ABA Banking Journal - April 2008 - (Page 43)

BANK MANAGEMENT for that IPO Currently, for community banks, the gains of going public are eroded by the cost of SOX, subprime, and other deterrents Tough time “We can focus on our highest objectives rather than being concerned about quarterly performance reports,” says McVicker. “We have bought stock in a number of new banks,” he explains. “They typically take three years before they are profitable—sometimes ten. I think if we were public and our shareholders were not close to us, as they are now, they might not understand why earnings were not that high.” W PHOTOGRAPH BY KEN SCHULZE hen people ask Earl McVicker can they buy stock in his bank—as they often do given its indexbeating performance—the answer is no. And that’s how it will remain if McVicker, chairman and chief executive of Central Bank & Trust, Hutchinson, Kan., has his way. Why go public when you have enjoyed, as McVicker describes, “a 16-year run of creating 24% compounded return to shareholders”? That’s double the long-term return of the S&P 500. Like most banks, McVicker’s family-run bank issues privately-held stock through its bank holding company: “We can provide all the liquidity we want, and if we need capital it’s readily available.” He’s not just saying the bank doesn’t need to go public; rather it’s doing so well because it’s not public. By Orla O’Sullivan, contributing editor Sins of a few visited upon all Added to these arguments for staying private, developments over the past decade have brought things to the point where many suggest the benefits of being public have been eroded, at least for community banks. The biggest bane cited is compliance with the Sarbanes-Oxley Act—better known by the industry curse word SOX. Any company with over 500 shareholders is regulated by the Securities and Exchange Commission and subject to SOX, meaning filing and mailing reports, engaging internal and external auditors, etc.—at a cost www.ababj.com/subscribe.html ABA BANKING JOURNAL/APRIL 2008 43 https://www.centralbank-kansas2.com/home/home http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - April 2008

ABA Banking Journal - April 2008 Contents Editor's Column You Can't Beat Wal-Mart: Or Can You? Snapshot: Non-Interest Income Shoulders More Weight ABA National Conference for Community Bankers Report 100th Anniversary: Then & Now ABA Resources ABA Chairman's Position Banks Plus Insurance: How to Make It Work Pass the Aspirin 2008: Year of Rich Internet Apps? Tough Time For That IPO Your Audience Needs to Know Who You Are Telepresence: Costly But Very Cool Webnotes Better Websites Mean Tougher Compliance Mailbox Banker's Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - April 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.