A bank can be the lifeblood of a community.
Beyond just taking deposits, bankers have their fingers on the economic pulse of their communities. They extend credit to businesses by listening to the challenges and successes of their customers. They invest back in those same people and places because they care about making their communities stronger.
When the Omaha Branch of the Federal Reserve Bank of Kansas City opened for business on September 4, 1917, it became the local face of the new central bank for the people of Nebraska. As it worked closely with those community-minded banks, the Omaha Branch tapped into the state’s economic pulse so it could give Nebraskans a voice in the Federal Reserve’s role in helping maintain a strong economy.
From operations to outreach
For the Omaha Branch, more than three-quarters of its history has focused on operations that supported commercial banks—distributing cash and processing paper checks. The late 1990s and early 2000s, however, brought a shift in focus from operations to outreach.
As the nation moved toward electronic forms of payment, the Federal Reserve responded to the changes in the payments system by consolidating its check processing operations to one national location. Along with the consolidation, Omaha’s large check processing center ceased operation in 2004.
A study of the impact on other functions in the Federal Reserve System followed. In 2008, the Omaha Branch’s cash distribution operation was consolidated into the Kansas City Fed’s new headquarters building and vault in Kansas City, Mo.
In the midst of these changes, however, leadership of the Kansas City Fed reimagined the importance of its structure of three branches throughout its seven states. For the staff at the branches came a new and broader focus on outreach to the areas the Kansas City Fed serves.
A key part of that effort was the Kansas City Fed restructuring its form of Branch leadership. Each Branch would be led by person who served both as a regional economist and branch executive. The executive would focus on understanding the region’s economy and work with the Branch’s board of directors. An increased emphasis on outreach to the community through research, information, community development and education became a major effort, as was a focus on the safety and soundness of community banks within each zone.
Connecting to Nebraska’s economy
Today, Nathan Kauffman serves as the Omaha Branch executive.
“A significant part of my job is working to understand the fundamental drivers of Nebraska’s economy through research, outreach and interactions,” Kauffman said. “As an economist, I’m trained to analyze data and apply techniques to solve specific problems. A benefit of our branch structure is that it allows me to regularly interact with business leaders and decision-makers who deal with these problems every day and see how they develop in the real world.”
While much of the Kansas City Fed’s seven-state region is rural, Nebraska is even more so, Kauffman said. With that comes a strong concentration in agriculture.
“Because Nebraska is so connected to agriculture, I have an opportunity to provide broader perspective about how those drivers in our state’s economy are generally drivers of the ag economy nationally,” he said.
With this economic backdrop, the Omaha Branch has developed a niche as the Federal Reserve’s source of expertise on the nation’s agricultural economy, publishing an Agricultural Finance Databook and Agricultural Credit Survey each quarter as well as regular ag outlook articles.
Kauffman sees the connection not only of ag production in the state but also businesses that provide services to the ag industry—manufacturers, transportation, and other professional and business services.
“Even in our role as a bank regulator, we have a large number of banks that are providing financing to the ag industry,” he said. “That provides us with a unique opportunity to learn about the different perspectives of the ag economy,” he said.
That strong connection with Nebraska’s community banks has been the focus of the Fed’s supervisory role, according to Nick Hatz, who serves as the officer over that function in Omaha.
“Community banks are the lifeline providing credit in communities in our state,” Hatz said. “In Nebraska, 80 percent of our banks are community and rural. Without them, communities wouldn’t be served; they know their communities and focus on the needs of businesses on Main Street.”
To better understand how those banks make decisions and to ensure safety and soundness, bank examiners work with a model where every bank they supervise has a central point of contact, Hatz says. This gives the Federal Reserve better insight into the operations of banks.
“We work to answer their questions, help educate their directors on their roles and provide resources. Our examination model helps us have conversations with bankers before there are any issues.”
Having examiners in Omaha also gives the Kansas City Fed an understanding of banks’ local economies and communities, guides examiner understanding of risk, helps build stronger relationships and coordination with state banking authority, all of which strengthens the Fed’s regulatory responsibilities.
“When you’re having a conversation with a banker, having local insight and understanding lends credibility and breaks down walls,” Hatz said. “We value that additional expertise, which helps us fulfill our responsibilities in a fair and unbiased manner.”
Reaching out
An expertise in small business and economic development is what Dell Gines, a community development advisor in Omaha, brings to his work across Nebraska. He focuses on these economic development issues in both rural and urban communities.
