Small-Town Banker to Tackle a Big Job : Finance: Former Iowa farm boy to take over as head of the American Bankers Assn.

A banking industry on the defensive is turning to a small-town banker for leadership.

Alan Tubbs, who grew up on an eastern Iowa farm, takes over as president of the 9,000-member American Bankers Assn. at the group’s annual convention, which begins Oct. 5 in San Francisco.

“It’s a big load,” Tubbs says. But he has the credentials, experience and reputation to become point man for the banking industry’s biggest organization.

“He’s got extraordinary high credibility,” said Rep. Jim Leach (R-Iowa), a ranking minority member of the House Banking Committee who has known Tubbs for 10 years and the banker’s family even longer.

“He understands small business, agriculture, banking and the nuances of competitive relationships between various segments of the financial community,” Leach said.

Tubbs, who takes office Oct. 8 at the end of the convention, succeeds Richard Kirk, who is chairman of United Bank of Denver and vice chairman of United Banks of Colorado Inc.

Tubbs, 47, is president of the $40-million First Central State Bank at De Witt and of the $105-million Maquoketa State Bank at nearby Maquoketa. The institutions are owned by his family in partnership with the family of John Fagerland. Tubbs’ father, Edward, is a former Iowa banking superintendent.

Tubbs also has a doctorate in agricultural economics in addition to completing postgraduate banking studies. He is a former assistant professor and extension economist at Oklahoma State University.

In the bankers’ association, Tubbs has held increasingly greater responsibilities since chairing its Agricultural Bankers Division in the mid-1980s during the depths of the steepest farm recession since the Dust Bowl days of the 1930s.

In the 1980s, farmers were buried under enormous debts brought on by the collapse of inflated farm real estate values. Bankers suffered too, with more than 1,000 Midwest agricultural banks disappearing either through failures or consolidations.

For Tubbs and other survivors, the lessons apply to what big-city bankers are struggling to overcome in the 1990s in the retreat of inflated commercial and residential real estate values.

“It gives me a perspective to bring to this job at a time when others are having problems,” Tubbs said. “My message to them is: Recessions do end, markets find a bottom and recovery does occur.”

Leach said an additional aspect of Tubbs’ background is appropriate at a time when the financial community is being rocked by scandals--his Midwest-bred values of common sense and integrity, steeped in “a common-sense conservative Midwestern community banking tradition.”

While community banks have had their problems, Leach said, “There are very few probity problems--unlike Wall Street and the savings and loan thing.”

Tubbs said he will serve four masters in his one-year tour of duty as spokesman for the banking industry: Congress, regulators, the public and bankers.

He quickly ticks off the challenges he’ll face:

* Protecting the interests of bankers as Congress considers the biggest overhaul of banking regulations since the Great Depression and moves to prop up the bank insurance fund.

* Coping with a wave of mergers that is changing the face of the industry.

* Combatting an image problem associated with highly publicized bank failures and aggravated by the public’s tendency to lump S&L;, insurance and Wall Street woes in the same boat as banking.

* Keeping the industry united on those issues and many others. “If we shoot at each other in the industry, we’re dead on arrival in Washington,” Tubbs said.

Washington certainly has center stage with bankers.

Congress is considering tearing down more bank barriers erected in the Glass-Steagall Act of 1933, which separated the banking and brokerage businesses.

Bankers want to be allowed to compete in the insurance and brokerage businesses but don’t want Congress to restrict states’ powers in these areas.

Tubbs and other ABA officials have said they would rather pull the plug on the legislation than give up ground gained earlier. Their arguments take note of a new status of bankers, one in which they bargain from weakness rather than strength.

“When you look at the market share on both sides of the balance sheet for the banking industry over the last 10-15 years, we’re a declining industry, largely because we haven’t had the tools to compete with the other financial players that are out there,” Tubbs said.

Bankers’ share of U.S. business financing is only about half what it once was, and new competitive powers also would help U.S. bankers regain lost stature in international markets, he says.

The new powers come in a bill that would revive a deposit insurance fund that is being drained by bank failures and an unwritten Federal Deposit Insurance Corp. policy known in the trade as “too big to fail.”

The FDIC insures individual deposit accounts up to $100,000. But in cases that regulators believe threaten to send destructive ripples throughout the financial system, all deposits are made good.

To keep the $100,000-an-account protection, Tubbs and the ABA have been willing to nearly triple insurance premiums paid by banks from 8.3 cents per $100 that prevailed in 1989 to the 23 cents that took effect in July. But they want a lid on the “too-big-to-fail” policy, or an understanding that such extraordinary deposit protection be financed by taxpayers--not the bankers.

Tubbs also has duties as a cheerleader for the industry.

“The message to the public is: ‘Behind the headlines, there’s 90% of the banks that are doing very well, that the industry is fundamentally sound.’ In fact, half the banks had record profits in 1990 and it looks like 1991 is going to be similar,” he said.

He also is a cheerleader on the homefront.

Tubbs, who played basketball and baseball at Iowa State from 1962-66, now cheers sons Brigham, 23, a basketball player at Iowa, and Abraham, 20, a basketball player at Cornell of Iowa.