Community Bankers of Iowa Monthly Banker Update July 2013 | Page 3

In This Issue From the CEO & EVP , Don Hole .. 1 Welcome New CBI Members ........ 1

There is Still Time to Register to Join “ Team Main Street ” in Okoboji ........................................ 2-3

Meet a CBI Endorsed Member ..... 3

Advocating for Iowa ’ s Community Bankers .......................................... 4

Fine Points ..................................... 5 Tuning the Mortgage Machinery .. 7 From the Top ................................. 8 Hide Your Goat ......................... 9-10

Main Street Economic Survey ..................................... 11-12

Welcome New CBI Members

The Community Bankers of Iowa would like to welcome the following companies to the association , and thank them for their support :

BOSC , Inc . Milwaukee , Wisconsin

Continuity Control

Minneapolis , Minnesota

PNC Bank / PNC Capital Markets

Chicago , Illinois

Community Bankers of Iowa 1603 22nd Street , Suite 102 West Des Moines , Iowa 50266

Phone : [phone] Fax : [phone] www . cbiaonline . org

From the CEO & EVP , Don Hole Gas and Bank Wars

Karkau ’ s Sunoco Service Station was nestled between Sully ’ s restaurant ( a genuine drive-in with carhops ) and a vacant lot ; it was also located immediately across the street was Bailey ’ s Standard ( a competitor ’ s gas station ) and American Bank and Trust was on the other corner in my home town in Michigan . It was there , the summer of 1968 , that I learned the true meaning of free enterprise and competition . Bill Karkau had a will to compete . There was nothing he enjoyed more than a good , old fashioned gas war . Two or three times daily he would drive his gleaming blue tow truck up and down Saginaw street to check out the posted gas prices of the Jackson ’ s Pure and the Sinclair stations . Each time he made the trip I knew I was in for changing the metal signs in order to remain a penny or two cheaper . He would do whatever it took to compete , including offering a free wash or tire rotation with oil change or fill up . Never mind the stress and workload it might cause for me and his son Billy Karkau , his “ boys ” for the summer . We endured many days washing upwards of 30 to 40 cars , alternating between washes and rushing to the driveway to offer Bill ’ s brand of full service . Back then , Sunoco had a dispensing system that allowed them to “ Custom Blend ” up to six different octane levels in a single pump . This resulted in Bill making sure that we “ boys ” offered a little more octane than the lowest priced option . We would suggest to the customer that a little more pep in their car would increase their enjoyment , and most of the time they would go for it . So we advertised the lowest price and sold most of our gas at three to four cents a gallon more than everyone else on the street . Bill also had three full-time mechanics and we were always busy washing cars or working the “ drive .” Bill never lost his will to compete . Rather , Bill resisted the trend and demands of big oil to morph into something bigger , a full service convenience store and gas outlet . Bill knew how to sell gas and service cars , not retail candy and cigarettes . After all , retailing would take away from what he wanted to deliver … a friendly smile , clean windshield and oil level and tire pressure check . Sadly over time , Sully ’ s Restaurant was replaced by Wendy ’ s , Bailey ’ s Standard is now a Mega-Walgreens , the bank is now B of A , and Karkau ’ s Sunoco in now a glass and screen shop . Bill Karkau went down fighting .

Funny how things come full circle in this world . Big anything is under attack . Big oil companies , big communication networks , and big banks . Politicians and policy wonks , supported by consumer sentiment , are leading the charge to break up the big banks . We read studies that demonstrate that by virtue of their sheer size , the too big to fail banks enjoy competitive advantages in funding costs . Now , we learn of admissions by top government lawyers that big bank executives are above the law — that prosecution would have “ a detrimental effect on the nation ’ s economy .” We learn of the risky and unscrupulous behavior of the big banks from fraudulent foreclosures to the manipulation of LIBOR . And last week , we learn that the big banks have been given an additional TWO YEARS to complete the “ firewalls ” between deposit based activities and highly speculative derivatives bets . All while more than 500 community bank directors and officers are being sued for being derelict in their duties and oversight of failed banks . Big bank troubles are a result of venturing into risky activities that community banks have never contemplated . It is hard to predict if efforts to truly end too big to fail will be successful . K street lobbyists are being hired in droves to ensure that they are not , and political action contributions flow freely to those who will have the ultimate say in the matter . Regardless , it is incumbent on all other stakeholders in the financial services industry that the debate rages on to preserve real free enterprise and fair competition as we continue to demonstrate that bigger is not necessarily better and plead our case for two-tier regulation and a bifurcated industry . In many ways , community banks have thrived and prospered because community bank owners and executives have stuck to the tried and true business model of offering traditional banking products and resisted the temptation to venture beyond . And it is that business philosophy that will ensure their place in the future . Driving through West Des Moines the other day , I was pleasantly surprised to see something I have not seen in a while - a full service gas station . Oh yes , there was candy and cigarettes . But one whole island was labeled “ Full Service ” and included everything that goes with - a clean windshield , oil level and tire pressure check , and a friendly and thankful smile . I stopped just to relive the experience . Naturally I thought about Bill Karkau and wondered if good old fashioned gas wars might just be making a comeback . Just like good old fashioned community banking is .