Where small banks can raise their 'very powerful' voice next

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LAS VEGAS — Cam Fine, president and CEO of the Independent Community Bankers of America, gave an emotional farewell address to community bankers.

Fine, who will retire from the ICBA in May after 15 years at the helm, spent most of his time at the podium Wednesday reflecting on the association’s wins while imploring attendees at this year's convention to make sure that a Senate bill to relieve regulatory burden becomes law.

“I urge this convention to bring that bill home,” Fine said during his prepared remarks. “Don’t stop until we get this bill signed by the president. When this bill goes over to the House, I want every person in this room to contact your [legislators] and say, ‘Pass this Senate bill. Get it done.’ ”

Fine said community banks have a "powerful voice" in Washington, and he encouraged ICBA members to use that influence to keep making progress.

In an interview following his remarks, Fine said that creating an equal playing field for banks, nonbanks and credit unions should be a priority for the ICBA and its members. Community banks should also advocate for fair laws and regulations tied to cybersecurity, he said.

Fine, who received a standing ovation when he took the stage at the convention, discussed his thoughts about the future of community banking, big legislative wins and the road ahead for smaller institutions.

Here is an edited transcript of the conversation.

Can you describe the legacy you hope to leave behind?
CAM FINE: The legacy that I hope continues is that community banking is recognized as a distinct segment of the financial services industry. It is a brand unto itself, and I think that will continue. I think it is accepted by policymakers — both in the [regulatory] agencies and in Congress — that community banks are a different type of financial services entity and they require a different type of regulation. I think that legacy will endure.

How has the role of community banks changed over the last 15 years?
When I came to Washington, policymakers, both in the agencies and on Capitol Hill, looked at all banks the same way. If you were FDIC insured, you were just a bank. It didn’t matter if you were a little, tiny bank or JPMorgan Chase — you were a bank.

Over time I’ve seen that evolve and, more importantly, I’ve seen the influence of community banks grow exponentially. They’ve grown in the amount of influence they can have on policy deliberations in the financial services arena. Community banks have become a very powerful voice. If you listen to speeches of policymakers when they are talking about financial issues, they will talk about community banks — how they don’t want to hurt the community banks and how important the community bank is to the local economy. You just didn’t hear those kinds of things 15 years ago, but now you do. I have seen the influence of the Main Street community banks just explode.

We’ve seen consolidation impact the sector and now de novo activity is slowly picking up. How do you see the model of community banks evolving to stay relevant?
I think you will continue to see de novo activity and I think it will grow and become more robust. The financial crisis was a paradigm shift. It was such a deep, serious and far-reaching crisis that it takes about a decade before everybody can recover. I fully expected to see de novo banks begin to form again. The crisis came and just shut everything down, as is natural when you have a crisis like that. Now it’s starting to pick up again.

I think in the future what will be called a community bank is an institution that's very technologically savvy. You’ll see community banks begin to either partner with fintechs or adopt various business practices of some of the fintechs because they can do that. Community banks are very nimble. I think the future for community banks is very bright and you’ll see more and more de novo activity because of consolidation. There are pockets around the country where there's plenty of room for a local community bank. We're a very entrepreneurial country. You’ll have some businessmen and women get together in those pockets where there isn’t a community bank and say, “Hey, let’s start a community bank.”

With substantial regulatory relief within reach, what other priorities should the ICBA focus on?
There is always more regulatory relief that we could get. I’m sure we will continue to work on various relief measures. But once this big bill gets passed and gets to the president, we will be advocating for an equal playing field with credit unions. The tax issue continues to be a sore point.

Cybersecurity is a huge issue. Not only do we need stronger regulations and laws dealing with cybersecurity and what happens when an entity is hacked, but we need to apply the same standards to nonbank firms — merchants and big-box stores. A breach at a Target or Walmart is horrendously expensive to a bank because the bank has to reissue all of those cards and bear the cost. And the bank has nothing to do with the breach.

Current law says that if a bank is breached and data is lost, a bank is 100% responsible for recovering from that breach and making the customer whole. Well that’s fair, we don’t disagree with that. We're saying, “Why doesn’t that standard apply to Lowe’s?” When Lowe’s get breached, it’s the bank that has to pay for it. There's something wrong with this picture. We’ve tried to get the law changed so the entity that is breached is responsible for making everything right, but the merchants have been successful in blocking that. I understand why — they have a good deal, but we need to get that fixed.

What is next for you?
I don’t know. I’m still keeping my options open. Some people have talked to me about this or that, but I’m not sure exactly what I want to do. I’ll probably just want to sort of rest for a while and then I’ll decide what’s next.

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