Meeting Recap for October 1, 2012
(RYE student Natalie Obaldia) (Alex from Ralph Richardson)
Steve Fleming is part of a relatively rare breed: a community banker with international banking experience. He’s also a member of Rotary Club of Sacramento and Monday, the President & CEO of River City Bank was RCS’ featured speaker at the club’s weekly luncheon at the Woodlake Hotel.
Introduced by Chair of the Day and Past President John Frisch, Fleming offered his personal perspectives on 10 major banking trends and his responses to several post-presentation questions offered some interesting perspectives on a variety of related issues.
Asked about the current European Union turmoil and how it might turn out, Fleming shared long-term doubts about the EU’s viability. He was a banker working in London when the EU was being formed and as a then-British citizen voted against the plan.
“You can’t have a monetary union without fiscal and political unions,” Fleming said, a 30-year banking veteran and CEO of two other Northern California banks before coming to River City. “I don’t see that happening and so it hinges on whether Germany is willing to step up and to what degree.”
In response to a question about where people could put their money in times like these, Fleming said the current stock market “scares me, the current run-up is driven more by low interest rates than anything else. If interest rates were to suddenly spike…”
On the other hand, the first of the 10 key banking trends Fleming discussed is that he expects interest rates to remain at historic lows for some time. The current 10-year Treasury rate is 1.63%, down from 3.29% less than two years ago. And it could go lower, he opined. Other trends cited included:
• Banks will continue to experience a large in-flow of cash as people bail out of money market funds (which currently pay between .01% and .05%).
• Meanwhile, banks are struggling to find loans to make that have “attractive risk-based characteristics” consistent with the new tightened underwriting standards.
• There is a long-term trend to industry consolidation. There once were 15,000 banks; now there are 6,000. The top 50 banks now control 73% of deposits, the top five 42%.
• The global financial “eco-system: is becoming more and more interconnected.
• Financial regulation will grow in importance.
• The economies of branch banking are changing and the growth of branches in recent years likely has peaked and will reverse.
• Government will continue to be a strong player in the housing finance market.
• Electronic banking fraud is growing rapidly.
With regard to the latter point, Fleming said businesses are now most at risk. He advised that businesses which do a lot of online transactions take extra care to protect themselves. “I would make sure that you have one computer that is dedicated only to banking and that no one uses it for things like email or surfing the net.”
Gabriel Gendron was inducted as the newest member of RCS by President Peter Dannenfelser II. A realtor, Gendron was sponsored by Susan Sheridan and his spouse, Kelley Moran.
Rotary Youth Exchange student Natalie Obaldia, just back from a year in Sardinia, was on hand to thank the club for sponsoring her time abroad.
The club was treated to a visit by several representatives of the Ralph Richardson Center, one of the beneficiaries of the upcoming annual Golf 4 Kids event.
Elfrena Foord was the meeting sponsor, celebrating the beginning of the third annual Plan Your Giving week, an effort to get more people to include philanthropy in their estate plans.
Community 1st Bank is our wine sponsor for the month of October, thanks to Gretchen Eischen. Doing double duty, Gretchen also provided the Thought for the Day. President Peter led the Pledge of Allegiance after which Dick Osen led the club in singing “My Country Tis of Thee.” Elfrena also provided the musical accompaniment to the pre-meeting wine reception. Past President Brian Van Camp celebrated his career change, having just stepped down after 16 years as a Superior Court Judge.
Jay Fehan of Collette Travel gave a presentation about the tour to Portugal in connection with next year’s Rotary International Convention.
Next week’s speaker is Sacramento Bee editorial page writer Ginger Rutland. Her topic: California Budget Crisis and Pension Reform.
(Photography by John Swentowsky)