“When I am out speaking across the state, my goal is to help make the good life great for everyone,” Gines said. “There are challenges in low- to moderate-income populations that need extra tools to help them experience the greatness of Nebraska.”
Gines concentrates on connecting local communities and organizations with information, tools or relationships to help make their job easier. That might manifest itself
in discussions about growing entrepreneurs locally or addressing housing shortages in rural Nebraska. Often, he’s facilitating conversations and sharing resources.
“We are focused on the practical side of program delivery: convening, fostering collaboration and making new connections,” Gines said.
Erin Redemske, who manages the Public Affairs function in Omaha, focuses her efforts more broadly, with outreach to business, banking and community leaders at public economic forums in the state, business roundtables and networking with key leaders.
“Providing the public with access to information and resources about the Fed and our economy helps us be transparent and provides a connection to the Fed in our state,” she said.
Building a foundation of economic and financial literacy also is part of that work, which means helping classroom educators better understand those concepts and how to teach them to students.
“Our goal is to help provide information and research so individuals make more informed decisions, whether they are a consumer or a business,” she said. “When they are armed with more information, they make stronger choices that strengthen our economy as a whole.”
Redemske says doing this work locally is key.
“We live here. We work here. This is our state, and we have the opportunity to represent and provide a voice for Nebraska.”
Listening to Main Street
The real ear to the ground across Nebraska comes from the Branch’s board of directors. Brian Esch, president and CEO of McCook National Bank and one of the Branch’s seven directors, thinks the grassroots information directors provide is an important part of the Branch’s role.
“When you have board members that represent different areas of the state and segments of the economy, you get feedback from mom-and-pop businesses and huge corporations,” Esch said. “With the Fed being in Omaha they can network with those different segments of the economy and really gather everything off the ground in Nebraska.”
As part of the Fed’s outreach in the state, Esch hosted a meeting of the Branch’s board of directors and Kansas City Fed President Esther George in McCook in 2014. The event included tours of local businesses and a forum with local leaders.
“For the Fed to come to McCook is the ultimate statement that they care about the rural economy,” Esch said. “That is what has impressed me most – how engaged the Fed is in every aspect of what is going on in our District. From nonprofits to healthcare to transportation to agriculture, they want to know how those segments are working.”
Esch thinks the Omaha Branch isn’t the only one that benefits from interaction with board members.
“What can happen when you sit in McCook is that you can end up with a silo perspective. The more exposure, education and interaction I get with other business leaders gives a more holistic perspective of what is going on,” he said. “It improves the way I manage the bank and assess risk in the economy.”
The Fed’s unique regional Reserve Bank structure is a benefit to the country, according to Esch, providing a local and real connection that captures a diversity of perspectives.
“I have to believe that without the Omaha Branch and its work in the economy and economic development, it would be much more difficult for the Fed to get engaged in our state.”
Coming full circle
The Omaha Branch’s evolution came full circle in April with the announcement that it would grow its workforce by close to 100 employees to support its financial services work on behalf of the U.S. Treasury Department. Kauffman notes that this returns the Branch to focusing on all three of the Bank’s core mission areas—monetary policy, bank supervision and financial services.
“This positions the Omaha Branch in a way to provide expertise into each of those areas,” he said. “It’s feedback for monetary policy, our relationship with banks, and also the connection of how the Fed is integral in the country’s financial services structure.”
One of the newest faces to the Omaha Branch for this new work is Todd Rich, who joined the Bank this year as an assistant vice president in charge of support for the new financial services work for the Treasury. He brings a unique perspective to the Omaha Branch with his 29 years of experience in the U.S. Navy, serving as both a flight officer and information professional officer. He most recently was chief of the IT operations division and deputy director of the Joint Cyber Center at U.S. Strategic Command.
“What appealed to me about the Bank was its culture and values, which was very clear even in my interview,” he said. “I have been amazed at how innovative the Bank is in my time here.”
Adding this new function to Omaha is exciting to Rich, and he sees the chance to spotlight a Tenth District city.
“This national focus for supporting Treasury work will bring people to Omaha who might not otherwise have a reason to be here,” Rich said. “Omaha is one of the best-kept secrets in the country, and this is good for the region.”
Kauffman agrees.
“As the Omaha Branch reaches our milestone of 100 years of service to the region, it’s exciting to see this expansion for Omaha,” he said. “These changes, both from a building and resources perspective, will enhance our strong commitment to serving the people of Nebraska and the Tenth District.”
Further Resources
Visit the Omaha Branch webpage for additional information about the Branch and its programs.
Comments/questions are welcome and should be sent to teneditors@kc.frb.org.