By John Witkowski
Community banking is a uniquely American system. While many other advanced nations have long operated highly centralized banking systems – some for centuries – in the United States, ours was founded on decentralization and localization. Appropriately, this distinctive U.S. tradition is carried on by institutions that are themselves exceptional. I refer to community banks.
Throughout New York State and the nation, each community bank is as unique as the community it serves. Each has its own story and history to tell, with its own distinctive chapters. Together, our stories tell an epic tale of our industry, our state and our nation … and in the face of growing pressures from Wall Street, ours is a story we must continue to tell. Members of the Independent Bankers Association of New York State (IBANYS) are not merely bankers – we are much more than that. We are independent community bankers. IBANYS was formed in 1974 to give voice and representation to this constituency, and have done so with pride for the past 42 years, and many of our member institutions have been serving their local customers and communities for well over a century. By taking in local deposits and putting them to productive use via loans to local small businesses, farmers and home buyers, community banks establish mutually beneficial relationships and sustainable economic ecosystems.
“Community banks provide most of the loans for New York’s small businesses and farms and are thus essential to job growth and the strength of the state economy,’ according to a 2013 New York State Department of Financial Services study. “Even though community banks have less than a quarter of all bank assets in New York and are competing against much larger national banks, they generate more than half of all small business loans and almost all the small farm loans in the state.”
It further noted that New York’s community banks grew during the financial crisis by continuing to lend to small businesses and homeowners as larger banks pulled back. In announcing the results of the study, Gov. Andrew Cuomo noted: “Community banks represent a strong economic engine that drives growth in New York and their performance is remarkable. Small business is the engine of job growth and most small business loans come not from the big national banks, but from community banks.”
Unlike some megabanks that pose existential risks to the financial system, community banking is built on one-on-one relationships with local customers. New York community bankers know our customers and their needs, and are personally accountable to them. As locally based, locally involved institutions, community banks are by definition “honest dealers” – our livelihoods depend on it. We measure returns by more than dollars and cents. Our “return on investment” also includes meeting customers’ everyday needs and enhancing their quality of life, so they can be valuable and productive members of our local community.
Because we are in the business of promoting and developing local economic growth, community bankers account for those priorities in virtually all of our business decisions.
The community banking system goes to the heart of what we believe, as a state, a nation and an industry: that we are stronger from the bottom up than from the top down, and more powerful collectively when we are empowered individually. This is our heritage as community bankers. It’s why IBANYS continues to support our members and industry: the independent, local community bankers in small villages, rural communities and big-city neighborhoods all across New York State, from Long Island to the Canadian border, from the Adirondacks to Lake Erie.
These are the reasons why community banks are so important to the fabric of New York State, to the U.S. banking system and to our local, state and national economies. These are the reasons that IBANYS, and the Independent Community Bankers of America, advocate for state and federal legislative and regulatory policies that distinguish local institutions from the large, complex financial firms that have grown increasingly powerful. And they are the reasons we must all keep fighting to preserve our independent voice in Albany and Washington, D.C.■
John Witkowski is president and CEO of the Independent Bankers Association of New York State. He may be reached at email@example.com or (518) 436-4646.