Hackers, nonbanks are small banks' biggest threats: New ICBA chair
LAS VEGAS — Timothy Zimmerman is set to chair the Independent Community Bankers of America during a pivotal time for the association.
Zimmerman, CEO of the $970 million-asset Standard Bank in Monroeville, Pa., will be the first chairman to work with the group's new CEO, Rebeca Romero Rainey, who will succeed Camden Fine when he retires in May.
The incoming chairman's one-year term coincides with the potential for more industry relief as lawmakers zero in on a comprehensive plan to reduce regulatory burden. That could give Zimmerman and the ICBA more time to focus on other issues such as cybersecurity and competitive threats from credit unions, fintech firms and other nonbanks.
Zimmerman, who has served with Romero Rainey on a variety of ICBA committees over the years, recently discussed the current mood of community bankers, the new association CEO and nagging issues for his peers.
Here is an edited transcript of the conversation.
What are the most important issues for community banks?
TIMOTHY ZIMMERMAN: The most important thing to me right now is this legislation we have on Capitol Hill. We have worked tirelessly to try to get regulatory relief for community banks. We now have a bill that has bipartisan support and we have a lot of good things in this bill that will help community banks. What we want to do is change the focus so community banks can focus on servicing their customers’ needs rather than spending as much time as we do complying with complicated regulations. We’re excited about that. We have to get it through Congress and onto the President’s desk. That’s a major priority for us.
Where do you see the future of community banking going?
Community banking is critical to so many communities around the country. After this legislation gets passed, the environment will change a bit to be able to get more de novo institutions involved — if they change some of the rules there. The way it stands now, the bar is just way too high to attract investors and the period of time you’re under extreme scrutiny is too long. I think the future looks brighter now than it has for a while for community banks.
Are there any emerging competitive threats?
We have a whole laundry list of things we’re watching. Some are regulatory and legislative and some are competitive. We obviously have concerns and things we’d like to see happen at the Consumer Financial Protection Bureau. Cybersecurity is something on everyone’s list that we’re concerned about.
We really have concerns about what the Office of the Comptroller of the Currency is doing — their proposal to issue special-purpose bank charters. That would give [fintech firms] access to the banking system, but it would allow them to avoid the responsibilities we have. It could be that we have one level of regulation and they have another level, and it would be easier for consumers to deal with them than us. All we want is a level playing field. We really think Congress should decide if the OCC has the authority to grant such a charter. We think they got ahead of themselves and we’d like to see that rolled back and done in a more careful way.
The credit union issue is an ongoing one. As you know, credit unions have a significant tax subsidy. They don’t pay federal taxes and, in addition to that, there’s continued expansion beyond what they’re really supposed to be doing. So right now they continue to expand into commercial lending and they have … expansion where basically now if you’re living and breathing, you qualify under [credit unions’] field-of-membership rules. They also don’t have responsibilities under the Community Reinvestment Act. We serve communities and consumers just like they do and we believe everyone is going to benefit if there’s a level playing field.
What’s your agenda as ICBA chairman?
I’m going to become even more actively engaged now that I’m ICBA chairman. I realize our agenda is going to be shaped by the needs of our industry and the challenges we face. The issues in community banking today change very quickly and we will need to address them as they shift. We have an incredible staff at ICBA and they have the skill and capacity to pivot quickly when a need arises or issues come up.
Have you worked with incoming ICBA CEO Rebeca Romero Rainey?
Luckily for me, I've worked with her quite a bit. I've been on a number of committees with Rebeca, most recently the ICBA executive committee. I've seen her in action. She's really outstanding. I'm looking forward to working with her as CEO and president. She has a tough act to follow. Cam Fine has taken ICBA to new heights. I believe she will continue to lead ICBA forward. I think she will take us to the next level.
How do you think your community banking peers are feeling in the current environment?
There has been a lot of positive movement over the last year, so I think the general community banker is pretty optimistic and positive right now because we haven’t been this close to getting real relief for years. We’re optimistic. We want to be able to serve our customers and do the things that we know how to do. When you have all these rules and regulations holding you back, it’s frustrating. The attitude is now flipping because we are on the verge of getting real changes.