Pub. 3 2015 Issue 2

www.uba.org 14 By Bruce T. Jensen Our Way Through How government-guaranteed loans helped our Utah community bank through the Wall Street financial crisis E very community banker working in our industry during the last Wall Street financial crisis has a vivid memory of that tense and difficult period. When our community bank first opened its doors for business in 2008, the U.S. Census Bureau had recently recognized our community of St. George, Utah, as the fastest-grow- ing metro area in the nation from 2000 to 2006. With a booming economy, surely the timing for a new St. George bank was perfect we thought. Just a few months later, however, the crisis abruptly reversed our community’s fortunes. Two banks operating in St. George, a diverse community that has drawn many retiring couples as residents, eventually failed. A third local bank became so weakened that it was eventually acquired last year. As a real estate-based economy, our area’s wealth base was decimated by the hous- ing-driven recession, and finding qualified borrowers and commercial projects of any kind became extremely difficult for all banks in the area. Furthermore, regulators unilaterally im- posed strict loan-growth limitations on all de novo banks such as ours and effectively forbade the launch of new initiatives—for seven years! That limited our options to maneuver and generate income just when we most needed both. Finding our community bank in a difficult position, Town & Country’s board and management team faced a tough decision. Like all new banks during their first two to three years in business, Town & Country was unprofitable because we didn’t yet have a critical mass of customers to offset the required upfront costs of payroll, data processing, premises and other operating costs. So one option for our bank, like many other de novo banks, was to roll over and sell to another financial institution—at