Moving Momentum Into the Right Direction

May 20, 2015

Momentum. Momentum is the word we use to describe that unknown impetus driving thought or action in a certain direction. It can be either good or bad direction, or sometimes both. Currently the banking business appears to have plenty of momentum driving it in a good direction. As I speak with bankers across Indiana and throughout the nation, I am regularly told that they are seeing an increase in high-quality loan demand ‒ more than they have seen in quite a while. That is a very good direction.

The Federal Reserve Open Market Committee, which sets interest rates, seems to be prepared to soon increase those rates, allowing banks to increase the interest margin between loans and deposits, and thus helping improve net earnings. Even Congress appears to be moving some legislation that would provide much-needed regulatory relief. The recently concluded session of the Indiana General Assembly passed a few bills that will help banks operate more efficiently in Indiana.

Last week the Indiana Bankers Association hosted its annual Mega Conference, an intense two-day educational program covering many disciplines of banking in nearly 50 sessions. Speakers and bankers were more positive about the future than they have been in several years. This conference is an effective barometer, because it attracts directors and officers from all levels of their banks, and those banks are of all sizes and geographic locations. In other words, Mega this year provided a representative cross section of 1,276 attendees who are either bankers, or purveyors of bank products and services.

Momentum is funny, though. It can change quickly, or it may slog along for years and years. No one person or group of people can make momentum continue or stop, but an event or a widespread shift in group opinion can change it in a day. We can facilitate desirable momentum by maintaining a positive attitude about those factors that are driving it. Another way to move that needle is through grassroots efforts. For example, invite a U.S. Congressman, state representative or state senator to your bank to show firsthand the regulatory burden involved in making a loan or opening a new account. Maintain that legislative relationship by providing input on issues you care about and are expert in. A simple email, postcard, letter or tweet from a constituent can go a long way toward influencing how our elected officials vote.

Obviously, there also are momentum changers that we have no control over. The recent financial crisis that tarnished banker reputations, sent numerous banks into default, and cost many consumers their jobs and homes is a sad example of how quickly momentum can change. We should never lose sight of the lessons learned during this damaging episode of our history.

Please continue to press the current positive momentum forward. Let us unite our efforts behind that which is in our control. We must continue to move forward in the right direction, so that our communities, customers, staffs and shareholders are fairly and comprehensively served. We have had enough bad momentum in recent years, so let’s work to sustain the present positive direction for years to come!

– S. Joe DeHaven

Mega Momentum

May 13, 2015

This week the Indiana Bankers Association is hosting its annual Mega Conference. Over 1,270 people have registered to participate in this unique event. The IBA created this primarily educational venue in 1993, and it has grown significantly over the past 23 years. This year the event has filled a record 92 booth spaces in the exhibit hall. It is the largest event hosted by a single state bank trade association held in the country. A dozen educational tracks will be held over the two-day educational portion of the conference.

IBA is proud to provide this offering to our member bankers. Most of our banks are community banks, and attendance at Mega represents an opportunity for educational exposure of various levels of management within those institutions. It also provides the chance to visit with those service providers who support the event through purchased booth spaces. It is a rare occasion for both line-level supervisors, in need of a solution, and the individuals who make the buying decisions to jointly observe alternatives.

In today’s fast-paced and overregulated world of banking, the IBA Mega Conference presents an opportunity for bank directors and officers together to learn about changes on the horizon or about new approaches to old problems. It is a cost-effective and efficient way for those smaller banks, in particular, to be exposed to multiple solutions. Our member bankers who attend this event consistently rate it extremely high, year in and year out.

The directors, officer and staff of the IBA take pride in this annual event. Over 100 Indiana banks are represented this year. Many attendees will use the information garnered to cross-train those who were not able to come. Many will use the opportunities gleaned from the exhibit hall to follow up with those companies that offer needed products or services. For years, our valued members have been telling us how important this conference is to them, and it’s truly satisfying to the IBA staff to meet the needs of those we serve. We host some 200 seminars and schools throughout the year and provide about 400 webinars annually, and we carefully survey attendees for feedback on each of these events. It is important that we offer relevant information in a timely manner.

While the regulatory burden thrust upon banks is overwhelming, IBA is pleased to provide a service that is necessary in order for our members to continue to serve their customers and communities. While it is unfortunate that so much of what we provide is compliance-related training, we are grateful to be able to provide it.

As we celebrate IBA’s entrepreneurship in creating this event, we are ever mindful that it is our members ‒ our customers ‒ who are the reason we exist, and we continually seek new and better ways to serve our members. Thank you to all of our member bankers and service providers who are giving momentum to this year’s IBA Mega Conference!

