Place Trust in Your Montana Community Banks

In 1998, when I was in my early 20s, I started my career in community banking. I did so because while growing up in Montana, I was able to witness the vital role community banks play in ensuring the financial health of Montana’s small businesses and communities.

Some 25 years later, I currently have the honor of serving as President of the Montana Independent Bankers Association (MIB), the only state association that solely represents the interests of locally owned community banks chartered in Montana. The business model of these banks has been time-tested for more than a century – serve local depositors and invest those deposits back into the communities they serve.

For years, I have watched as Montana’s community banks have had to defend themselves against the irresponsible practices of vastly larger institutions with exceptionally different business models. Such was the case once again in mid-March when two large financial institutions specializing in the high-risk industries of tech start-ups and cryptocurrencies collapsed. Their models drastically differ from your local community bank that help its neighbors, small businesses and their local Montana communities thrive. The only real thing they have in common with community banks is the solitary word ‘bank’.

Montana’s community banks stress one-on-one, face-to-face relationships with the businesses and neighbors they serve. They understand small businesses because they are themselves a small business. Montana’s community bankers know and prioritize what it takes to protect their customers because they live and work in the communities they serve. Because local community banks rely on relationships and their reputation, they are dedicated to looking out for their customers’ long-term interests. This outlook means they focus on safe, responsible, and established banking practices that have served their communities for generations.

The soundness of deposits held in Montana community banks is backed by a model of generational local ownership, quality leadership, and measured lending and investment practices. As the FDIC’s latest Quarterly Banking Profile attests, community banks’ asset quality is favorable, total deposits are stable, and capital ratios remain strong.

This isn’t the first time that MIB’s community bank members have weathered a financial crisis. Community banks provided the financial stability needed for the country to survive the dot-com bubble in 2000, the 2008 Wall Street meltdown, the most recent COVID-19 pandemic, and the current cryptocurrency meltdown. Montana state-chartered community banks have been a constant source of stability for bank customers through every stage of the economic cycle.

Given the soundness of the community banking model, I encourage Montana’s members of Congress to ensure that whatever regulations result from the Silicon Valley Bank and Signature Bank closures should not in turn, harm Montana’s main street banks and its citizens. As responsible financial stewards, community banks should be exempt from restoring losses to the Deposit Insurance Fund caused by a culture of too big to fail. There is no need for new regulatory burdens to be imposed on banks that have not contributed to the issues. I think all Montanans would agree that local community banks and their customers shouldn’t have to pay for the miscalculations and speculative practices of large financial institutions.

If the collapse of Silicon Valley Bank and Signature Bank shows us anything, it’s that the existing tiered regulatory model works and continues to work here in Big Sky country. Rules should recognize and account for institutions of different sizes and risk models. Given the continued stability of Montana’s community banks, lawmakers need to ensure that policy changes support community banks and only target the risky practices of other, larger institutions.

The events of the past few weeks highlight the strengths of Montana community banks. MIB’s community banks stand ready to defend and protect our sound business model. We’re ready to compete against larger regional and national institutions for your deposits. We’re ready to meet you anytime and anywhere to show members of our community that our responsibility is to you, not to Wall Street or Silicon Valley.

If you already bank with one of Montana’s numerous locally owned community banks, I thank you. If you currently bank with one of the larger institutions, I encourage you to consider making the change. I’m confident that any of our member banks will be happy to assist you in the process.

To find a community bank near you, go to http://www.mibonline.org/find-a-community-bank.