What will banking look like in the future?
Recently, a large regional bank made the announcement that they were going to take away all their customer facing mortgage lenders in every one of their offices. They plan on taking care of everybody via a call center/web page moving forward. So the question is…..will this work?
Every year that goes by the “easy to recognize” differences between large banks and community banks seems to be clearer. As a self-proclaimed community bank junkie, I find these differences very interesting and thought provocative. It's kind of disturbing and exciting all at the same time. The big question is… will community banks survive?
The market area of the community bank that I’m privileged to work at, consists of 3 primary counties located in what I call SE, SE Wisconsin. Going back about 20 years, there were probably 15+ banks that called this market their home. Banks that were chartered here and had their headquarters here. Today there are only 4 remaining. That’s the disturbing part!
The exciting part is that I believe we still provide a unique service in our markets. I believe that a large number of people (not everyone) still value the face-to-face interaction that a community bank provides. I also realize that this only goes so far, and those customers still need and deserve the same technology that our larger counterparts provide. It takes money to put team members in a branch. It takes money to deliver our products with very similar technology that the big regional bank has. Will customers and prospects see the value? We believe that some will, and have bet on that with expanding our branch network and hiring mortgage bankers when competitors are eliminating them.
The big banks will call me old fashioned and out of touch. Maybe so, but I don’t believe I am. I still think it’s important to have employees where our customers are located. It’s important that those employees help develop and grow their communities. It’s important for customers to see our employees at the grocery store and at church. It’s important that we know who you are. It’s important to have our employees spend hundreds of hours on community events. It’s important to support and staff leadership in the many non-profits in our area. It’s important to call SE, SE Wisconsin our home!
My hope and wish, is that it’s also important to you. Time will be the judge.
As always, your thoughts, comment and concerns are welcome. At a community bank you can still connect with the President!
President / CEO | Community State Bank
Direct: (262) 878-3763
I've been a community bank junkie for a majority of my 30+ year career. I love working with customers, communities and non-profits and helping them succeed in their everyday lives. It has been rewarding and gratifying to do so.
That being said there’s one area of the bank that I’ve not enjoyed over the years and any banker that says they have would be telling a little fib. It’s the compliance area.
First, please allow me to explain a little history. The FDIC was started in 1933 right in the middle of the great depression which lasted from 1929 to 1939. The FDIC stands for "Federal Deposit Insurance Corporation." Yes that is correct, the FDIC is an insurance company. The main purpose for the United States Government to start the FDIC was defined this way: The FDIC's purpose was to provide stability to the economy and the failing banking system. Officially created in the Glass-Steagall Act of 1933 and modeled after the deposit insurance program initially enacted in Massachusetts, the FDIC guaranteed a specific amount of checking and savings deposits for its member banks.
In other words the FDIC's purpose was to "insure" depositors for their money (up to certain limits) held at banks. In the banking world we call that "safety and soundness", meaning the FDIC regulated banks to not get over their skis. It allowed the opportunity to develop a business model that made the bank money and thus helped the community and everybody was happy.
That part of this makes a lot of sense to me. The next part doesn't.
Over the years the regulations grew and it was somehow determined that banks would be responsible for all of the hundreds of compliance agendas. When I started in this business in the 1980's the "compliance officer" was the person who showed up to the meeting late. It was a title, but it didn't require much work. Safety and soundness was the #1 concern.
Jump forward 34 years and now community banks have departments of compliance staff and spend thousands of dollars on top of that hiring outside consultants to make sure we are meeting the agendas of all the regulatory agencies and departments. Some of those rules that we have to track and live by include TILA, RESPA, TRID, FCRA, ECOA, SAFE Act, TISA, EFA, EFT, FLOOD and HMDA just to list a few. Pictured above is a manual from our good friends and the Wisconsin Bankers Association who recently conducted a 2 day training session for Regulations Z... TRID and all of the changes that are happening on August 1st, 2018. To give you a better idea of how in depth these changes are, this manual is 238 pages long. All of the others I have listed above have pretty much the same thing. To be fair, the FDIC’s responsibility is to carry out the laws and regulations set by the US Government, they are the messenger and gate keeper.
I have the honor and privilege of being the President and CEO of a great community bank located in the 3 counties of the lower part of Southeast Wisconsin. This bank has been around since 1898. I would love to be able to ask the first President of this bank if he, in his wildest dreams, would have ever thought it would be like this 120 years later. In fact, I would love to ask the people who started the FDIC in 1933 the same question. I'm guessing that I know the answer.
A generation ago the markets that we serve were dominated by many community banks. Today we are a very small minority in our markets. Gone are the many community driven organizations replaced by the huge corporate banks that are headquartered all over the country and the world. Why has this happened? One big reason is that many community banks have waived the white flag because of what I have just explained.
