dodd Frank, in
addition to SEC regulations, apply to these banks.
The added regulatory burden for this can be
hundreds of thousands of dollars each year. Adding
this on top of a stagnant economy, low interest
rates, declining real estate values and a soft
lending market, makes it very difficult for
community banks to turn a profit. Good News for
Community BanksThe JOBS Act increases
the threshold for SEC registration and periodic
filing from 500 shareholders of record to 2,000.
Banks approaching the 500 shareholder threshold
will be relieved. In addition, banks now have room
to maneuver if they were considering a bank
combination but did not want the transaction to
create a public company, with all the associated
fees and added compliance. Perhaps more important,
the Act increases the threshold for SEC
deregistration ("going dark") from 300
shareholders of record to 1200. This permits any
community bank (or holding company) that can
certify that it has fewer than 1200 shareholders
of record to deregister as a public company. The
process is simple, and we will go through that in
our next newsletter.
Read the full article on our website.
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