Hartford Business Journal Special Editions

www.HartfordBusiness.com November 26, 2012 • Hartford Business Journal 19 Celebrating 20 Years of Business News BANKING 20 Years of Congratulations to the Hartford Business Journal for reaching their 20 year milestone in reporting Hartford business news! Guilford Specialty Group "Top Insurance Companies in the Hartford region" as seen in HBJ's 2012 Book of Lists. Burlington · Hartford · King of Prussia · Scottsdale 860.871.1111 Toll Free: 800.741.6367 nemsi.com License #'s: E1-104939 • S1-302974 • P1-203519 • F1-10498 • SM1-192 • MC-1134 MECHANICAL • ELECTRICAL • PLUMBING •SHEET METAL • BUILDING AUTOMATION • FACILITIES SERVICES SERVICE SOLUTIONS… ONE SOURCE Only one company can build, power, protect, and maintain the critical systems in virtually every type of facility. Our clients trust us to deliver end-to-end facilities solutions, so they can focus on their core business. We are experts in: Facilities Services Preventive Maintenance Programs Onsite Operations & Maintenance M y banking career began as a sum- mer teller at City Savings Bank of Pittsfield (Mass.) where I eventu- ally served as vice president - lending. Back then, you closed a consumer loan with a green application form, a signed note and a handshake. That was community banking as it was meant to be… where the customer came first and there was an easy answer to the ques- tion "when we have a choice, do we inconve- nience the customer or do we inconvenience ourselves?" The last two decades have seen game changing shifts in the banking industry. The old product offerings… commercial loans "tied to prime," 80 percent mortgages, can- celled checks returned with monthly state- ments, passbook accounts, Christmas and vacation club accounts, etc. have faded from many bank services. One consequence of change could have a lingering negative impact on our commu- nities and our Main Streets… a precipitous decline in the number of community banks. Community banks principally serve con- sumers, families and small business. They're known for local decisions, support of local organizations and events and share staff time, talent and the banks financial resourc- es within their service areas. Simply stated, community banks meet the needs of their local communities. Here is the disturbing picture of commu- nity banking trends in America: Number of FDIC insured institutions 1985 2010 18,033 7,658 This overall decline of 135 percent in total institutions is dwarfed by the overwhelm- ing decline of small community banks, those under $100 million…from 13,631 to 2,625. Simultaneously, mega banks over $10 billion in assets increased from 36 to 107. The reasons for this shift range from economic growth, bank consolidation to achieve economies of scale and bank failures. The net result is ominous for consumers and small businesses — fewer providers of local services and less opportunity to deal with decision makers. "Fee vs. free" banking services have definitely shift- ed to "fee," whether direct or indirect. Was there a specific event that precipitat- ed banking industry changes? I see several: The financial crisis and subprime mort- gage fiasco focused public and regulatory attention on the industry…and, yes, politi- cians and regulators missed excellent oppor- tunities to nip mortgage abuses in the bud, but failed to act until the damage was done. Very stringent regulatory oversight and legislation followed for the entire industry. For the sins of a few, all suffered. There are diminishing returns from increased regula- tion and its burdensome costs. Advances in technology have brought customer enhancements — mobile bank- ing, online services, 24 hour access to your bank accounts, etc. On the negative side, this progress has security risk and has benefitted larger banks more due to technology costs and economies of scale. Increased competition. There is a blurring of the differences between savings banks, savings and loans, and commercial banks as well as growth and increased powers for the credit union industry. Industry culture change. "It's a Wonderful Life" style bankers have become dinosaurs. Bankers are less likely to be considered "pil- lars of their community" as focus intensifies on financial results. The priorities of who banks serve have shifted from customers, potential customers, communities and staff in favor of shareholder and investor interests. Has the pendulum swung too far? Will a better balance between pure financial inter- ests and customer interests return? Only time will tell. g William J. McGurk retired as president and CEO of Rockville Bank. CT banks, particularly community lenders, will never be the same By Bill McGurk "Remembrance" 'For the sins of a few, all suffered.'

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