If all goes well, and I don't screw things up too bad, I hope to be the president of this great bank for the rest of my career. I feel that there’s a need for a community bank that actually gets their hands dirty in the community. One that supports non-profits. One that accepts local deposits and puts those deposits back out in the form of loans in our very own communities. One that when a customer has a problem we get in our cars and go see them. One that doesn't look to be highest earning bank in the world, but the most respected.
It’s correct that there are a lot fewer community banks today, but this guy believes that a strong community bank makes for a stronger community. I hope that many of you believe the same thing.
It is easy for me to get caught up in the senseless terrible things going on all around me. What used to only happen in big cities is now happening in small towns. The apparent total disregard for all things good gets me questioning our future.
There is one activity that I attend each year that helps me restore my faith in people, especially young people. I'm talking about our local county fairs. Volunteers at our bank go early in the mornings to share milk and donuts with the young people showing animals. The appreciation and respect is something I don't encounter everyday. The obvious display of hard work and a true love of what they are doing brightens my attitude. It's parents and grandparents working hand-in-hand with their kids pointing out the value of that hard work and dedication. It's those same parents and grandparents teaching them to appreciate people who do nice things and encourage them to do the same.
I hope that someday these really neat young people will be the future leaders of our country and our communities. Who knows, maybe one will even be a leader at Community State Bank. I sure hope so.
Have you ever heard of the term “mortgage burning?” If you haven’t, ask your parents or grandparents as I’m sure they have.
Mortgage burning ceremonies are really a thing of the past and I want to bring them back. Banks used to send out the actual mortgage when a mortgage loan was paid off. Many people actually burned their mortgage in a sign of financial freedom. They no longer had the largest debt hanging over their heads. Some might even be jealous to see this happen.
We have become a society of change. Our parents or grandparents may have lived in only one house their whole lives, while today, people have owned many. That by itself isn’t a good excuse to eliminate the grand ceremony of burning your mortgage!
So many of you are asking, "Where do I start?" Well, the first thing I would recommend is to consider doing a 15 year mortgage instead of a 30 year mortgage. This idea isn’t popular with many in the real estate business, because they will tell you that you can buy more house with a 30 year mortgage. The downside of this is that customers will be paying for it twice as long. The truth is that you may be able to afford a slightly higher priced home with a 30 year mortgage, but the difference is not significant. Here is an example of the unbelievable savings comparing a 30 year to a 15 year mortgage on a $150,000 loan:
(After 15 years you could take the house payment money and put it towards college education or retirement.)
Now, I realize that we're in the business of earning interest on loans you secure, but I can also assure you that our number 1 fundamental is to always do what’s best for you, our customers. I would be honored to attend your mortgage burning ceremony! Just let me know when it is.
NOTE: The example above is for informational purposes only, and uses estimated APRs.
I know, I know... the everyday citizen doesn’t feel sorry for us Community Bankers. They've heard from the government about how the banks “Just don’t loan any money out” and at the same time actively enforce a 20,000 page regulation called Dodd-Frank, which was rolled out in 2010. It stifled growth and handcuffed banks from doing what they do best, which is taking care of our customers. It made it next to impossible to assist borrowers who needed some help. Oh yes, they said it didn’t, but I can assure you it did.
Well, the government got what it has always wanted (in my 35 year banking experience and knowledge), which is fewer banks. There were 7,357 federally chartered banks in 2011 and now there are 5,980. That trend doesn’t appear to be changing. Fewer young people are looking a banking as a rewarding career, because they see and hear what’s happening.
The new administration has been saying all the right things. They claim to understand what Dodd-Frank has done to us and small town America. They say they are going to roll back the strangling parts of the bill that don’t make sense... at least not to a $325 million community bank in SE Wisconsin. They say they will place more trust in people who have demonstrated doing it right for many years.
So my plea to them today is to just do it. Allow us to go back focusing on our customers. Let me spend my day helping people. Bring common sense back into the equation and we will all be better for it.
I have had the privilege of spending my entire life with one of the most humble, caring people ever to live. A person who’s deepest wishes were that her family cared and looked out for one another. A person who taught me the difference (and importance) of right and wrong. Someone who made going to church fun and understood the importance of the meaning. Someone who taught me the love of music. A person who cared about less fortunate people. Someone who would let you know if she thought you were out of line. Someone who gave unconditional love to her family and to many of the people she came in contact with.
This lady did not judge people and made everyone feel included. She was someone who cared about other’s happiness way before hers. Someone who didn’t find the need to say bad words, except for that occasional bad driver who made her mad. Someone that could transfer tears into smiles. A person who knew no strangers. Someone who considered her marriage vows a lifelong commitment and expected the same from me. A lady that could tell you the life story about a waiter or waitress after leaving a restaurant. She reminded me often of what’s really important in this life.
My mom passed away on October 17th of this year at the age of 75 after a very short illness. I’m going to miss her a lot.
During this election year I hear politicians talk about how they are going to solve our problems. In reality, if everyone lived their lives like my mom did, the problems would go away.