– S. Joe DeHaven


Great Expectations Pared Down

May 6, 2015

I recall vividly as a child the overwhelming excitement of Christmas. Although it did not resonate with me at the time, I also recall my parents trying to trim down my expectations to what Santa Claus realistically could deliver. They did a pretty good job of aligning my expectations to reality.

One month ago, and again last week, I felt that same tug between expectations and reality while visiting Washington, D.C., on advocacy trips sponsored by the American Bankers Association and the Independent Community Bankers of America. Last fall, high expectations arose following the elections, when most of us believed that having a business-friendly U.S. Senate working with the U.S. House of Representatives would portend gifts of regulatory relief, tax restructuring, data breach/cybersecurity solutions ‒ and even some leveling of the financial services playing field. The reality became clear on these two recent DC trips, when the national association representatives and many members of Congress repeatedly cautioned against expecting too much. The likely end result is that our gifts will be limited to some regulatory relief and a little movement of the needle forward on cybersecurity issues.

Reality may have been spelled out on these trips, but DC-style reality seldom makes sense to the rest of us. Nevertheless, it is reality. That reality is twofold as it relates to us and many other business interests. First, 2016 is an election year ‒ a presidential election year. Typically that means that political posturing trumps the legislative agenda. In other words, little will be accomplished between Oct. 1, 2015, and the election in November 2016.

The second issue, resulting from the first one, is that the calendar is too crowded to get much through this Congress besides emergency and budgetary issues. Every industry has a lengthy list of items it wants to have addressed. My sense is that this Congress will want to deal with some of these issues, but no industry will get close to what it wants. Many will not even get what they need. Of some encouragement is that the Republicans in the Senate have stated publicly, on many occasions, that they will work with the Democrats to pass what they can agree on.

If you were expecting to see Obamacare and the Dodd-Frank Act eliminated, you will be disappointed. Though I never expected to see such major change, I do hold out hope that some important regulatory relief may occur. There has been much more talk about tiered regulation, as determined by the complexity of bank product offerings and structure. I doubt that this change will be enacted in this Congress. It is difficult to determine how to accomplish this goal; one idea is to leave it up to the regulators. I tend to think that bankers will determine that this approach is not desirable. It’s hard enough to get regulatory consistency among the different agencies operating in different regions of the country. Can you imagine the difficulties if the examiner in charge is left to determine how complex your bank is, and then determine how you should be examined?

Overall I remain confident that some of the important bills already moving will be included in a relief package during this Congress. However, just as Santa Claus could not give us all we wanted as children, Congress will not give us all that we want. We will need to work hard to help lawmakers understand which of the issues are the most pressing and realistic to address, and help them find a way to provide solutions. Those of us who advocate for the industry are doing just that, with grassroots support from member bankers, as we grapple with these realities.

– S. Joe DeHaven

Keeping our DC Relationships Strong

April 29, 2015

This week I am again in Washington, D.C., along with bankers from throughout the United States. Six Indiana bankers have joined me to call on the Indiana congressional delegation, on behalf of the Independent Community Bankers of America. Last month I made the same trip with a different group of bankers, on behalf of the American Bankers Association. In September the Indiana Bankers Association will host over 50 bankers for our IBA Annual Washington Trip. And it is likely that the legislative process will require attendance in DC another time or two during the year.

Today also is sine die, the last scheduled day for the Indiana Legislature to meet. Members of the Legislature are statutorily required to end today. In the unlikely event that they cannot come to agreement on issues, specifically a budget, the governor may call a special session.

An obvious question is, why would I go to Washington, D.C., at such a critical time for the state Legislature? A corollary question is, why do I go to Washington so often, when so little seems to get done?

For the first question, the IBA is blessed to have on staff one of the most talented government relations teams nationwide. Our association peers envy the skills of Amber Van Til and Dax Denton, with support from Josh Myers, GR office manager. Amber and Dax do such outstanding work that, apart from occasional testimony or other involvement on my part, little is required of me at the state level. Also, by this time in the Session, most of the fireworks have fizzled out, and all eyes have turned to the budget bill, which we are satisfied with at this point. Therefore it is highly unlikely that anything will occur that requires my personal attention. If it does, I am just a phone call away.

