New Mexico Residents Favor Local Banks (67%) over National Banks (39%) in the 2020 Garrity Perception Survey
By The Garrity Group
Favorability of Financial Institutions Vary Based on Local versus National Banks
New Mexico Residents Favor Local Banks (67%) over National Banks (39%) in the 2020 Garrity Perception Survey
New Mexico residents are more favorable towards local banks than they are national banks. According to the 2020 Garrity Perception Survey, Local Banks are viewed as the sixth most favorable of the 17 industries included in the research findings. National banks are the 15th most favorable institution. The scientific survey among New Mexico residents was conducted in late January 2020.
“By their nature, local banks have a unique connection to the community; that affinity is clearly reflected in GPS findings,” said Tom Garrity; President and CEO of The Garrity Group Public Relations. “The changing world of community banks and credit unions have created some mergers of convenience. However, despite new names and expanded customer segments, local banks continue to be known for their community connections.”
“National banks have a perception issue, but not because of the good work they do in our communities,” Garrity says. “The perception issues are likely due to issues at national banks in other parts of the country that get coverage on news networks or social media and review websites. Ever since the Great Recession of 2008, public perception of national banks has suffered. This is unfortunate because national banks help on their local communities, sometimes with greater financial impacts than local banks.”
Jerry Walker, president and CEO of the Independent Community Bankers Association indicated in a 2020 Perception Broadcast that the number of local community banks in New Mexico has dwindled from 46 in 1991 to 33 this year. “NM is slow going into and slow going out of a recession,” says Mr. Walker. “With our regulatory environment, with the gross receipts tax system and corporate income taxes, which some bordering states do not have, we expect our business growth to be slower this year.”
New Mexican’s favorability of Local Banks is consistent. In 2011, 66 percent of residents were favorable of local banks. In 2020, 67 percent of residents are favorable of local banks. New Mexico residents who annually earn between $40,000 and $79,999, have earned a high school degree and have lived in the state for more than 20 years are more favorable of local banks than other demographics.
Geographically, residents living in the Northwest region are more favorable of local banks than those who live in other parts of the state. New Mexicans living in the North Central region and the Albuquerque area are also favorable of local banks than residents in other parts of New Mexico.
National banks have routinely ranked lower than most other industries on the Garrity Perception Survey. The highest score for the industry came in 2015 with 41 percent of those surveyed having a favorable view. The lowest level of favorability was a mere 30 percent, in 2017. Favorability increased in 2020.
Geographically, residents living in the Eastern and Northwestern parts of New Mexico tend to have a higher level of favorability of national banks than residents living in Albuquerque or Las Cruces.
Tom Garrity, The Garrity Group [00:00:29] How do New Mexico residents feel about banks? Well, based on insight from the annual Garrity Perception Survey, it all depends if that bank is local or national. Hello, this is Tom Garrity. And in this episode of the Perception Broadcast or podcast, we’re actually going to be talking about the favorability of local and national banks. It’s my pleasure to welcome Jerry Walker, the president and CEO of the Independent Community Bankers Association of New Mexico. Welcome. And thank you very much for taking time to share some of your insights about the local community banks on today’s broadcast.
Jerry Walker, Independent Community Banking Association [00:01:07] Thank you. It’s great to be with you. I’m very honored you would allow me to take a few minutes and share my passion about community banks in New Mexico. I’ve been proud to represent community banks for over twenty nine years now, and it’s just a great bunch of people. And so I’m always ready to talk about community banks.
Tom Garrity, The Garrity Group [00:01:26] Well, and you and I are connected by way of linked in. Just to give them a shout out, which is one of the ways or the main reason why you and I are talking today. So is thanks to social media, which I’m grateful.
Jerry Walker, Independent Community Banking Association [00:01:38] Social media has changed our life totally, has it not?
Tom Garrity, The Garrity Group [00:01:41] It has. It has. But you know that one of the traditional media sources, Albuquerque business first, you know, they track financial institutions each year in their annual book of lists. And included in there is a list of banks with a federal charter and a state charter. There are 20 19 list included, 51 banks in New Mexico total. Thirty nine of those have a local have a state charter and 12 have a federal charter. Can you provide some insight a little bit since there’s so many local banks here in New Mexico, a little bit about the bankers as CIT Community Bankers Association and then what constitutes a community bank?
