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MBA TURNS 125 — Regulation, technology driving consolidation

BNA Bank began in 1896 as the Bank of New Albany. This photo is from about 1903.

BNA Bank began in 1896 as the Bank of New Albany. This photo is from about 1903.

As the Mississippi Bankers Association celebrates its 125th anniversary this year, the number of banks in the states has decreased from about 165 to fewer than 100 in the past 30 years, and the spiraling growth of bank regulation could possibly reduce that number even farther.

Freddie Bagley, chairman of Community Bancshares Inc., of Brandon and current chairman of the MBA, said banking trends towards consolidation combined with changes in technology that require fewer tellers to service customers will continue in the future.

» READ MORE: View large form full timeline here …

Bagley said the smaller banks can compete by offering the same technology as big banks, and having available the capability for online banking, electronic deposit and transfers, and mobile check deposits is critical.

“Our position is you need to have the latest technology or you are going to lose the next generation,” Bagley said. “You must look at how customers bank, and the newcomers and young folks don’t visit branches as much as older folks. This is leading to more technology, fewer banks, and fewer locations.”

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Click to view large form full time line of the Mississippi Banking Association

While technology improvements cost banks money, Bagley said what is really hurting the banking industry is changing the rules by requiring higher amounts of capital and more rules for compliance.

Mac Deaver, president of the Mississippi Bankers Association, agrees. “The spiraling growth of bank regulation continues to provide a serious challenge for our member banks,” Deaver said. “Unfortunately, banking regulation is often written in response to problems created by forces outside of traditional banking. But these regulations create obstacles, burdens and costs that hurt community banks.”

The one-size-fits-all regulations often come between the bank and its customers, Deaver said. Sometimes these regulations make it prohibitive for community banks to continue to offer the credit and other services that their customers rely on.

“In some cases, products and services that have benefited customers and proven successful for banks have been discontinued,” Deaver said. “This hurts the individual citizens and businesses in the communities served by these banks. Of course, Mississippi banks’ success is tied to the prosperity of their communities. Such changes that result from onerous regulations create lose-lose situations for banks and their customers.”

Consolidation of banks has already created difficulties.

“The falling number of banks, in itself, creates challenges to the association in providing value and meaningful representation, products and services to our membership,” Deaver said. “The MBA faces the challenge in representing the interest of its members–traditional community banks–in seeking to impact government policy toward banks and in assisting banks in dealing with regulations already on the books.   Additionally, our member banks face unprecedented competition from many different entities using many different delivery systems. Making full and effective use of technology is a growing challenge for all banks.”

While the MBA’s activities have changed over the past 125 years, its basic mission has not. But Deaver said all of the changes taking place in the industry require that they adapt to meet the changing needs of their members, just as the banks are changing to meet the needs of their customers.

 “Our association and its leadership believes that our system of community banking–which is unique in the world–has played a vital role in the success of our nation,” said Deaver, who has served as president of MBA for more than 20 years. “This has been especially true in Mississippi, where our citizens and communities depend on the local bank as a source of credit and other financial services, plus support for community activities. Successful banks are partners in the economic development of their communities and the prosperity of their customers. This is the lifeblood and mission of community banks.”

Unfortunately, it seems that traditional banking is, in many ways, under attack.  “The MBA is committed to working to help these banks continue to serve and succeed,” he said. “While banking has changed in many ways, and will continue to do so, it remains a people business. Personal involvement of bankers in the lives of their customers is an important part of the successful community-banking model. The MBA is dedicated to working to preserve this important aspect of banking.”

“We have long-term relationships with our customers,” said Odean Busby, executive chairman of PriorityOne Bank of Magee, and immediate past president of MBA. “We are fortunate that we know many of our customers. e relate to our general population in Mississippi very well. You can look back through that all 125 years of our history and where we are today has truly been built on good, strong relationships. We understand the marketplace where we do business.

“Fortunately, Mississippi banks have enjoyed good performance over the years. Mississippi banks are strongly capitalized, and they are profitable. Their interest is serving their communities. The better we can serve our communities, the better our communities do.

Community banking has played a vital role in the success of the U.S., and that has been especially true in Mississippi, where citizens and communities depend on the local bank as a source of credit and other financial services, plus support for community activities.

“Successful banks are partners in the economic development of their communities and the prosperity of their customers,” Deaver said. “This is the lifeblood and mission of community banks. With the support of our membership, we see a bright future for our association.”

The MBA recently published a special anniversary issue of The Mississippi Banker that includes many historical articles and photographs, including articles on every bank in the state. The publication is available online at www.msbankers.com. Hard and soft copy editions of the publication can be purchased online.

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