As to the second question, it is very important that we maintain the strong relationships that we have forged with the two U.S. senators and nine US. representatives voted into office by the citizens of Indiana. Having worked in this arena for nearly 25 years, I have been privileged to become well acquainted with many of our elected officials. Government relations is much more dependent upon the “relations” part than the “government” part. Privately I have asked many of our elected officials over the years how important it is that bankers visit multiple times annually. Time and again I have been told that those who oppose us on issues do visit frequently and that we need to be present, too, in order to keep our positions known. In other words, if we do not show up, legislators will hear only one side of the story … and will vote accordingly.

Another answer is that cultivating relationships builds trust. When a vote is required, our legislators know they can reach out to us for banker perspective as to the specific bill being voted upon. A final answer is that we form relationships not only with legislators, but with their staffs as well. While we might occasionally see our U.S. congressmen back home, their legislative assistants rarely come to Indiana. Because those legislative assistants are tasked with developing expertise on a variety of issues, elected officials often rely on them when it is time to vote. Our only opportunity to foster relationships with these key staff members is to travel to DC.

If you have never gone to Washington to represent your industry, an ideal opportunity is coming up this fall with the IBA Annual Washington Trip, scheduled for Sept. 27-29. This offering includes not only visits with the Indiana congressional delegation, but also with federal regulators and with representatives of ABA and ICBA. It’s informative, it’s engaging and, for an old veteran like me, a highlight of the year.

– S. Joe DeHaven

A Wonderful Life of Banking Values

April 22, 2015

Frank Capra was an Italian-born American filmmaker who defined his craft throughout the 1930s and ’40s. His films earned dozens of Academy Award nominations and won multiple Oscars, including two for best picture and three for best director. You may recognize some of Capra’s signature works: “Mr. Deeds Goes to Town,” “Mr. Smith Goes to Washington,” “Meet John Doe” and “It’s a Wonderful Life.”

Capra infused his films with themes of hard work, patriotism and the American dream, mirroring his life’s path from poor immigrant son to towering success. Fiercely devoted to his adopted country, Capra enlisted in the Army twice, serving in both world wars. By the time of his second enlistment ‒ days after the bombing of Pearl Harbor ‒ Capra was in his 40s and considered one of the most successful directors in Hollywood history. Yet he turned his talents to the Army, for which he produced a series of inspiring documentaries, “Why We Fight.”

It was after World War II that Capra directed “It’s a Wonderful Life.” Though now a holiday classic, and a clear favorite of the banking community, the film was deemed a box office flop in 1946. Perhaps the project fell victim to a national shift away from the political principles and social mores that Capra so proudly espoused. Following that box office disappointment came several lackluster films and, by the 1960s, Capra was all but forgotten.

Change happens, and Capra seemed unable or unwilling to change and eschew all that he believed in. Is our country facing the same dilemma? Is the world facing the same dilemma? Governments and economic systems have changed. At one time we acted collectively in the same way that we act individually. An example is debt. Individuals use debt to purchase what they need and occasionally what they want. Prior to the financial crisis, individuals were using debt excessively to satisfy unrealistic wants. In recent years, collectively, the federal government has become a huge debtor, using debt to finance what people want, not necessarily what people really need.

If only this problem were confined to the United States, we could work to correct it, but it is spreading worldwide. Most of the nations of Europe, as best evidenced by Greece, for years have been spending well beyond their means, and today they cannot service their debt. Further East, China has been ambitiously building cities throughout the country, some designed for a million people, but so far there are no inhabitants. Does that sound like good fiscal management?

What will come from this worldwide change? Despite my concerns, I do believe the United States is in the best position to weather this storm of change. We have bountiful resources for food and water. We are nearly energy-independent and, at least for now, the dollar is the de facto world currency. We have the most diversified financial services industry in the world to provide the necessary capital that can undergird future business ventures.

We will, of course, need to adapt to changing times but, like Frank Capra, let us not compromise our basic tenets. I am hopeful that, in the long run, common sense will prevail. Our form of government is, admittedly, at times inefficient and messy, but it works better than any other form of government on earth.

Many thanks to the late Mr. Capra for his vision, patriotism and optimism. May we share his belief system in recognizing what is right, and be willing to stand up for it. And may we remember the message he brought home with his last major film: For the banker who helps build communities, it’s a wonderful life.

– S. Joe DeHaven

Ushering in a New Generation of Banking Leaders

April 15, 2015

Golf history was made last weekend, when 21-year-old Jordan Spieth won the 2015 Masters Tournament. The young phenom set numerous Masters records for this year’s event. His poise and composure far exceed the maturity expected of most his age. It certainly is refreshing to see such a mature young role model in the making.

