2019 Journal of Community Bank Case Studies

The University of Akron

FIRST PLACE:

Executive Summaries

Juniata College

D uring Kish Bank’s (Kish) 120-year history, it has weathered a number of economic contractions and real estate bubbles, including the Great Depression and the Great Recession. Management, in its 2008 Annual Report, alluded to the fact that severe recessions had historically been followed by periods of exceptional growth for the bank. Based on an analysis of its financial performance in the period from 2014 to 2018, this is also true of the most recent crisis. In the period since the Great Recession, the bank concentrated its efforts on its core values, putting the community and its customer’s interests center stage. This focus recognized and underscored that; a community bank and the communities it serves are inseparable and; to meet the needs of its customers Kish must be service-oriented and ahead of the technological curve. The result of Kish’s unwavering commitment to these values has enabled Kish to grow its customer base and take advantage of the recent consolidation in the banking industry. However, achieving favorable financial results has not been without challenges. The economic decline precipitated by the 2008 recession, coupled with the enactment of the 2010 Dodd-Frank legislation were two such challenges. The latter, which sought to prevent the recurrence of the 2008 financial crisis, implemented strict rules and regulations on the banking sector. These rules and regulations did not discriminate on the basis of size, notwithstanding

that it was the actions of the larger banks and non- bank mortgage brokers which had led to the crisis. The resulting regulatory burden has proven to be extremely onerous for smaller banks, in particular, community banks such as Kish. In 2018, the passage of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA) was intended to scale back the impact of these regulations on community banks. Many politicians referenced EGRRCPA as primarily benefiting community banks. Former House Speaker, Paul Ryan, heralded the passage of the law as a step toward “freeing our economy from overregulation” while also referring to smaller banks as “engines of growth” who lend to small businesses and are “vital for millions of Americans who participate in our economy” (Rappeport and Flitter). According to the 2018 Congressional Research Service (CRS) Report on EGRRCPA, advocates of the legislation contend it provides necessary and targeted regulatory relief and engenders economic growth while providing increased consumer protections. Those who oppose it argue the legislation unnecessarily diminishes important Dodd-Frank protections which will benefit large and profitable banks. This research paper studies the impact which EGRRCPA has had, or may have, on the regulatory burden of Kish, both in the period since its enactment and in the future.

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