Consolidation among Iowa banks to continue, bankers association president says

CEDAR RAPIDS - The consolidation of Iowa's banks likely will continue, even if regulatory burdens are relieved, the Iowa Bankers Association president and Iowa Business Council treasurer said Thursday.

Speaking to a crowd of about 45 during The Gazette's Business Breakfast at the downtown Cedar Rapids Public Library, Association President John Sorensen said the state's banks are healthy financially.

Even so, he added, population shifts to the state's metro areas and cost increases from emerging technology and federal regulation are driving community banks to look for ways to increase their scale.

'Those three in particular are driving consolidation,” Sorensen said. 'You have to be bigger, you have to have scale in order to adequately address a lot of those areas.”

Bank charters in Iowa have steadily been on the decline.

'Fifty years ago in Iowa, we would have 661 bank charters in our state. Average size, believe it or not, would have been $7.8 million,” Sorensen told the audience. 'Today, we have 297 bank charters in Iowa, and the average size is $260 million.”

Iowa also hasn't seen a new bank form in the state since 2006.

'For our industry and any industry, no matter what business you're in, if you don't have new entrants, sometimes you can lose that vitality and the innovation that can bring,” Sorensen said.

Sorensen also cautioned against the effect of federal regulations formed after the 2008 financial crisis. A focus on strict regulations also can lead to the commoditization of banking services into less personal, off-the-shelf products, Sorensen said.

While Sorensen agreed some regulation is needed and necessary, rules should be tailored to the size and market of financial institutions, he said.

'The thing that really, in my view, differentiates banking in Iowa is we have relationship lenders. ...

If we push too hard on a regulatory system that requires us to move away from that model, I certainly do not think that's good for our state and our economy moving forward,” he said.

The Gazette's next quarterly business panel will be Thursday, June 8. The topic will be 'Future of Workforce” and panelists will be D. Allan Boettger, community outreach director at the University of Iowa's Pomerantz Career Center; Megan Schulte, human resource director for Frontier Co-op; Seth Wear, senior manager of Rockwell Collins Professional Staffing; and DaLayne Williamson, Workforce Business Services director of ICAD Group.

l Comments: (319) 398-8366; matthew.patane@thegazette.com