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Winners and Losers.

Over the last several weeks the debate regarding the government ultimately being the decider of who wins and who loses has reemerged as a national dialogue tied to the government’s response in securing deposits of large failed financial institutions. Anytime government intervenes in what is seemingly a free-market system, whether it is ultimately for the greater good or not, it will stoke passions and debate among reasonable men and women. My concern is less with the decision and more about the unintended message that the market receives from such a decision - that bigger is better.

Back in 2019 prior to the pandemic, I wrote a paper entitled, "David vs. Goliath: The Fight to Keep Community in Banking.” In the paper, I argued for a "new localism.” In other words, America needs to get back to making stuff and local communities need to do more business with local businesses and community banks. I believe large multinational banks and corporations have an essential role, but there has to be a fair and accountable system of competition.

Imagine with me what a typical morning stroll might look like if only big national companies can successfully compete. Instead of walking out into my once eclectic community, I would find a cookie-cutter neighborhood checkered with national chains on every corner, nook and cranny. In testing its urban business model, Walmart purchased a square block to establish a retail foothold competing vigorously with the local grocer, gas station, and home goods boutique. Every restaurant was a national chain. The locally owned shoe store and even my local barber were gone, Great Clips was now my only option. As a black man, this was disconcerting. Even local construction companies and community banks were not spared - Wall Street banks and companies swallowed and digested them. After my morning stroll, I went back into my house and turned on the news to find that this phenomenon was occurring all over the country. The winners from the not-so-invisible hand were the large multinational companies who could do business with other large multinational companies. And while this scenario is intentionally overexaggerated for a reason, my conclusion remains that just because something is big doesn’t mean that it will work in my best interest over time.

We need big and we need small and everything in-between to have human connection and resilience in our economic system. Early in my career at my last job, I was responsible for major gifts. During that period, we increased the number of events we held annually significantly. Events came in all sizes, many large and many small. Both types of events had their purpose - if we wanted to reach a large number of people quickly and distribute information --go larger. If we wanted to connect more intimately and get to know people by name and story go smaller. Big or Small isn’t inherently bad.

Small Community banks are alive and well and value your support. Midwest BankCentre, and the vast majority of community banks, have strong balance sheets, including diverse deposit and loan portfolios. Out of necessity, they maintain strong risk management practices and appropriate reserves. And due to strong regulatory oversight, many ensure that their capital levels exceed regulatory requirements.

There are almost 5,000 community banks in the US today, representing 97% of all bank charters, while only accounting for 40% of bank branches, 14% of bank deposits and 18% of bank loans, and 13% of bank assets. While community banks account for a relatively small share of total banking activity in the US as a whole, they remain the economic engines of Main Street. Community banks are particularly important in relationship-based and information-intensive banking services. These services are mainly consumed by smaller customers such as small businesses, family farmers, and those who have traditionally been denied access to mainstream financial services. Today, community banks are outsized providers of credit to agricultural and commercial borrowers, including during periods of economic stress when the need for credit is most acute. Community banks provide 36% of all small business loans, which is double their share of the banking industry’s total loans, nearly 80% of all financing to agriculture from the banking sector and more than a third of commercial real-estate loans.

Winners and losers should be chosen based on their ability to serve customers, meet a market need, manage an effective operation, and nothing more.
At Midwest BankCentre, St. Louis has been our home since 1906. We aren’t trying to be the biggest bank, just have the biggest impact on the communities we serve. If this type of stable approach to banking interests you, I encourage you to reach out to me at or any other community bank throughout our region.

Originally published in the St. Louis Business Journals Ask The Expert Column on 4/21/2023 by Orv Kimbrough, Chairman and CEO.