Once again this past week one of our nation’s largest bank was in the spotlight. Wells Fargo agreed to a $185 million settlement for widespread illegal sales practices. According the the allegations, Wells Fargo opened up as many as 2 million fraudulent deposit and credit card accounts. Makes me sick to call them a “bank.”
I also read recently that only 9% of millennials bank at community banks. This really surprised me.
Instead of telling you why I think you should bank at a community bank such as Community State Bank, I'm going to tell you why you shouldn’t:
If you are a customer now, I really appreciate it. If not, give us a try! I trust that you will be glad you did.
As long as I can remember, I’ve heard about the need for organ transplants. I have to admit that I never really gave it much thought other than thinking that it’s probably important.
At the time of this writing there are 120,519 people in America hoping and praying for a transplant. As of June 10th there have been 13,550 transplants performed this year, which have been made possible by 6,359 donors. Being a numbers guy, it just doesn’t add up.
Like most things in the world, you really don’t think about these numbers unless it affects you in some way. One does not realize the stress and pressures that go with waiting. One does not understand what dialysis really is. Well, unfortunately, I’m now becoming more aware of all of this.
Kelly Huston, one of our cherished Community State Bank employees, is in desperate need of a kidney transplant. He was informed he would need a kidney transplant over 2 years ago, and has been on the waiting list ever since.
In a strange but true way, Kelly is fortunate. He is fortunate because a kidney can come from a donor who is still living. We all have 2 of them, and most healthy people only need 1 to live a normal life. As you might imagine it takes a perfect match and specific requirements to be a fit. That being said I know you are out there.
Kelly is an extremely kind, selfless and modest person that doesn’t feel comfortable asking for help, especially when it comes to his own personal wellbeing. That’s why I’m writing this post today, to ask for your assistance in helping Kelly.
So today I ask you to do 2 things:
Please help me in saving a great person whose time on this earth needs to continue. Thank you for reading this and for your consideration.
Froedert Live Kidney Donor Network
Froedtert Hospital strives to make transplant an option for all patient candidates, their Live Kidney Donor Program helps meet the critical need for organs. It also offers the expertise in live donor patient care. To learn more about the Froedert Live Kidney Donor Network Click the link below.
My wife Andrea and I were invited to a graduation ceremony this past weekend. It was one of the best events we have ever attended.
The graduation ceremony was at Shepherds College, located right here in Union Grove, Wisconsin. The 2016 graduating class was the 6th class to graduate from this fairly new college, which is associated with Shepherds Ministries. Both the College and Ministries serve intellectually disabled individuals. I don’t use the word “serve” lightly. These students come from all over the United States and even some international locations.
Having two children of my own, I know firsthand how difficult it is to have your kids go off to school. I can only imagine the feelings these students' parents had dropping them off 2 or 3 years ago to attend this wonderful organization. Uncertain, worried and concerned are only a few words that could describe what they might have been feeling.
At this graduation however, I did't see any uncertainty, concern or worry from the parents. They were overwhelmed with joy. For most, they probably didn’t think they would ever see this day.
The stars of the show though, were the students themselves. You could see the confidence in them. You could see the love of God in them. You could see the newly gained job skills in them. Like any other young adult graduating from college, they were bursting with enthusiasm.
It was a very touching event for us. I have no doubt that these young people will go on to be productive and giving citizens. We could all learn something from their example.
The employees at Shepherds Ministries and Shepherds College are special people, as are their students.
A "Gig Economy" is an environment in which temporary positions are common and organizations contract with independent workers for short-term engagements. In short, more temporary jobs and less full-time jobs.
I read recently that Intuit predicts that by the year 2020 40% of American workers will be independent contractors. The current percent of temporary employees is less than 5% according to the US Department of Commerce. This prediction just about floored me, but when I started thinking about it, it makes sense. Here is why...
First, the workforce is becoming much more mobile. Many jobs today can be done anywhere, anytime and anyplace. Digitization today allows for fast and easy access to data. I can securely see the same information I need working from my home office versus sitting in a traditional brick & mortar office..
Second, as the millennial generation becomes more dominate, this type of work and work schedule, better fits many individuals within that age range. The demand for a better work-life balance appears to be much more important than it is for previous generations.
Third, as the federal government mandates more employee laws on businesses of all size, many businesses won’t be able to afford it. Some that can afford it won’t want to. In a gig economy businesses save resources in terms of benefits, office space and training. They also have the ability to contract experts for specific projects who would normally be too expensive to have as permanent staff.
According to Eurostat approximately 12% of the work force in Europe is now temporary. Spain itself is over 20%.
So what does this mean? For someone like me at the age of 53, it's hard to wrap my mind around it. That being said, it hasn’t been all that easy for me to see the rapid changes that have occurred over the past few years. It’s not all bad and not all good, but for someone who enjoys change like me… it’s still too much too fast.
I don’t believe that we will be at 40% in the year 2020, but I do believe that we will be closer to that figure than what we are at today. Fasten your seatbelts.