Jerry Walker, Independent Community Banking Association [00:02:23] Tom, let me begin by explaining that community bank might have a state charter or a federal or national charter. Just because a bank is a national bank doesn’t mean it’s not a community bank. The difference between the large regional banks or the large national the Wall Street type banks is is basically the governance of the bank itself. And the ownership community bank, by our definition, is one that’s owned here in New Mexico. It’s based in New Mexico that shareholders are in New Mexico. All decisions are made in New Mexico. These banks are invested, invested in the community. And so that’s our business model. And that could be a national or state charter. The reason we have two different chartering systems is some bankers, some groups would rather be regulated by the state of New Mexico or the state where they’re domiciled than to be regulated by the feds. Now, with that said, all banks have to have FDIC insurance in order to accept deposits. And so you have federal involvement regardless of whether the charter is state or federal. And so that’s that that’s where we are in terms of the charter now, in terms of the number of banks not to be disrespectful to the business magazine there in Albuquerque, but we actually ended the 2019 year with only 34 loan banks in New Mexico.
Jerry Walker, Independent Community Banking Association [00:03:59] And so while they may be showing some that they call community banks, they probably are not. In fact, I can tell you they are not. And what’s happening in our industry is mergers and acquisitions, mergers and acquisitions. And it’s going on all over the country. When I went to work for this industry back twenty nine years ago, there were some 15000 community banks, independent banks around the country. Today, we’re down to 50, 300. So what’s happened over the course of a couple of recessions, the Great Recession of two thousand, eight and nine and 10? There’s been there’s been a lot of the banks either purchased and gobbled up by the Bega’s or they’ve just simply there’s there was a number of them went out of business during this last Great Recession, about 600 or so community banks went out of business. We’re closed by the regulators. And so in New Mexico, our numbers have Brundle from when I started 64 community banks back when I started twenty nine years ago, down to thirty three now and two to twenty twenty. And so that’s a real concern for us.
Tom Garrity, The Garrity Group [00:05:12] And you mentioned to some of those reasons as far as just the economic climate in the you know, in 2008 through 2010 during. The Great Recession. Mergers and acquisitions. What are some of the key issues that are facing the community banks today?
Jerry Walker, Independent Community Banking Association [00:05:29] Well, I guess we’d have to start off saying the pandemic right now. This pandemic, number one, we know how many businesses are closed because they are not allowed to operate open and re closed. And so what we’re what we’re looking at in terms of the pandemic, number one, most of our banks lobbies are still closed as of today. They are accepting customers by appointment only. Most of them around the state are still operating through their drive through us, either in their main offices or their branches. And let’s go out. What we’re fearful about happening as we move back into, quote unquote, normal times, whatever normal is, is that some of the credit quality of the small businesses and our banks of finance may deteriorate. And that happens and it probably will happen. Then we’re going to see regulators come in and say, OK, you’re quite a credit quality isn’t quite as good as it was going into this saying. So we’re going to ask you, Mr. Banker, to put more money in reserves in case of loan losses. Well, when that happens, of course, there’s less money to lend for loans. And so that’s one thing that bothers us. The real concern to us, I should say, bothers us. Next is the business environment in New Mexico. And I’m not one to trash our business environment. But let’s just be let’s be honest. New Mexico generally is slow going into a recession or whatever, and we’re slow coming up. And so with our regulatory environment, with our taxation scheme, the gross receipts tax system that we have with the corporate income taxes, which state some states surrounding us are bordering us, do not have, we expect that our business environment is going to cause us to be slower. It was interesting. I listened to Dr. Peach and Jeff Mitchell from the Bureau of Business Research. Dr. Peach, from in an issue and then Mitchell from you and Ms. Bureau of Business Research addressed the Legislative Finance Committee here just recently, and they were telling the committee to expect a longer drawn out recovery in New Mexico simply because no one of our, you know, our dependance on oil and gas, they don’t see that coming back as quick the pandemic and how that has affected small businesses, especially in the services sector, like restaurants, hotels and so forth. And so the business environment is going to be one of those things that we think will cause us some concern down the road. Mergers and acquisitions, we’ve already talked about that. We have some very profitable banks in New Mexico and nationally, our district. We’re in the Dallas district for the FDIC. And nationally, we have some of the most profitable banks even for their size in the country. We have a two or three still larger community banks in New Mexico and they’re doing very, very well. With the larger they get, the more of a real bright, shiny plum they become for one of the larger banks to want to come in and purchase. And obviously, when you have a stockholder base board of directors, the management has a responsibility. If they’re if someone takes a run at them wanting to buy them, they have a responsibility to take that to the board. Well, it’s kind of hard to turn down a real, real solid, very lucrative offers. And so that’s something that concerns us as we go forward. Our banks doing so well that they become a target for a merger and acquisition. And then finally, just a yearly economy where I talked about that. We’re such a rural state and by nature and by geography. And so not all parts of New Mexico are created equal. Tom, you know that you’ve been around for a long time and watched the economy of the state then. So while things may be doing well in Albuquerque or Las Cruces or Santa Fe, they may not be doing as well in Clovis or Hobbs or Farmington or Gallup or read Tom. It’s just a we have such different dynamics going on economically in the state.
