A Few Thoughts About Community Banking

As we enter 2023, the headwinds are many. Regarding SVB, we are all well aware of the reasons for the failure of Silicon Valley Bank (SVB) and Signature Bank. Regarding SVB, the key questions to be answered are who knew what and when and why nothing was done months ago. Hold onto your popcorn because this will be an interesting tale that will be told over time. Regarding Signature Bank, this is the irony of all ironies as the former Co-Author of the Wall Street Reform and Consumer Protection Act (A.K.A Dodd/Frank) Rep. Barney Frank is on the bank’s Board. Oh, what a tangled web we weave. Even though both institutions are nowhere near being considered a community bank, it has been the safety of the community banking industry that has been called into question by media and other “experts.” Really??

As we all know, community banks take in local deposits and make loans to local individuals and small businesses. While some are publicly traded, many are closely held/ family based banks that have been around century or more. They are well capitalized and have managed to endure many financially turbulent times in the past due to exceptional balance sheet management. They are experts in the business of managing risk and are the epitome of “slow and steady wins the race.” In my view, it is high time for the experts and pundits to take some time and study the history of community banks and our overall system of banking and educate the public as opposed for looking for a controversial 30-second sound bite OR to secure social media “clicks.”

Finally, for legislators and federal regulators, I would like to remind all of the vital nature of the community banking industry with three letters- PPP. Without Georgia’s community banking industry working around the clock to effectively and efficiently distribute PPP funding, nearly 1 million Georgia’s would have lost their jobs. Let us all remember that small business drives the broader economy and community banks are the primary banking resource for small business.

Rebeca Romero Rainey President and CEO ICBA