Acting Commissioner of Finance D. Eric McClure told members of the Missouri Independent Bankers Association at their annual convention last month that Missouri state charters are "alive and well." The overall numbers have dropped, he conceded, but 23 new charters have been approved in the past five or six years, including the most recent one in Cassville in September.
The regulator also told the group meeting at Lodge of the Four Seasons on the Lake of the Ozarks that he is excited about the prospects for community banking. "It is here to stay," he said. He told the bankers they face challenges, but they have the management and staff skills to deal with adverse developments. The condition of Missouri state banks is good, McClure said, due to good management. There are a handful of "problem" situations, he explained, "but none I'm losing any sleep over." Missouri state banks have strong capital levels and asset quality still looks good, he said.
Voicing a couple of concerns, he noted that consumer debt loads are "very high" and banks are facing stiff competition on both the loan and deposit sides. His agency has detected "some deterioration of loan standards," McClure reported. A lot of lenders in banks today haven't seen bad times, he pointed out, and sophisticated risk management techniques are needed. "When you see a debt ratio that is lean and mean, have you shocked it to see the effect of rising interest rates or an economic downturn?" McClure asked.
The regulator told the MIBA members that they should "strive for a culture of excellence" in their banks, in performance and in safety and soundness. Representing the Independent Community Bankers Association, Thomas J. Sheehan, president of Grafton (Wis.) State, declared that in the present climate for banking legislation, parties don't mean much anymore.
"We have to support the people who will help us,"' said the ICBA president-elect, regardless of their party affiliation. On other matters, noting that 44% of ICBA's membership is considered ag banks, the association will continue to work with Congress to relieve problems in the ag sector. "We share your concern," he said. Another item on the ICBA agenda is raising the FDIC insurance ceiling, even though the agency has not shown much interest and large banks don't want it, according to Sheehan, because they have "something better," the too-big-to-fail concept.
Carol Gilstrap of the State Treasurer's office, pinch-hitting for State Treasurer Bob Holden, advised the Missouri bankers that state funds are an option for Y2K liquidity purposes. She suggested planning ahead, however, and not waiting until the last minute, which means having a current depository contract on file with the Treasurer's office.
A "hot topics" seminar on Subchapter S elections by banks was conducted during the convention by San Antonio attorney Patrick J. Kennedy, Jr.
Issues he addressed includedmarketability, taxation, fair value and strategies for reducing the number of shareholders to qualify for Subchapter S election.
Sub S status can actually increase marketability for investors, he said, because "very attractive cash flows are involved."
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