Tom Garrity, The Garrity Group [00:09:59] Well, Mr. Walker, you touched on a couple of items that I know Dr. Peaches testimony was very sobering, to say the least. But of course, he’s never cold punches. But one of the things that you talked about as far as the potential of M&A and larger national banks acquiring those at the state. Level. What is the ripple effect, if any, that we see in the communities when those types of acquisitions take place?
Jerry Walker, Independent Community Banking Association [00:10:31] Let me let me divert. Just for a second and tell you what I tell all my friends who call me Mr. Walker. Mr. Walker was my grandfather. Please call me Jerry. Jerry. OK. That’s one of my pet peeves for years and years. I’d love to do that. You know, I can give you an example here in San Juan County where our offices are in Farmington. My office is really that vehicle setting out in the parking lot because I’m all over the state. Then spend more time out of town than in town in normal times. But here in Farmington, a really good example and settle on county. We had a very, very one of our larger community banks several years ago that was acquired by one of the national banks. And then another of our very profitable community banks was purchased by yet another. About two years down the road, those national banks began closing branches here in San Juan County and they basically had all come right back into Farmington, one with just two branches, one with three branches. And so the smaller towns, Bloomfield and ask Tech and Kirtland, those branches were closed. Shiprock, those branches were closed. And so that’s what happens sometimes when the large guys come in and buy a community bank. Local people want to know their banker. That’s the strength of community banking. And that is the fact that we’re a relationship industry. We’re not a transactional industry. Yes. You have to have an account number on your checking account with us or your loan. But the fact of the matter is the president and the loan officers in that bank know you by name. They know you by face. That isn’t the same. That’s not true at the large nationals and regionals because they are so much larger. They have to have processes and procedures in place just to manage all those multiple branches across or across the country. And so the relationship suffers when a large bank purchases a local bank and then that decision making is taken away from that local community. It’s shifted to, well, whatever region or national office that bank happens to use.
Jerry Walker, Independent Community Banking Association [00:12:44] Well, and that’s very good insight. What I’d like to be able to do is let’s kind of shift a little bit on perception, because he touched on that. As far as the perception when, you know, there’s a merger and acquisition and the realities that you have that you shared. When we look at the 20 20 Garrity perception survey, New Mexico residents favor local banks by 60, 70 percent favorability. National banks have at thirty nine percent favor ability. What surprises you about those results?
Tom Garrity, The Garrity Group [00:13:13] Not a thing. Not a thing. In fact, it validates what I have been preaching to legislators and to regulators and to anybody who would listen for twenty nine years. The net is the fact that people like to know their banker. They like to be able to walk into a bank and walk by the prison’s desk and wave and say hello Joe or Sam or Bill or whoever it is. It could be Martha duration. It might be Ruth. Mean. We have a lot of lady presidents in our state now, which is great, but it just validates what I’ve been saying all along, and that is that people want to know their banker. And so I’m not surprised by what you found at all.
Tom Garrity, The Garrity Group [00:13:56] And by means of disclosure, I’ve you know, I started out when I started my company back in nineteen ninety seven. I used a I went through a local community bank. It was acquired, went through a couple of different transitions with some national banks. And I can tell you that even though I don’t know the exact who the president is, I still feel like I have a pretty good line of communication with the folks at my national bank that just happens to be up the road from the office.
Jerry Walker, Independent Community Banking Association [00:14:29] Yeah, I know. And that’s fine. You know, just because they are national, just because they are large doesn’t mean they’re evil people. That doesn’t mean they don’t have local folks working in those branches that do care about the community. I’m not saying that at all. What I’m suggesting and I think what the reckonable bear out when you really dig down into the stats of lending and so forth, is that when you take Decision-Making out of that local community and it’s done either through a cookie cutter process where you check all the box in boxes and then if you qualify, you get the loan or they have to run it up the flagpole to a regional office or a national that takes away that takes away from the from that’s the feel of a community bank. And from that business model. And additionally and I know we’re gonna get into this just in just a couple of minutes. But that’s one of the weaknesses, I think, of the large national regional bank model. And this the fact that when they come in and buy a local bank, they’re buying the deposits. Let’s be honest about it. They’re looking for capital to fund their operations in other areas where maybe there’s a more robust economy and they’re needing money to make loans there. So New Mexico funds, New Mexico deposits shift to out-of-state and they’re benefiting people out of state rather than staying here and benefiting New Mexico.