I have written many columns bemoaning the fact that there is a leadership dearth among bankers, not just in Indiana, but throughout the country. There are many logical and compelling reasons that this situation had occurred. Recently, however, I have been encouraged, as many intelligent, mature young bankers are poised to take over the reins of banks throughout Indiana. These young professionals are rising through the ranks in both family-owned and non-family-owned institutions.

I am now confident that the Indiana community banking industry is well-situated for the next 30 years, though I would not have made this statement just a couple of years ago. Many of the young bankers I have met are becoming increasingly involved in Indiana Bankers Association committees and boards. They participate in IBA educational opportunities and aid our grassroots advocacy through government relations initiatives.

While most of these young people are in their 30s, as opposed to Mr. Spieth in his 20s, they are no less talented for their age in the business of banking. While banking has long been a bastion for the “pale, male and stale,” this scenario is rapidly changing. Banking, like other segments of the business community, is embracing diversity industry-wide, as reflected in upcoming leadership. It is a joy to me to witness, particularly since many of our financial institutions are far older than the 79-year-old Masters Tournament.

To keep pace with these positive changes, IBA has been refreshing the face of our Future Leadership Division (FLD) during the last year and a half. Membership has more than doubled, as programming has been expanded in quantity, quality and breadth. Many of our newest FLD members are in their 20s, eager and hungry to learn. Despite allegations that millennials want to run the company today, that is not what we are seeing. These young professionals understand that they have much to learn before they can lead a business. They are smart, hard-working and determined. They value personal time and success equally with career aspirations. And their comfort with technology is off the charts, because they grew up with it.

Much as Jordan Spieth is ushering in the next generation of golf greats, the young bankers that I have met in the past couple of years are ushering in a new generation of banking leaders. I am pleased that the IBA can play a part in their career development, and touched that these young people appreciate the value that IBA brings to their banks. IBA has its own stable of talented young people who will be working hand-in-hand with these young bankers over the next 30 years to keep our industry strong.

– S. Joe DeHaven

Sports-Level Fairness Needed in Data Breaches

April 8, 2015

The National Collegiate Athletic Association (NCAA) Men’s Basketball Championship came to a close Monday evening, with the Duke Blue Devils earning the title of 2015 champions. Along the way, many outstanding college basketball teams were eliminated. Probably the biggest upset took place on Saturday, when the Wisconsin Badgers defeated the previously unbeaten Kentucky Wildcats, only to lose to Duke in the final game. At any rate, it was an exciting tournament, full of talented teams and players from throughout the country.

Each participating team has to stand on its own. Each team is responsible, within its capabilities, for its own destiny. No team gets off easier because of its height, or the location of its school, or the quality of its academic programs. Though zealous fans may blame referees for a loss, most players understand that it is their ability and effort versus that of the opposing team that determines the outcome of the game.

Unfortunately, this cause and effect does not always exist outside of the sports arena. Some people seem to be successful despite themselves, while others, who work their craft diligently, fail. Life is not always fair.

Last week a court required Target Corp. to set aside $10 million for a fund to pay for harmed parties in the Target data breach from a couple of years ago. While this sum may seem excessive, it must be put in context. The banking industry, which issued most of the credit and debit cards, has spent over $100 million in reissuing cards to customers and covering the fraud losses that resulted from Target’s negligence, which resulted in this breach. Where is the money set aside by Target to cover the losses of these innocent businesses? Oh, there isn’t any. Target, like most of the big box stores and many other retailers, doesn’t think it should have to cover those losses on cards suffered by the banks, which provide the infrastructure by which Target makes over 90 percent of its sales.

Efforts are being made by both retailers and the banking industry to develop better standards to which retailers will need to adhere in order to combat the seemingly daily breach occurrences. The first step is set to take place Oct. 1, when retailers will be required to accept EMV cards, which provide a chip that deters breaches much more effectively than the existing PIN cards. Regretfully, while banks are spending millions of dollars preparing for this day, many retailers have made little or no progress toward upgrading to the necessary equipment required to utilize the EMV technology. I suspect that we are headed for another retailer/banker train wreck, or a postponement of the effective date.

Regardless of these divisive issues, both the retailers and the bankers continue to work with government to establish better rules and/or guidelines by which we can all combat the crooks who perpetrate these cybercrimes on businesses and their customers.

There will be many more tournaments where every team is judged on its own merits. Fairness and skill will separate the winners from the losers. Let us hope that the same kind of fairness begins to creep into the business world as it relates to data security issues.

– S. Joe DeHaven


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