ABA Banking Journal - February 2010 - (Page 20)
Community Banking Pass the Aspirin ecember’s Community Banking column spoke of the challenges of banking a family-owned farm undergoing ownership transition. We followed up by asking prescribers more broadly how their institutions deal with the challenges of banking any farm or nonfarm family business undergoing transition. H. McCall Wilson, Jr., president and CEO, The Bank of Fayette County, Moscow, Tenn., $282.9 million-assets While there is no formal policy here for dealing with “family situations,” community bankers have been dealing with this challenge since we opened our doors for business. Being a community banker is much more than being just a “banker.” It means being part of the community and caring about the well-being of the citizens of the community. It means being trusted advisor to your customer, a sounding board, and not just a “Yes Man.” Family situations usually involve the next generation being unwilling or unable to assume a leadership role in the business. If the next generation is unwilling, then as community banker you need to counsel the current generation on why it is “okay” for the younger party to choose a different path in life. They may eventually create a more successful business, than had they simply taken over the family business. The family can still own the “family business”; they can simply hire professional management. A more ticklish situation: Let’s say the banker considers the next generation unable to assume a leadership role. The banker owes it to the current generation to speak his or her mind. Being a trusted advisor means that you are willing to discuss difficult subjects. This is tricky! While most fathers may criticize the son privately, they always assume they are “a chip off the old block” 20 FeBruArY 2010/AbA bAnKinG JouRnAl Remedy 1 and are capable of taking over the family business. But a community banker is in the perfect position to discuss both the positive and negative issues with each generation. If the next generation is truly unable to handle the business, the business fails, a family loses its wealth, and a community loses jobs. All because a trusted advisor chose not to have a difficult conversation with a customer. I would rather potentially lose a customer, than have a customer potentially lose their family business. This banker asked to remain anonymous. I’ve seen firsthand, and have even been involved personally as a farm owner, with family farms being passed on from one generation to the next. Fortunately for me and my siblings, my father did it correctly. unfortunately, I’ve seen the opposite as well. Here’s how one well-intentioned plan failed miserably. A local rancher set what he thought was a well-structured succession plan that ensured that ownership of the family ranch would stay in the family indefinitely. He had worked the ranch with his sons and daughters all his life and was proud of their success building the cow-calf operation. unfortunately, he passed away unexpectedly and the trouble began. In many cases, such problems arise not from the sons or daughters inheriting the operation, but rather from their spouses. each sibling also had their opinion on how the operation should be run. You can imagine the problems that ensued, with the mother forced into the precarious position of “referee.” One sibling, spurred by a spouse, started a lawsuit, which resulted in most of the ranch being liquidated. Our bank was in the middle because all of the siblings were customers, and some even shareholders. My strategy through the entire chain of events was to stay neutral. I divulged no privileged information about Subscribe at www.ababj.com Remedy 2
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