Divided We Stand

Six years ago, during my tenure as president and CEO of the Community Bankers Association of Indiana, we were approached by the Indiana Bankers Association to discuss a possible merger between the two organizations. A few weeks later, my then-executive committee asked me what my thoughts were regarding a potential merger. I made two observations. First, I noted that we were two strong organizations serving a single, contracting industry, and therefore merger talks made sense. Second, I pointed out that I could not recall a single state-level issue within the past 10 years that the IBA and CBAI disagreed on.

The merger took place soon after, and it was a smooth transition by all accounts. Ever since then, though, I have harbored a lingering concern. What would the IBA do, I wondered, if faced with a divisive issue between big banks and small banks? This year, that concern became a reality through Senate Bill 147. The bill, with language supported by the county treasurers, covers numerous topics, one of which is the removal of geographic restrictions on relationships with approved depository financial institutions (i.e. banks).

The big banks support this idea, the small banks do not, and the IBA is caught in the middle. It is an uncomfortable position, because we are a member-driven organization. Each member bank, regardless of size, has one vote. Fortunately our executive committee members met their responsibilities head on and examined all facets of the issue. In the end, they were unanimous in their decision. They instructed staff to seek an amendment that would require local government units to maintain their banking relationships with those banks within their service areas. However, in the event of fewer than three approved banks, the local governmental unit may seek relationships with banks in adjoining counties.

What impresses me, more than the end result itself, is the reasoning behind this decision. Our executive committee members felt strongly that, much as banks are required to invest back into their marketplaces through the Community Reinvestment Act, local governments should invest funds back into their communities by supporting those banks that hire local community residents and make lending in the community a priority.

While I understand that this amendment will not likely satisfy all of the larger banks, I am proud of the careful consideration exercised by the IBA executive committee and ratified by the Government Relations Committee and the board of directors. Personally, though, I hope it is at least another 20 years before IBA is faced with another member-divisive issue!

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