ABA Banking Journal - November 2008 - (Page 72)

100YEARS FIRST PERSON What has changed and what shouldn’t Jim Culberson, 1995 ABA President, expects community banks will thrive, but shouldn’t expect less regulation W hen I joined Wachovia in 1960 as a “management trainee” the bank was described as the biggest bank between Philadelphia and Dallas with assets of about $700 million. By today’s standards it was really just a big community bank. It was a major correspondent and check clearing point for smaller banks, especially for non-par banks (such banks don’t exist anymore) in its region. Most banks did not make residential mortgage loans for their own portfolio, but placed them with insurance companies. All banks liked to maintain a loan-to-deposit ratio of 55-60% so they limited themselves to short-term lending. This left the mortgage market wide open for the savings and loans. Credit unions as possible competitors were not on the horizon. That was pretty much the picture in my early years at First National Bank of Asheboro, N.C., as well. I joined that bank as president in 1974. Things began to change dramatically in the ’80s as technology began to expand rapidly. ATMs were a huge step (the cash machines were at the time, like magic), computers became available through service bureaus and cooperatives at prices that were affordable. Meantime the S&Ls were given bank-like powers such as checking account authority. They priced up deposits to allow them to make more and more loans including out-of-area development loans, began to sell loans to Fannie Mae and Freddie Mac. At the same time, in a quiet sort of way, the credit unions received expanded powers, especially liberalization in their field-of-membership requirements, and they began to attract traditional bank customers with higher deposit rates and lower loan rates. As the bank financial industry entered into the ’90s, interstate banking became a reality helped by the need to bail out troubled banks by large regional banks. At the same time everybody and his brother became some sort of banking institution, for example insurance companies, the auto industry (GMAC), mortgage brokers, stock brokers, Farm Credit Banks, and expanded powers for the credit unions. All this brought along a conglomerate of various regulators, both national and state, each with his own piece of the pie to protect. The Congress was so overrun with lobbyists for each group that they did not do much to change the status quo. What about today and tomorrow? It’s always difficult to predict the future, but in my opinion there is an important place in the future for community banks. I think the need for real community banks in America’s towns and cities is terribly important especially for small business. And through technology, motivation, marketing, top-notch personal customer service, and real people to speak with, a community banks can survive and do very well. Profits and ROA will not be as good as in the past, and the public needs to feel assured that you are here to stay and not planning to sell out in “x” number of years. It will be hard work, but community banks can provide their communities with one of the most important ingredients to make them a good place to work and live. It’s up to the community banks to sell this to its market. BJ What I’m hearing on Main Street Main Streeters have taken many blows in the last couple of years and they are hardened more than one might expect. But there is no question that they are irate over the huge Wall St. salaries and golden parachutes. Community bankers were pleased with the increase in FDIC limits which slowed the real and potential deposit drain. But they worry about regulatory response to the crisis, and what effect markto-market accounting will have on their portfolios. They worry about the bank’s 401k, and what their future profit picture will look like. It isn’t easy and it won’t be easy in the near future, but sometimes hard times make us stronger and we learn valuable lessons from adversity. James M. Culberson, Jr. By appearance and demeanor a pleasant country banker, Jim Culberson was an aggressive competitor, able to keep the Charlotte and Raleigh “big boys”—Wachovia (where he began his career), First Union, and NCNB—at bay in his Asheboro, N.C., market. He also didn’t like being played the fool by big credit unions masquerading as little Mom and Pop institutions. Before and during his term as ABA President in 1985-86, Culberson’s bank took the lead in suing the National Credit Union Administration over its abuse of the common bond requirement. And he won. By James M. Culberson, Jr. chairman emeritus, CommunityOne Bank, Asheboro, N.C. 72 NOVEMBER 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.myyesbank.com http://www.ababj.com

Table of Contents Feed for the Digital Edition of ABA Banking Journal - November 2008

ABA Banking Journal - November 2008 Contents Editor's Column Banking 2.0: Credit, Banking's Essence, Set for Rethinking Snapshot: The Few, the Proud, the Banks that Can Raise Capital Will Strong and Simple Banks Inherit the Business? Back to the Future ABA Resources ABA Chairman's Position Farm Lenders Must Take Care When Lending in Indian Country Pass the Aspirin Into the Breach Adventures Across A Century What the Future Holds, Post Crisis Paul Volcker: A Financial Legend Still Speaks Strong Ed Yingling: Weathering the Storm Dick Kovacevich: "Boring" Banking to Dynamic Financial Services Jim Culberson: Community Banking: What has Changed and What Shouldn't Walter Shipley: How a Chemical Reaction Helped to Mold Today's JPMorgan Chase William Isaac: Challenges and Opportunities Ahead for Banks A Hundred Years from Our Pages Eight Tech Innovations that Brought Banks into 21st Century Bank Cherokee: Third Generaton Marks 100th Year The First National Bank of Altavista: Railroad Gave Birth to a Town, a Hope Chest, and a Bank Rosedales Federal Savings and Loan Association: How a Friendly Game of Cards Turned into a 100-Year Mutual New Washington State Bank: Cooking Up the Next 100 Years Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - November 2008

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