Tom Garrity, The Garrity Group [00:15:51] Well, geographically, it appears that the northwest part of the state, you have higher favorability for local community banks as well as national banks. What is happening in the Northwest that is creating such a higher favorability than other parts of the state?
[00:16:09] I think the example that I gave you a few minutes ago regarding our two larger community banks that had sold, I think that’s part of it. But I also think. Especially here in San Juan County and over at McKinley County. You know, we have some strong community banks that have been around for a while. And so I think that lends itself to it. But we have an economy here in San Juan County, at least, that over the years has been based upon extractive industries, oil, gas, coal. Way, way back, uranium. The Navajo Agricultural Products Industries, Nappi of agriculture. And so we have an economy here that quite honestly lends itself better to being financed and banked by a local bank, because, again, our people are people in the community banking side really understand those industries better. And so I think that’s part of it. And again, just the business model itself to on the it’s too much relationship versus transactional.
Tom Garrity, The Garrity Group [00:17:12] So we’ve talked a little bit about the geographic sweet spot as far as being the northwestern part of the state. You know, one of the things that 20-20 Garrity Perception Survey provides is some demographic insights of those who are favorable, and it includes residents who annually earn between forty thousand eighty thousand dollars, those who have earned a high school degree and have lived in the state for more than 20 years. These are the key audiences that have a high favorability for local banks. Why is this so strong? Why are they so zealous about local banks?
Jerry Walker, Independent Community Banking Association [00:17:49] Well, I’m gonna go back to that word again. Relationships. I’m going to go back to that. Plus, I’m going to go back to the fact you look at the age of our banks in New Mexico. Our community banks, we have community banks that go back to being chartered and created before statehood bid for statehood. So these folks who have been in their communities for 20 years or more, so have their banks that they’re banking with most. We have banks that are over 100, several banks that are over 100 years old in the states that are still in operation, still locally owned, still locally managed. They have local boards of directors. And I think that is really part of it. You know, I like to liken community banking, the industry itself to the local hardware store. Community banks are really a small business in the scope nationally of things. We’re not a trillion dollar bank. We don’t have any trillion dollar banks in New Mexico. We don’t even have any five billion dollar community banks in New Mexico. Ours are all under two billion dollars. And the larger ones and most of our banks in the metro community banks. The average is going to be about the median is going to be about two hundred and fifty to three hundred billion dollars. That is the size of these local banks. So we’re just we’re small businesses, too. So while the local hardware store is selling shovels and hammers and buckets of paint, we’re selling services and money. We’re selling safety deposit boxes, we’re selling savings accounts to that and then college funds and so forth. And so I think that people recognize that. I think especially since 2000, the Great Recession. I think the differences between a community bank and the large Wall Street or regional banks. I think that that that difference has really been demonstrated. I think the media, quite honestly, is understanding better now that community banks that we used to just be painted with the same brush. We’re not being painted anymore. And, gosh, we’ve been we’ve been pitching that and trying to sell that idea and explain that the whole twenty nine years I’ve been in this industry and it’s finally happening and I’m fixing to retire so well.
Tom Garrity, The Garrity Group [00:20:01] Well, Jerry, that’s a that’s quite an accomplishment, you know. And you definitely and when we started our conversation day before we were on camera, it turns out we both have roots in radio. And so, yeah, I’m sure just as the you know, we’ve both seem traditional media and specifically radio changed quite a bit over the many years. Local banks to your testimony from earlier today. I definitely has seen an equally dramatic transformation.
Jerry Walker, Independent Community Banking Association [00:20:31] Yes, absolutely. Absolutely. And, you know, technology has changed the community banking industry as well. We have to our banks have to compete with the larger banks when it comes to being up for offering online banking and in remote capture deposit and things like that. They have to offer investment services. They have to offer all of these things that the big banks do. And so what our banks have done, of course, is we have a national association. And in our state association, we have relationships with vendors that allow our community banks to offer products and services at a competitive price so they can compete with those big guys. So there’s just been a lot of changes over the years to this industry, as there has been in broadcasting, and neither will ever be the same again. And I guess I guess that’s probably for the good. But the nostalgia and nostalgic side of me says, golly, I wish we could go back to yesteryear because it was a lot more fun.
