ABA Banking Journal - February 2008 - (Page 18)
Community Banking Pass the Aspirin types of leaders–those whose banks have yet to be impacted; those who have been hit hard with the credit and liquidity issues; and those who regardless of the level of impact are committed to their future. Unscathed optimists. Of those leaders whose banks have yet to be impacted, most continue to believe that their tactical oneto three-year plans will keep them on track. What is troublesome about this unscathed segment is that they truly believe they will remain exempt from difficulties. As a result, they have not taken the steps needed to plan through this crisis. It’s important to note that the community banking community is indeed starting to show signs of cracks. Over the last 12 months, community banks between $100 million and $5 billion have seen, on average, nonaccrual loans rise 72%; chargeoffs increase 63%; and provisioning for losses go up 105%. Nonperforming loans are at the same level they were at during the peak of the 2001 recession. And these numbers are from the third quarter—when the economy was still strong! Pessimists caught in the headlights. The second type of leader we have observed is the one hit hard with credit and liquidity issues. These blows have left the entire board and management team frozen. They are dealing with only the current nonperforming loans and failing to continue to build franchise value. The core issue here is the ripple effect on the entire bank–causing uncertainty and lack of focus. So often, the board and management get so tied up in their problems that they ignore the bank’s future. The employees see a grim management team constantly in long meetings behind closed doors. Think of the message this sends to the employees and customers. Communication is a planned event. Ensure you are doing it often, and keep the team motivated to build the franchise value. Realists who want to survive. The final type of leader we’ve observed is the one 18 FEBRUARY 2008/ABA BANKING JOURNAL The Books Bankers Live By A year ago we ran an Aspirin “special,” based on banker’s reports about books that made a difference in their careers or that they have found helpful. We asked Aspirin prescribers once again for their reading suggestions. You can find additional books recommended by bankers on www.passtheaspirinplus.com. If you’d like to send in your own suggestion, send an e-mail to firstname.lastname@example.org. Tell us about the book, who wrote it, what it says, what lessons it holds, and how you and your bank benefited from it. Remedy 1 Charlie Funk, president & CEO, Iowa State Bank & Trust Co., $572.8 million-assets, Iowa City, Iowa. The Miracle of St. Anthony: A Season with Coach Bob Hurley and Basketball’s Most Improbable Dynasty, Gotham, by Adrian Wojnarowski I read this book over the Christmas holidays this year. It is one of the most compelling sports books I’ve ever read. If you are a basketball fan, you’ll have a tough time putting the book down once you start. You do not have to look far to see that there are many lessons to be learned as a business leader from this book. Bob Hurley is one of America’s mostrespected high school coaches and he’s been doing it for more than 30 years. He continues to obtain tremendous results— both on and off the court—though the odds keep getting longer as the years pass from his post in inner-city Jersey City, N.J. One of the takeaways from this book is that one needs to stick to the fundamentals of what one believes. I firmly believe that this applies to banking, not just to basketball! Fads come and fads go (subprime lending, anyone?), but fundamentals and tried-and-true practices more often than not are successful year after year if the fundamentals are applied correctly. Great leaders know that while there are basic rules that apply to everyone, not every person in a company or on a team is treated equally. It amazed me as I read this book that Hurley treats each unique situation (and there are many, with the collection of players he has who come from all types of backgrounds) in a different manner. One player may draw a suspension for a seemingly minor act, while another might continue playing despite committing several transgressions. But at the end of the day, just as in business, Coach Hurley has his “line in the sand,” which led to the suspension of one of St. Anthony’s top players prior to the state tournament final. Fully understanding each problem and the human dynamics of each individual usually gets Hurley to a very good decision. Just as in banking! Finally, as a parent and big supporter of the educational community in a prosperous town in Middle America, reading The Miracle of St. Anthony sent home the message loud and clear that we as a nation are not doing enough to educate our children. That message is driven home repeatedly as we learn about the backgrounds of the characters in this book. Educators and coaches such as Bob Hurley deserve our respect and thanks and I am committed that our banking organization will continue to support our K-12 educational systems in all of our trade areas. Remedy 2 Roger Claypool, president and CEO, Shelby County State Bank, $212.3 million-assets, Harlan, Iowa. Team of Rivals: The Political Genius of Abraham Lincoln, Simon & Schuster, by Doris Kearns Goodwin. This is not really a business book, but it’s an outstanding study of the leadership style and skills of Abraham Lincoln. It’s a tough read, due to the numerous direct quotes from vari-
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