Home Depot Abandons ILC Charter Plans
Home Depot said it will withdraw its application to acquire EnerBank USA in Utah, an industrial loan company (ILC) specializing in loans for home improvement. The company said owning an ILC is no longer a part of its corporate strategy. This is the second high profile ILC charter withdrawal--Wal-Mart ended its quest in March 2007.
Home Depot’s application to the FDIC has been on hold since 2006, when the agency self-imposed a moratorium on processing ILC applications from commercial companies. The moratorium expires on Jan. 31.
“This is another victory for bankers and consumers,” said Hampton State Bank President & CEO Brad Davis. “Bankers and lawmakers have traditionally opposed the mixing of banking and commerce, and in particular, this ILC charter which offers non-financial entities competitive advantages over commercial banks. Consumers win when they do business with banks that have the safety and soundness stamp of approval from regulators like the FDIC.”
Davis said winning this battle against ILCs doesn’t end the large fight. Bankers should remind their congressman of the need to close the ILC loophole once and for all.
The U.S. Senate should consider closing the ILC loophole soon. Senate Banking Committee Chairman Chris Dodd (D-Conn.) wants to begin working on legislation within the next month. The U.S. House passed a bill last year closing the ILC loophole.
For Some Positive Economic News, Look to Iowa
Read a newspaper today and you’d think a recessions is a foregone conclusion. The Fed is cutting interest rates. Stock market investors are uncertain. And the credit crunch aftermath isn’t going away.
The national economy appears to be slowing. But Iowa should fair better than most other states in 2008.
Clear Lake banker and Federal Reserve Bank of Chicago board member Mark Hewitt attended his first meeting as the Iowa representative last week. He told others that Iowa is more “insulated” from a severe economic downturn because more than 25 percent of the economy is agriculture-based, there’s a strong insurance presence and Iowa bankers are traditionally prudent lenders.
According to the Federal Reserve Board’s January 16 Beige Book, economic activity in the upper Midwest (the FRB Seventh District includes all of Iowa and significant parts of Illinois, Indiana, Michigan and Wisconsin) should grow at a continued slow pace. States like Michigan and Indiana have already been hit hard by the changing economy, primarily because of their heavy reliance on manufacturing, particularly the auto industry.
“I’m very positive on the Iowa economy,” insists head of the University of Northern Iowa economics department, Dr. Fred Abraham. “By nature, Iowa bankers are more conservative than lenders on either coast. The good news is that Iowa bankers guessed right (in regard to sub-prime).” He says just as we haven’t experienced wild booms in real estate prices and the general economy, any bust should be softer than in California or in Florida.
But everything isn’t sunny in the Hawkeye state. Iowa’s non-farm unemployment rate is the highest since 2006, inching to 4 percent in December 2007, up from 3.9 percent in November and up from 3.5 percent one year ago. The Iowa Business Council reports a generally positive outlook with 79 percent of respondents expecting an increase in capital spending. And the Wells Fargo senior economist Scott Anderson told Iowa Bankers Association members at the Mid-Winter Management Conference in Colorado that economic growth may be anemic for the foreseeable future, consumer confidence is down and worries of inflation linger. Iowa bankers and consumers have good reason to be anxious.
“Iowa bankers didn’t get into the sub-prime mess, but we’re having issues because of linkages,” reports Hewitt, President & CEO of Clear Lake Bank & Trust. “Many Iowa banks have a significant bond portfolio. An Iowa bank may buy a municipal bond from Indiana and feel confident because it’s insured. But the bond’s insurance companies have gotten involved in sub-prime and now they’ve been downgraded. The Iowa banker though he had an AAA-rated bond and now it’s AA. We’ve got to watch for the underlying linkages,” cautions Hewitt.
Bankers and economists agree that there will be economic pain for many in the next 12 months. The assertion from most media that the sky is falling, however, is an exaggeration.
IBA Holds Mid-Winter Management Conference
During the three-day Mid-Winter Management Conference in Snowmass Village, CO bankers had the opportunity to do some hands on learning. Seventy-one people attended the three-day event and heard from a variety of speakers covering a range of topics including customer service, investments and technology. A legislative update was provided and bankers discussed regulatory issues and legislative prospects for 2008.
Bankers also had the opportunity to ski four different mountains in Snowmass Village as well as explore the many shops and restaurants in the town. A highlight of the trip was attending a show at the Crystal Palace Dinner Theatre in Aspen.
The 2009 Mid-Winter Management Conference will be January 18-20, 2009. For more information contact the IBA’s Molly Lydon at 800.532.1423 or email mlydon@iowabankers.com.
Cutline: Brintech’s Dominic Langteau spoke to attendees of the 2008 Mid Winter Management Conference about new technology for banks.
