ST. LOUIS — Small bank executives should be optimistic about the future, but they have to help shape it by fighting for regulatory relief that will benefit them and their communities.

That is the underlying message bankers, regulators and academics will hear from Rebeca Romero Rainey when she comes to the podium at the Federal Reserve Board's community banking research conference. Rainey, chairman and chief executive of Centinel Bank of Taos in New Mexico, is set to deliver the keynote speech Tuesday. The event is co-hosted by the Conference of State Bank Supervisors.

"We need to make sure that the regulatory wave doesn't carry us out to sea," Rainey said in an interview to preview her remarks.

Rainey's challenge will be to use her experience at the $196 million-asset institution to provide practical insight about the community banking sector, against the treasure trove of research and quantitative analysis that will be presented over the course of the two-day conference.

"My speech will be an attempt to make this academic research real and tangible for everyone," Rainey said. "I'll talk about the viability of community banking and the types of customers and relationships that are in play to demonstrate why we need to make this model work in the future."

Banks of all sizes are under duress from challenges including low interest rates, volatile loan demand, intense competition from other banks and nonbanks and ongoing concerns about regulatory compliance.

With the Fed hosting the event, Rainey said she will urge community banks to push regulators to implement tiered regulation for smaller institutions, and allow for more independence and judgment from examiners in the field.

"If you think about all the tools that regulatory examiners have, they know who the outliers are," Rainey said. "We need to put examiner resources and regulatory compliance where they really belong, while letting the banks that manage risk go about doing what they do."

Rainey also said regulators — including the Consumer Financial Protection Bureau — should give banks greater flexibility when it comes to offering products, which is critical to improving revenue growth. In a community like Taos, customers are instrumental in policing good and bad products, she said.

The Fed invites state banking commissioners to the annual conference who, in turn, bring an executive from one of their supervised banks. Those banks tend to be smaller institutions, and Centinel certainly fits that mold.

Rainey, meanwhile, will also have the opportunity to discuss what it means to be the third-generation leader of a family-owned bank.

Rainey's grandfather, Eliu Romero, opened Centinel in 1969 to serve the Hispanic community after he was denied a loan to help open a law practice. Rainey's father, Martin, ran the company from 1983 to 1999, when she took over as chief executive.

"We have a lot invested, literally and figuratively, in the community," Rainey said of her family. "We are stewards of this organization to carry a legacy forward."

But Centinel has had its fair share of challenges. Taos, located about 70 miles north of Santa Fe and 130 miles northeast of Albuquerque, relies heavily on tourism, which has ups and downs. "We're seeing some signs of life, but… loan demand is still pretty sluggish," Rainey said.

Competition remains intense. She noted that U.S. Bancorp entered Taos when it bought the failed First Community Bank in early 2011. Centinel also competes with a smaller regional bank, a few credit unions and online lenders. "We've got a little bit of everything here," she said.

Still, she remains optimistic. A major ski resort in the area recently found a buyer. Centinel's net income at midyear rose 38% from a year earlier, to $1.2 million. "We continue to look for loan demand, but we're also being patient," Rainey said.

"Challenges are coming in from every direction, that's for sure," she added. "At the end of the day, as a community banker, you have to jump in and get the job done. … As a community banker, my first and foremost priority is to take care of my community."

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