Is Bigger Better In Banking?

I originally addressed this question in my position paper,David Vs. Goliath: The Fight to Keep ‘Community’ in BankingIt feels urgent to address it now amid growing concerns about resurgence of the Coronavirus and the long-term impacts on our health, communities and economy.

There is a reason why community banks are important. There is a reason why, especially in uncertain times like these, relationships matter. Our customers are our neighbors. Our customers are our friends. Our customers are our business partners. We know your name, and we speak your language, literally. We understand what you are up against and are working hard to help. We know that beyond the challenges of liquidity, many businesses on main street will struggle with solvency if our government leaders misstep with the next round of support. We hear you, and we are advocating for you.  

We understand the uncertainty you are living through. We feel your worry and concerns. When we see near-empty restaurants, we know that everyone from the owner to the bus boy is hurting. When we see schools grappling with how to best educate our children virtually or in-person, we know parents are also struggling to provide safe, affordable care so they can work.

These are the very times that community banks matter most. Times like these when our neighbors need us most. Over the course of the last few months, Midwest BankCentre has processed over $200 million in PPP loans, impacting nearly 20,000 workers. Nearly 80% of these loans – with a 99% approval rating – were for less than $150,000. In this “under $150,000” category, we helped more than 1,000 organizations keep their teams employed and their businesses afloat to serve local neighbors – a testament to our Main Street focus as a community bank. Community banks across the country have proven to be accessible to ordinary people on Main Street during this crisis. Our commitment is to maintain this level of services as we move forward. 

So, let me go back to the question, “Is bigger better?” Absolutely not. Looking back to the last economic down turn in 2008, banks that were “too big to fail” struggled mightily. It took government bailouts of these financial institutions to stabilize the global economy. The recovery was slow and painful, especially for the people at the margins. But, despite that, the too-big-to-fail banks have grown even larger. Ten banks now control 77% of all U.S. bank assets.

These banks are not singularly focused on the needs of our local communities. During the earliest days of the pandemic, their focus on Main Street, or lack thereof, came into question. As our neighbors were racing against the clock to obtain a PPP loan to save their business, many couldn’t even reach someone to provide a call back, much less a steadying hand to guide them through the ever-fluid regulations. 

It is times like these that we need community banks more than ever. It is times like these that as a community we can act together so that more people are supported. When you Bank Your Values, you are saying “I can help.” You are saying, “I will be there for my neighbors.” I will invest in my community by banking where my heart resides.

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