President's Message

A lot has happened in the last year.

Complying with new regulations directed much of the bank’s efforts in 2010 and will continue to do so for the foreseeable future. Dodd-Frank, Durbin Amendment, Consumer Protection Agency, Consumer Advisory Council, TARP, Office of Service Member Affairs, Volker Rule, Small Business Lending Fund # to name a few new terms or acronyms. But these only scratch the surface.

Over 300 new rules are mandated by the Dodd-Frank Bill. New regulations, new interpretations of old policies and regulations have also been mandated by the new Administration, Congress and regulators. So far, in the last six months we have seen over 1,000 pages of regulatory proposals with over 360 pages of final rules. Stacked together, they are over 10½ inches high. The expectation is there will be over 5,000 pages of new regulations for banks to deal with.

Let there be no misunderstanding: there needed to be some new regulations. More importantly, there needed to be enforcement of the existing regulations with Wall Street and shadow banks.

Community banks were not the culprits. Sure, some made mistakes as they fought for market share, attempting to maintain their existence. There is probably some truth that the number of banks needed to shrink so proper regulatory oversight could take place. Some existing banks need to merge to achieve economies of scale, especially in this heavily regulated climate.

The passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act, while supposedly aimed at Wall Street and money center banks, is and will have an in-proportionate impact on community banks and our customers. We are forced to reevaluate all of our products and services. We can no longer be all things to all people. All banks and financial institutions are going through the same analysis of their basic business model. We have to adapt and change, but that has always been one of our strengths.

On the one hand, I am concerned. On the other hand, I view this as an opportunity. Due to how well we have positioned ourselves, First Fed has a competitive advantage due to the quality of our staff and being able to change quickly.

The year 2010 was another year of strong operating results. It was further evidence of how well the Board, Management, and employees of First Fed have and continue to position the Balance Sheet to deal with these economic times.

Much credit needs to be given to line employees — employees who took on the challenge of reducing expenses while maintaining and gaining business and not giving up customer service, which is part of the First Fed reputation. That reputation is also one of safety and soundness, as new customers recognized our efforts, opened new accounts, and deposited new monies, growing the Balance Sheet by $15 MM. What a compliment to the efforts of our employees as the deposit totals build.

First Fed is a significant player in the Magic Valley in expanding our local economy. We continue to take great pride in being the number one mortgage lender in the Valley, plus being a strong supporter of small business through our Business Banking Department.

We continue to be innovative in the introduction of new products and services, made possible through the upgrading and advancing of our Information Technology Department, both in software and hardware.