OVER THE HORIZON

Alphabet Soup

AML, ALM, BSA, CFPB, CRE, FDIC, OCC, ODP…Bankers know full well the alphabet soup that is the industry in which they work. Acronyms are just the tip of an iceberg of items in the banking industry that warrant decoding. As I sit here writing this, a banker emailed that he is looking for a TMO. My guess is they are in the market to hire a Treasury Management Officer. Yet, for the first 100 years of banking it likely stood for telegraph money order.

Getting back to alphabet soup, my research revealed pasta in the shapes of letters dates to U.S. Civil War times. Whether accidental or intentional, the origin seems to be a mystery, and it was maybe more of a novelty until Campbell’s popularized it in the 19th century. Yet, a lot of credit for the term’s popularity is given to President Franklin D. Roosevelt – ironically more frequently referred to by his initials FDR. The creation of numerous New Deal programs and agencies were more readily known by their three or four-letter acronyms. Thus, the collection of these were referred to as alphabet soup.

In addition to the acronyms and abbreviations, there is so much more to decode in our industry given all our regulations governing our activities are known by their sub-chapter numbering in 12 CFR – Code of Federal Regulations. Reg B protects applicants from discrimination in any aspect of a credit transaction. Reg Z is Truth in Lending and Reg DD is Truth in Savings.

Though AOCI -- Accumulated Other Comprehensive Income – has been around for quite some time, it is a term bankers know all too well today. ESG –Environmental, Social and Governance -- is another that has generated increased attention over the past couple of years.

Source of Local Strength

OBL has been highly visible this quarter decoding events in the financial services industry. How could a dramatic increase in interest rates over a short span of time not have a significant effect on bank balance sheets? That, along with regulatory and management failures at a couple of atypical banks, has brought harmful attention to all banks. Throw on top of that toxic activity in the stock market targeting banks, which has created even more fear.

It is a true honor to be the face of the Ohio banking industry. We are grateful to hear from you that our hard work is valued as much as ever. Over the span of two weeks in March, OBL was on more radios and TVs and in more digital and print publications than at any other time during my 20 years with your association. We had to be visible. That is a fundamental mission of a trade association. The calls for OBL to weigh in on economic issues with interplay in the banking sector continue to come our way.

Ohio bankers have shared that the failures of Silicon Valley Bank and Signature Bank were of no consequence to them and their communities. We have countless examples where Ohio’s community banks recounted proactive customer outreach to ensure concerns were relieved. Responses back from their customers were consistent and reaffirmed that they know their bank is intertwined in the local community. Their local bank has its name on the high school scoreboard, is visible with causes in the community and is in it for the long haul as its customers weave through the various stages and milestones of life. The local bank is walking alongside those customers – neighbors, friends and family members – with products to meet those needs.

How did we get to summer already?

The OBL events calendar is nearing the midway point. Ralphie and his decoding ring will be on our TVs before we know it. The year has flown by thanks to the packed calendar the OBL professional development managers have built. As covered in this edition of Ohio Record, we had a bumper crop of bankers turn out for our annual OBL Day at the Capitol statehouse advocacy event and great industry participation in OBL’s 20th annual CEO Symposium. This year’s speakers were especially solid, and the topics were both meaningful and timely. Yet, the one on ALCO seemed to have the longest tail of conversation well after the event. Of course, your ALCO has not been this active in a decade. ALCO, another acronym to throw in the soup.

With OBL’s annual convention we are excited to reconnect with our counterparts from Illinois. The OBL Next Gen Conference is shaping up to have record attendance. It is fun to see the industry’s young leaders and realize a growing segment of today’s Ohio bank presidents were once eager attendees at this event over the past dozen years.

On the Road

Bank visits over the first five months of 2023 put me ahead of my yearly goal. This could be the year I eclipse 100. With 170 member banks, it is a priority to call on as many as possible annually to gain timely banker insights and understand where OBL can be a greater resource. Days on the road and seeing the impact you have in your communities are among my most enjoyable. Resoundingly, Ohio banks are looking for more deposits and the cost of funds is getting more costly. For many, pipelines are good, if not great, and that sentiment is commonly held even beyond central Ohio. To clarify, those solid pipelines are commercial loans. Some of you are doing at least okay on residential but that continues to be constrained by the lack of inventory as much as anything. Credit quality is not an issue, and you are keeping an eye on delinquencies with the stimulus dollars being spent, while charge offs still trending favorably. Staffing seems to have stabilized. There is concern that upcoming exams could be contentious, given the Congressional hearing blowback on regulatory failures at the collapsed banks.

Though on the outside there might seem there is much to decode in the banking industry, it is as simple as the ABCs. Those decisions are still driven by the three C’s of credit – capital, capacity and character. Thanks to OBL’s great members who look to their trade association to help educate the public on how business is done here in the Buckeye State. You have the OBL’s continued commitment to look out further over the horizon to ensure our great industry’s sustainability. M’m! M’m! Good!

Michael J. Adelman President & CEO, Ohio Bankers League