Order the 2009 Scenes of Iowa Calendar
For the 16th year, the Iowa Bankers Association is bringing Iowa banks another unique and picturesque Scenes of Iowa calendar. And, for the 16th year you get the same low price of $.99 per calendar if you order by June 2nd. Orders received after June 2nd will be $1.09 each. All photos used in the calendar were submitted by Iowa bank employees and their family members. The Scenes of Iowa calendar is a great way to thank your customers for their business and they’ll enjoy the scenic tour through Iowa’s four distinctive seasons. Your bank name and logo can be printed on each calendar you order for prominent display in your customer’s homes and businesses all year long. The “Your Future. Our Focus.” logo is also used throughout the calendar to emphasize the strength and security of Iowa’s banking industry. Please see the Extra’s section of this Exchange for a 2009 calendar order form or go to our website www.iowabankers.com and click on 2009 Calendar Order Form. If you have any questions, please contact the IBA’s Cheryl Miller at 800.532.1423 ext. 2950 or email cmiller@iowabankers.com.
Iowa Business Growth Company Creates Jobs
At the most recent Annual meeting of Iowa Business Growth Company, Daniel T. Robeson reported to the board of directors that during FYE 07, the company had through their 504 loan program financed 48 economic development projects within the state of Iowa that represented a fixed-asset investment of $57,393,398. These same projects were expected to create 392 new jobs while ensuring the retention of another 235. “Capital improvements totaling over $57,000,000 were added to Iowa’s tax base, about 600 jobs were created or retained, and Iowa tax payers were not asked to foot the bill,” said Robeson. The 504 loan program is a self-supporting loan program initiated by the U.S. Small Business Administration (SBA).
Joseph Folsom, Iowa Director for the SBA, presented Robeson with a plaque to once again honor Iowa Business Growth Company as a “Top Volume SBA Lender” for 2007 fiscal year. During that period IBGC approved 48 loans for a total amount of $21,637,000.
Established in 1981, Iowa Business Growth Company was the first statewide Certified Development Company in the nation. Its purpose is to enhance and induce the financing currently available from existing lenders primarily for the expansion of Iowa businesses and ultimately creating or preserving jobs within the State of Iowa. Its board is made up of twenty-one individuals who represent the banking and utilities industries, as well as the various sectors of private industry. Including IBA CEO John Sorensen.
At the end of 2007, the Company was servicing 290 loans initially totaling $200,951,000 with an outstanding balance of approximately $92,929,000. The projects financed with these loans represent $563,916,378 in capital expenditures resulting in 11,796 jobs created or retained.
IBMC is Named Top Rural Lender
Congratulations to Iowa Bankers Mortgage Corporation who has been named the top rural development lender in Iowa for 2007 by the USDA’s Rural Development Division. In 2007, Iowa Bankers Mortgage Corporation made 81 loans totaling $5,192,832.
“IBMC is proud of its partnership with both Rural Development and the Iowa Finance Authority in meeting the needs of low-to-moderate income families in Iowa,” said Dan Vessely, president of IBMC. “Not only does it achieve the dream of home-ownership for these families but it also serves to nurture economic development in the communities they reside. Our ability to centrally provide this much-needed outlet to so many bank locations via our partner relationships and program initiatives leads to an efficient delivery of the monies where they are needed most.”
USDA Rural Development has announced that by partnering with lenders across Iowa, they were able to help 869 families buy a home in 2006. They did this by guaranteeing $64,951,650 in loans made by private lenders to low and moderate income home buyers across the state.
“Rural Development is very pleased at the success we have had over the past year in helping Iowans become homeowners, and the partnership we have with banks all over Iowa was critical to our ability to reach this level of success,” said Mark Reisinger, State Director of USDA Rural Development.
IBMC welcomes the opportunity to work with banks and their customers. For more information about the products and services offered by IBMC, contact Toni Parkins or Jane Sexton at 800.532.1423 or visit online at www.ibmc-iba.com.
Iowa’s Community Bankers Association Ends Operations
Dick Goodson, President of Iowa’s Community Bankers (ICB) recently announced that after 115 years, the association is ending operations. Goodson stated, “The organization has a long and distinguished history, but given the tremendous change which has occurred in banking over the past few years, there is no longer a need for a specialized banking trade association to cater strictly to thrift chartered institutions in Iowa.”
“The recent merger of America’s Community Bankers and the American Banking Association was the final step in the process of consolidation that has been occurring among banks and their trade associations for some years. The choice for our remaining members is to join the regional association called Heartland Community Bankers, which represents the thrift industry throughout the Midwest, or the state association, the Iowa Bankers Association. Both are fine organizations,” Goodson said.
Twenty years ago ICB leadership allowed senior management to create an association management company called Diversified Management Services (DMS). DMS has grown substantially during that period and now represents 20 state, national, and international associations, primarily in the areas of health care, law enforcement /security, staffing services and small business. “It was the foresight of the leadership in the 1980s that allowed us to broaden our client base, thereby allowing us the resources to continue representing our bank members for the past 20 years. It also allowed staff to eventually own the business we’ve now developed, and for that we will be forever grateful.”
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