Community Banking Month is a Wrap

Riley Creek ParadeApril was Community Banking Month and banks everywhere highlighted what makes them stand out. In prior years, First National Bank participated in the 3/50 Project and all bank employees pledged to spend locally during the month of April.

This year, the Bank decided to highlight one of the primary things that makes us a community bank: community involvement. Because all of our employees live within the Bank’s market area, they are all personally invested in seeing their towns and cities thrive. And as a result, they are all VERY willing to volunteer their time and energy to people and organizations that need help. We decided to keep track of their involvement to highlight what makes our Bank different. Here are the results of their voluntary efforts through the first quarter of 2013: 47 employees volunteered at 183 different events and collectively spent 625 hours investing in their communities.

“Community” can be an over-used word these days, but the efforts of this group exemplify what community banking truly represents.

Are Banks Lending Money to Small Business?

There is a misconception that was especially popular during the banking crisis of the last several years and that continues today at some level. As a small business lender, I often get asked if banks are lending money to small business. The misconception being that banks–including community banks–are just sitting on their hands and are unwilling to invest any loan dollars into small business growth. The reality is very different, at least at the community bank level. The FDIC recently released a report that stated while community banks only have a small percentage–14%–of industry assets on their books, they account for 46% of all small loans originated to businesses and farms in the United States. I would argue this fantastic percentage of small business loans from community banks is the result of community banks being invested in their communities, leadership and decision makers who live and work in the areas they serve, and community bankers who are invested in seeing small businesses in their towns and cities succeed. First National Bank has seen great small business loan growth in the last 18 months, and I know other area community banks have made a similar commitment to finding and helping creditworthy small business owners grow and thrive.

Small Business says “What Fiscal Cliff?”

After today’s Bluffton Chamber breakfast, the Chamber and the Bluffton Center for Entrepreneurs hosted a small business workshop on the challenges of being an entrepreneur. About 25 entrepreneurs (and 17 Bluffton University business students) representing businesses from Bluffton, Findlay, Pandora, Columbus Grove, Ada, Beaverdam, and Lima swapped stories, offered advice, and shared words of wisdom about running a business from personal experience.

What stood out to me were the answers given to the following questions: “Does political noise, “fiscal cliff” drama, and discouraging economic news affect the way you run your business? And are you less inclined to grow and look for new opportunities as a result of today’s business climate?” The answer I heard from people around the room was largely the same: “if you’re not moving forward, you’re likely headed in the other direction.”

There are certainly businesses that are cutting spending and taking a less optimistic approach to 2013. American Express announced yesterday they are going to eliminate about 5,400 jobs this year as part of a restructuring effort. Morgan Stanley is also eliminating 1,600 jobs according to reports earlier this week.

However, the small businesses in the room today maintained that success doesn’t come from sitting still and it’s better to look past the negativity and find ways to adapt and grow. It takes partners who share this mindset for businesses to succeed. In places like Bluffton, Pandora, Findlay and other local communities, willing partners include community banks. A bank of any size sitting on excess funds can decide it’s time to put loans on the books and grow by buying business. However, when the economy falters and large national banks retreat, cut ties with small businesses they’ve suddenly lost the appetite for supporting, and then wait for better days, the value of invested community banks is significant.

Chase and Jamie Dimon don’t need Bluffton or Findlay. Bank of America doesn’t need Pandora. But First National Bank needs Bluffton. First National Bank needs Pandora and Findlay. Ditto for Citizens National Bank and the communities it serves. Businesses and banks need each other to thrive–and healty communities need both–and the right mix is what allows small business to look forward and succeed in spite of challenges.

Community Banking Today 2012 in review

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

The new Boeing 787 Dreamliner can carry about 250 passengers. This blog was viewed about 790 times in 2012. If it were a Dreamliner, it would take about 3 trips to carry that many people.

Click here to see the complete report.

More Perspective on TAG

In case you’re interested, here is an interesting (if you like this sort of thing) article on the TAG program I posted about earlier. I don’t necessarily agree with every point about why we should keep the guarantee program for bank deposits, but I do agree there is still a lot of uncertainty in the market right now and caution may not be a bad thing. Also, keeping the program is not a taxpayer funded project because banks are the ones paying into the insurance program.

Main Street vs Wall Street

In 2008, the Federal Deposit Insurance Corporation (FDIC) established the Transaction Account Guarantee (TAG) program to instill public confidence in the banking system.  The program provided unlimited guarantees to non-interest bearing accounts through 2010 and then the program was extended to the end of this year (2012). 

And now in plain English (Sorry about that, too much banking jargon), banks pay into a federal program for insurance that guarantees depositors (anyone holding money in a bank) get their money bank if a bank fails and shuts down.  Deposits have traditionally only been insured up to a certain dollar amount and anything over the cap is uninsured.  In 2008, the TAG program raised the cap from $100,000 to $250,000 for deposit accounts and gave non-interest bearing accounts (like a traditional checking account) an unlimited guarantee.  This was supposed to inspire confidence in a banking system that was floundering due to the financial crisis that was really picking up steam in Fall, 2008.

Now, the Senate is supposed to vote today on whether or not to continue the program past December 31, 2012. 

The prevailing thinking is that this temporary guarantee helps community banks because they typically have less creative ways to structure accounts and keep dollars insured.  The reality may be different.  Earlier this summer, the Chairman of the FDIC, Martin Gruenberg, said most of the extra deposits protected by the temporary program were held in the Country’s 10 largest banks.  That doesn’t mean community banks–and their customers–haven’t benefitted from the program, but they may not have been the “biggest” beneficiaries.  Hopefully, small businesses, wherever they bank, have been able to benefit from the added security and will be able to move forward confidently no matter the outcome of today’s possible Senate vote.

If you’re a small business or have personal deposits at a local bank, visit your banker or go to the FDIC website and find out if your deposits are protected.  Chances are, your community banker will be able to make sure you’re covered one way or the other.

Make Cyber Monday (and every cyber day) Safe

Since the advent of Cyber Monday in 2005, online shopping has exploded. According to John Sileo, a leading expert on identity theft, online shopping can be routine and safe as long as you follow a few simple rules. One rule he doesn’t explicitly mention in the above-mentioned article is using Mastercard SecureCode to protect online purchases. SecureCode is a program created by MasterCard that allows debit and credit card holders to register their cards in order to add another layer of protection to online shopping. Once a card is registered, purchases made at participating merchants automatically produce an online receipt and require cardholders to enter their personal “secure” code. If a code isn’t entered, the purchase can not be made.

Spending a few minutes registering your MasterCard debit or credit card can provide significant peace of mind. Visit First National Bank or MasterCard’s website for more information.

Add this step to other precautions mentioned by Sileo, and you’ll be able to shop online with confidence.