I asked, “What do you think is the greatest change in banking since 1975?” The interesting answer came as a surprise.
He replied, “Risk. Thirty-five years ago bankers took far less risk.”

In today’s tight credit market, banks are approving fewer loans, insisting on tougher credit standards, concerned about credit concentration, weaker loan quality and increasing their loan loss reserves to deal with economic challenges
adversely impacts profits.

In the 1970s, banking transactions were usually handled manually and drivethrough services had not yet saturated
the market. Very little technology beyond the adding machine was in use. As computerized bookkeeping was introduced
followed by automated integrated bookkeeping systems, the new technology was embraced and provided both a cost
effective and labor saving tool. Often, though, the banks were not prepared for the costs involved in training staff,
operating the equipment and educating the customers to the changes involved. And so the changes took hold slowly.

Starting with the Bank Holding Company Act (1956) through the Depository Institutions Act (1980) Federal Laws were changed to permit the modern evolution of banking moving from a highly restrictive environment to what has become the current banking environment. In the process we evolved from a community of many relatively small, locally owned relationship-driven banks to a wide open, highly competitive environment driven to a great extent by technology, demands of the marketplace and distant control of management.

In the 1970s and early ’80s the Kansas City banking community was largely composed of locally owned banks. Until the unit banking and bank holding company restrictions were removed there was virtually no crossing the state line, so if a downtown bank wanted to be a part of the Johnson County scene it had to charter a separate bank or acquire a bank holding company.

Those restrictions may have slowed the region’s growth. Shortly after World War II ended, the populations of both
Dallas and Denver were smaller than Kansas City. But, Dallas and Denver bankers didn’t have to cope with the limitations
our bankers faced. With funding more readily available, those cities were in a more advantageous position to grow.

Because of the restrictions here, in the mid-70s, the metro Kansas City area had many banks with relatively small capitalizations working to develop personal relationships which could remain in place for several generations. Our largest
banks, locally owned Commerce and UMB, increased their presence by opening new locations or growing by selective acquisition. Their philosophy of conservative lending practices made it relatively easy for larger regional and national banks to enter the market successfully as soon as they were able under the changes in the banking laws.

When the laws changed, we saw a host of banks move into the area, including national banks such as Bank of
America, US Bank and Wachovia, and regional banks and collections of local banks like the Frank Morgan banks, Bank Midwest and Country Club Bank, Enterprise Bank, First National Bank of Kansas and M&I Bank.

At the same time small rural banks seeking a portion of the market moved in. They had the perceived advantage of
being able to collect funds at low rates in their home markets and bring those funds to invest here at higher rates. The
savings and loans were able to perform most of the commercial banking functions and created growth opportunities for that category, especially Topekabased Capitol Federal Savings. It is interesting to note that Commerce, UMB and Capitol Federal have each declined to apply for the federal bailout TARP funds.

After restrictions on interstate ownership were removed, banks were able to cross state lines. New banking products were permitted that were designed to bring deposits into banks—deposits that the banks could then use to make loans.
As the banks grew so did the size of the loans they could make. As the market grew more competitive, willingness to
accept greater risk became evident.

While these changes were taking place, a small group of private equity firms sprang up. Often these firms were
founded by entrepreneurs who had sold their companies and now wanted to be providers of equity to make money available in situations when the banking community would not or could not. This additional source of capital contributed
to growth of our area businesses.

Another important financial services sector was maturing in the mid-1970s. The U.S. credit union movement reached
its peak of 23,876 credit unions in the late 1960s, then many smaller credit unions started merged into larger ones. While the number of credit unions declined, membership climbed. The number of credit union members doubled during the 1970s
to more than 43 million and nearly doubled again to nearly 85 million today. The growth was spurred by the passage of
a Federal Law broadening membership requirements from the original affinity group organizations. Community America
and Mazuma Credit Unions are the two largest in the area with combined assets exceeding $2 billion.