Iowan Charles E. Walsh thinks bigger isn't always better, and wants his state to opt out of interstate branching to prove it. The president of $152 million-asset Farmers and Merchants Bank and Trust, Burlington, Iowa, said that opting out of the branching component of the Riegle-Neal Interstate Banking and Branching Act would give Iowa's community banks more time to study how the change would affect them and the state's economy. About 85% of the state's 515 banks are state chartered, according to the Iowa bank commissioner's office. Only one bank company in the state - Norwest Corp. - has more than $5 billion of total assets. Mr. Walsh, who ends his one-year term as president of the Iowa Independent Bankers Association this weekend, stresses that his views do not reflect those of the trade group, which has not taken a position on interstate branching. The banker, who has been at Farmers and Merchants for 25 years, discussed Iowa community banking with American Banker before heading to Lake Okoboji, Iowa, where the association is holding its annual meeting this week.
Q.: What concerns you most about community banking in Iowa?
WALSH: Banking is going to be changing. On the federal level, there's a lot happening. Interstate banking is going to be coming into effect. Glass- Steagall, we don't know what's going to happen on that. We have (Rep. Jim) Leach from Iowa, who will probably be the best negotiator for community banks. The CRA is going to be changing and we don't know what the new rules will be on that.
The other thing is, it seems like the government wants the banking industry to do more and more ... paperwork, keeping track of CRA, discrimination.
I don't think the banking industry as a whole has discriminated against people. Community banks in Iowa, we know the families usually, we know the children, the employers and employees. It's a lot different from New York or California.
Q.: Although no Iowa legislation has been enacted yet regarding interstate banking and branching, how do you think it will affect the survival of Iowa's numerous small banks?
WALSH: I think Iowa - and I'm speaking only for myself not for the association - should probably opt out (of interstate branching) and just see what happens. You can always opt-in.
Q.: Do you expect another effort in Iowa in 1996, as in recent years, by bigger banks for legislation to increase deposit concentration limits?
WALSH: They'll be back next year. What they were asking for is an increase from 10% to 15% in the state. It's a 50% increase.
Q.: What should community banks do about it?
WALSH: Just keep telling the legislators that big is not always best.
