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Responding to Challenges in Life and Banking

By: Bill Poquette

A program featuring liberal doses of motivation and inspiration drew some 700 bankers, vendors and guests to the Nebraska Bankers Association’s annual convention last month in the Omaha suburb of La Vista. Two speakers whose stories served as notable examples of leadership and achievement were FDNY Chief Richard Picciotto, the highest-ranking firefighter to survive the World Trade Center collapse, and Maj. Dan Rooney, USAF (Ret.), fighter pilot, PGA professional and founder of Folds of Honor, a non-profit organization that provides scholarships to spouses and children of military personnel disabled or killed in action. Vince Lombardi Jr. was scheduled to speak on “High Performance People” but canceled due to illness in his family and was replaced by Kansas City Chiefs Hall of Fame kicker Nick Lowery.

Picciotto and Rooney were alluded to by Matt Williams, chairman-elect of the American Bankers Association, in remarks about how important leadership is in dealing with the industry’s legislative and regulatory challenges. “Leadership is the key,” said Williams, who is also chairman and president of Gothenburg (Neb.) State. “Leaders don’t take credit, they accept responsibility,” he added.
In interviews prior to the convention’s opening session, Clark Lehr, the association’s incoming chairman, John Stinner, its new chairman-elect, and George Beattie, president and CEO, commented on fallout from the Dodd-Frank Act and other challenges facing community banks. Lehr is president and CEO of First Nebraska Bank, Columbus, and Stinner is president and CEO of Valley Bank & Trust Co., Gering.

“It’s a scary situation when you have an agency (the Consumer Financial Protection Bureau) with no oversight,” said Stinner. Its mortgage servicing and overdraft rules threaten harm for the banking industry and consumers as well, he pointed out. Some regulation was needed on the mortgage side, he added, “but the bad players are gone.”

“Whenever you have new laws and regulations there are unintended consequences,” said Lehr. “A third of Dodd-Frank has yet to be implemented and we don’t know exactly what is going to happen. We are trying to help our representatives understand the unintended consequences. Ultimately, regulations can impact our ability to serve our customers.”

George Beattie said he is hopeful the exam fairness bill making its way through Congress will be passed in this session. It has bipartisan support but there has been some pushback from regulators not wanting to go down that road, he pointed out. “It seems to me banks should have the opportunity to appeal outside of the regulators,” he said. “It’s kind of hard to believe you’re getting an objective look at a situation when you have to appeal on up through the regulators.” If anything gets passed this session it might be something like this, Beattie believes.

Addressing the issue of excess liquidity in community banks, Lehr said, “It’s pretty tough to find ways to deploy it.” But he believes bankers are being careful, not extending maturities and chasing yield. He related that in his bank, “We’re trying to get a little more creative on the loan side with some appealing fixed-rate periods that maybe can help ease up some of that liquidity.”

In response to a question about the much-talked-about dramatic rise in farmland prices, which some are calling a bubble, Beattie pointed out that less than 2 percent of Nebraska agricultural land changes hands in any given year. “I don’t know if that small amount of sales constitutes a bubble.” One of the dilemmas is that people are starting to think that all land is worth $14,000 an acre or $10,000 an acre when it’s not, according to Beattie.

Stinner suggested the Farm Credit Associations may be contributing to the farmland bubble, if there is one. They are making 15-year, fixed-rate loans at 4 percent in his area of western Nebraska. “That’s all tax-free money,” he said. “We’d like to have a level playing field.”

Click here to view photos from this convention.

Lehr pointed out that farmland is no different than any other asset in the sense that its value is revenue driven. Farmers have derived “tremendous revenues” from their land over the past two or three years, and hopefully that will continue. “If that revenue starts to slip behind current levels, then I think you might see land values begin to soften,” he said. “At this point I don’t think it’s a bubble but I know it captures a lot of attention from a lot of people.”

Bill Poquette is editor-in-chief of BankNews.

Copyright (c) June 2012 by BankNews Media