We remain convinced, judging by the evidence and the experience with long standing public banking in North Dakota that public banking immensely benefits community banks. We have lamented our lack to date of engaging a community bank to partner with us so we do not have to continue to represent their interests on their behalf. We want them to be with us.
We have already reached out to the community banks: Canyon Community Bank, Alliance Bank and Bank of Tucson. We reached out to Bank of Tucsonas early as 2011 when we first encountered Rep. John Fillmore.The others, we contacted in 2014.
It was encouraging to hear that State Senators David Farnsworth and Steve Farley are also concerned about the decline of community banks in Arizona. We are encouraged to hear that some discussion has been taking place at the State Sen. Financial Institutions Committee that perhaps capital at the Servicing Bank could be made available to capitalize a community lender in Nogales. We are also aware of, possibly a bill coming out of that Committee to ease State community bank charter rules.
This is where you come in, dear public bank supporters. If you are a customer or employee of a community bank– like the Bank of Tucson, Alliance Bank, or Canyon Community Bank– write the bank president a letter, call them or send an email, a Tweet, or a Facebook post to encourage them to check out our website and consider the benefits of public banking.
Update Feb. 15, 2015. Jim Hannley had a very cordial and wide ranging discussion with Canyon Community Bank President, Chuck Luhtala on Feb.13. We are grateful to him for having an open mind and taking the time to meet with Jim. Mr. Luhtala had much to tell us about the great deal of banking regulations that can be burdensome to community banks. He was frank in his description about how important loan quality is when regulators review their portfolios. This factor, he said can be a barrier to lending to (less qualified borrowers). He stated that it is their policy to look for three sources of loan repayments when they are considering a borrower.
Jim described how the Bank of North Dakota partners with community banks to provide the lending expertise for loan programs that have been created by the Bank of North Dakota. He described in general terms how the BND can help community banks by sharing some of the risk of default for entrepreneurs and students who, typically have very little collateral. He also pointed out that since the BND acts as a central bank to commercial banks in ND, they are able to provide capital at much lower costs than are typically available to community banks. He described how the BND can, when necessary subsidize interest to keep loan payments affordable to some borrowers. Jim shared with him the FDIC State Profiles for the 3rd quarter 2014 and used them to compare and contrast banking in the two states. Mr. Luhtala was not willing at this time to commit to becoming a supporter of Arizonans for a New Economy but he did promise to describe our meeting to members of the Arizona Bankers Association.
Update March 2015: We have an engagement to speak with the Arizona Bankers Association in April 2015.