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"As to a long-term challenge, Kemper cited the "changing nature of competition, the fact that we are all in each other's businesses." Kemper argued that it has become harder and harder for everyone to stake out a niche and decide who one's competitors are. The 20 commercial banks headquartered downtown 50 years ago have dwindled down to two or three. Much of that business, Kemper noted, has passed to the other players at the table--community banks, mortgage bankers, insurance companies, brokerage and mutual fund houses.
Stan Ricketts of Intrust Bank affirmed the last point. "As I look around the room," he mused, "it strikes me that the single largest challenge may be the abundance of competition." He elaborated that in this competitive environment, the issue remains: how does a bank attract new core deposits and quality assets and simultaneously maintain its existing business?
Gregg Motley of the Bank of Blue Valley was likewise of the opinion that "stemming the tide of the loss of core deposits to non-banks" is a paramount issue for banks not only in Kansas City but nationwide. Barry Sullivan of US Bank concurred that defending "market share against non-bank competitors" was a top priority.
Rob Givens of Mazuma Credit Union also was concerned about defending his turf, but in his case it's from the single-focus lending institution, those that specialize, say, in cars or mortgages. "We try to be broad-based," said Givens, "and do everything for everybody."
Nat Hyde of the Bank of America contended that his bank's greatest challenge was "trying to find the right balance of technology and people in delivering our service." Sullivan expressed a similar concern, noting that "attracting and retaining top quality people" was among his bank's key issues. "To maintain growth at certain levels," added Tom Rohling of the First National Bank of Kansas, it is imperative "to continue to find good quality people."
Mike Boles of Capitol Federal worried generally about "this economic situation we have right now." Rob Markey of Blue Ridge Bank & Trust was most concerned with finding viable funding sources, especially when interest rates rise again and the market comes back. Bob Buckner of Country Club Bank agreed that attracting core deposits is critical, especially given the current net interest margins. Gold Bank's Kent Brown confirmed that "interest margins are very, very low right now," a circumstance that makes a banker's job all the more demanding.
The mortgage bankers had an entirely different take on low interest rates. "In our business," said Tom Turner of Collateral Mortgage, "these interest rates are our greatest opportunity." Turner's biggest challenge is trying to establish what the value of real estate is. In theory, he argued, real estate values should be going down, given that occupancy is down and expenses up. In fact, the opposite is happening, a phenomenon that is of some concern to those who need to monitor the market.
Sept. 11 and its consequences
Tom Cohen of GMAC Collateral Mortgage joked that his "biggest challenge is Tom Turner here with Collateral Mortgage." More seriously, he saw terrorism insurance "on virtually all of our commercial properties" as the most pressing of all new issues. (GMAC happens to be the mortgage banker for the World Trade Center.)
Crosby Kemper asked the entire group if Sept. 11 and the potential war with Iraq had an impact on their businesses, and the answer was generally yes. Cohen elaborated that this newly minted terrorism insurance "has been a nightmare for a lot of folks out there" as it affects just about all commercial properties. As a result, at least for many businesses, "the cost of insurance has risen dramatically."
