January 21, 2010

The small-bank booster
NH banker, 11 others meet with Obama

William Pierce, along with 11 other community bank leaders, sat down with President Barack Obama in December to talk about how community banks are affected by regulations, as well as their role in the economic recovery. Pierce, 56, is president and CEO of the Monadnock Community Bank (www.monadnockbank.com) in Peterborough. Twelve members of the Independent Community Bankers of America (ICBA) got the president’s ear in the Roosevelt Room of the White House on Dec. 22. Pierce, who has lived in Peterborough for 16 years, said community banks didn’t cause the economic meltdown but they do want to be part of the solution.

Q:How did this all come together for you?
Over the years, I’ve been an outspoken advocate for community banking. The ICBA, our trade organization, had been talking to people at the White House advocating for community banks and really looking out for small businesses across America, advocating that the Small Business Administration make more loans to small businesses. We’re happy to participate in the SBA loan program. It was a week or two before the large banks had been in — that meeting didn’t go too well. ...The trade association had banks from different areas of the country. I got a call the Tuesday before asking if I’d like to be on the list. And then the Friday before the meeting I got a call from the Treasury asking if I was still interested. I said, “Of course.” Five minutes after that I got a call from White House staff telling me President Obama would be interested in having us down. ... You can’t let someone else do the talking all the time. Sometimes you’ve got to stand up for community banks...

In your preparation, what message did you want to get across to him?
It wasn’t that hard to prepare when you live your life being part of a community bank every day. We have 25 employees. We’ve been growing over the years. There’s not that much difference from many other small businesses with 25 employees. A lot of problems are the same for us as it is for small businesses.

What were the other bank leaders saying?
There were some themes that I think were a little different than the White House had expected. Small banks have had a lack of demand for small business loans even though there’s a supply of money available. Small businesses are hesitant to borrow money. I guess if you’re an academic you think more about a theory of things; if money is available at a low rate, then they’ll just buy it. That’s what happened with the sub-prime crisis. A lot of businesses are being very cautious about borrowing money unless they know it’s going to help them and their business. There’s been a little less demand than I think the administration had expected. ... A lot of us are dealing with the same types of things. Small businesses are reluctant to borrow money. ... Our point of view, government regulations are aimed at the large banks but they affect small banks also. Some regulations are burdens with only 25 people. In the end, the customer winds up paying the price for that. Sometimes there are unintended consequences.

How long was the meeting?
About an hour and 15 minutes. The president made opening remarks and then the 12 of us went around and then the president had closing remarks.

What was the response to bankers’ remarks?
Actually the whole meeting was very cordial. It wasn’t adversarial as the meeting with the megabanks was. Basically, because we’re primarily on the same wavelength.

What did you personally take away from the meeting?
I had a pretty good feeling that at least the smallest banks in the country really got a chance to be heard, where sometimes we’re forgotten. There are something like 8,000 community-oriented banks and 200 megabanks. Sometimes the 8,000 get overlooked. I felt good that we had an opportunity to speak on behalf of other small banks in New England.

What are you hearing in terms of the economy? Any good news?
It’s a little more upbeat at the moment than they were. Maybe at the end of the year, business will have picked up.

How is your bank doing?
We’ve had some challenges in the last year, but surprising that it’s from things like an increase in FDIC insurance. All of a sudden, it’s a very large burden, when it was practically non-existent two years ago. Now it’s a substantial fee.

That’s interesting...
All of a sudden we had this new expense. It takes about a quarter of one percent off the rate we can pay depositors. It’s still working its way through the banking system. —Jeff Mucciarone