Tom Garrity, The Garrity Group [00:21:34] You know what? And I appreciate that. You know, if it’s if it’s not fun, it’s not worth it. I mean, you know, being the person who likes to be in the middle and bringing, you know, different parties to the table to talk things out and such.
Tom Garrity, The Garrity Group [00:21:51] I’m going to put you on the spot here for a minute. But with respect to local banks and national banks, if somebody were just a regular consumer and they would see that, you know, they would potentially hear that there’s a real rivalry between local and national banks. And I’ve actually seen I’ve seen some rivalry, but I’ve seen more, you know.
Tom Garrity, The Garrity Group [00:22:11] Cooperation with local banks, national banks and micro lenders to try and find solutions for small business then I than I was ever aware of. Do you care to talk to some of the ways that everybody works together?
Jerry Walker, Independent Community Banking Association [00:22:27] You know, I can speak for our community bankers in the fact that cliches are always bad to throw out there. But I guess I guess it’s OK to use metaphors. A rising tide, you know, raises all ships. Right. And so I think you’re going to find when you get around the state and talk to our bank presidents and senior management boards of directors, who most of them outside directors, are local small business people themselves, you’re going to find an attitude that when New Mexico wins, we all win. When the economy in Albuquerque is good, we benefit in Hobbs or Farmington or Lordsburg or Clayton. It’s just that’s just the fact of the matter. And when things are going well in Clayton or Lordsburg, that helps Albuquerque as well. And so what I have seen over the years, and it’s just so, so neat to watch Tom. I have watched ARC. I’ve watched our bankers, our community bankers just compete head to head to head for that piece of business. And then when there’s an issue that crops up nationally or here in the state, the legislature come together as an industry and stand shoulder to shoulder and support each other. And again, I go back to what I said a few minutes ago, just because the big guys are big doesn’t mean they’re evil. So there are times when our interests are certainly in line with theirs, ours, the community banks are in line with theirs. And that’s when you do see us standing shoulder to shoulder. However, there are times when the interests of the big Wall Street banks, quite honestly, is not in the best interest of community banks. You see us take a we diverge, we leave the freeway and we get on the side road and we try to outrun them to the next intersection.
Tom Garrity, The Garrity Group [00:24:20] And I think that’s true in any industry. So I appreciate those insights. Jerry, how can people learn a little bit more? Where can they go to learn a little bit more about the Community Bankers Association of New Mexico?
Jerry Walker, Independent Community Banking Association [00:24:32] Well, of course, we have a Web site w w w I CBA in M dot org. And on that Web site, you’ll find Placer. We can pull a list of every community bank in New Mexico. I’m real proud, Tom. I’ve got to pat myself on the back. Now, this is this is a shameless plug. We’re probably the only state to have been for about 15 years that every community bank that can be a member in New Mexico is a member. While we do, we do not allow the large banks to be a member of arts. They have to be community banks. And that takes so that took a lot of effort over the years to get us up to 100 percent market penetration, if you will. But it’s something I’ve been very proud of, and I worked really hard to maintain that then so they can go on the Web site, look at our list of our members. There’s a little bit of a description’s in history about the association on the Web site. And they can always walk into a local community bank and say, tell us about this, icb a bunch. What are they all about? And I’ll guarantee you the local bank presidents can tell you about I.
Tom Garrity, The Garrity Group [00:25:41] That’s great. Well, it’s definitely something to brag about. No doubt you have very earned that right. And so congratulations, 100 percent participation is something to be applauded.
Tom Garrity, The Garrity Group [00:25:54] Jerry Walker, thank you so much for your time today and for you. Thank you for watching and or listening for insights about the New Mexico and New Mexico residents trust what industries we view as favored, favorable and how we access news and information. Just download the copy of the Garrity Perception Survey by visiting Garrity PR dot com.
Jerry Walker, Independent Community Banking Association [00:26:20] All right, my friend. I appreciate your let me do this.
Published July 28, 2020
Right out of the gate, full disclosure: I am a Southwest Airlines A-list flyer. I have enjoyed flying Southwest and will continue fly with this airline.
Welcome to the June edition of The Garrity Group water cooler conversation where we have a chance to talk about the events that are on our mind on this June 21, 2021.
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