Suppose someone asked you to make up a typical American community banker. What would he look like?
Let's make him a grandfather in his 50s, married to the same woman since college, running a bank with assets of about $125 million.
It's a bank in which his family owns most of the stock - and it also employs his wife, daughter, and son-in-law.
Where will we place the bank?
How about Great Bend, Kan., a city of around 18,000 in the center of the state and surrounded by agriculture, oil, gas, and some manufacturing.
It is a community that includes nearly 30 churches. And it is a two- hour drive to the nearest major airport.
The bank's president is involved in numerous community activities. He recently served on the hospital board, and he has just accepted the honor and obligation of becoming president-elect of the Kansas Bankers Association, which means he will become president next year.
His son-in-law is running for the local school board.
Does this sound like something from a Norman Rockwell painting? Well, yes. Except for one thing - I met him and learned about his bank.
W.R. "Bill" Robbins is president of Farmers Bank and Trust, which he bought in 1971, when it had less than $5 million of assets. The bank has two offices in Great Bend and three in nearby towns.
I met Bill Robbins at a Federal Home Loan Bank conference in Phoenix. It was advertised as being for banks of over $1 billion in asset size.
Farmers Bank was by far the smallest of the 125 represented. Mr. Robbins' attitude: If Citibank can be there to learn how the Federal Home Loan Bank Board can help them, my bank can also learn something from this conference.
And it did.
The bank must be doing all right. Organized in August 1907, it is now has $14.5 million in capital and is quite capable of serving larger customers.
What bothers community bank presidents today? The first concern is government regulations.
Despite the size of Farmers Bank, its health, and that of its community, Mr. Robbins' daughter, Karesa, spends more than half of her time making sure Farmers is in full compliance with regulations.
"Community banks could do a much better job of serving their communities and patrons if the compliance requirements were reduced," Mr. Robbins says.
He also feels the bank could do a better job of competing with government lenders in the agricultural sector if the playing field were leveled. He acknowledges, though, that though government farm lenders have an advantage in competing for agricultural loans, the average farmer prefers dealing with the community bank.
Mr. Robbins' bank, like other community banks, must keep up with the economic situation in the many towns they serve.
Community banks pride themselves in being able to approve or turn down loans within one day - unlike the giant banks that have to refer loans to numerous committees.
But though community banks can offer more services and reasonable prices, they sometimes fall short in offering the products that the giant banks can.
The employees of Farmers Bank and Trust have pride and a sense of dedication, crucial to the bank's success. But Mr. Robbins and his wife, Yvonne, express concern over where the bank is going.
Is growth the answer?
Two of Farmers Bank's five offices stem from purchases of assets of failed banks in the area - from LaCrosse in 1986 and Bazine in 1990.
To keep growing, Mr. Robbins must consider buying other institutions. But his board worries about this, fearful for asset quality.
Great caution should be used when any community bank looks at additional purchases.
Mr. Robbins, like many other bankers, feels he needs to keep increasing the bank's size to make it viable for the future.
Still, as so many other bankers have learned, big enough is a moving target.
It is like the farmer who says, "All I want is my land and the land next to it."
Another concern is the new farm bill and how it will affect banks' farm customers.
It is common knowledge that a farmer's cash flow is made up of at least 35% to 40% government payments. Fellow bankers should anticipate a reduction of at least 20% to 25% in next year's payments, says Mr. Robbins. Farm cash flows are sure to be pressured as the result of the new program yet to be agreed upon in Washington.
Another real problem for community bankers is succession.
For Mr. Robbins, this does not mean a lack of talent. Nevertheless, the question is how best to transfer the asset to the next generation without the inheritance tax claiming 55%.
Family community bankers need to be prudent in organizing the vehicles that can help them pass their bank assets on to their families.
Bill Robbins wishes this issue could be seriously addressed by the trade associations and in Washington. Family bankers, he says, want to keep the community bank alive and thriving in our heartland.
Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.
