ABA Banking Journal - June 2008 - (Page 4)

Editor’s Column WILLIAM W. STREETER Editor-in-Chief Banking JOURNAL ABA USPS-544-030 JUNE 2008, VOL. C, NO. 6 Editorial and Executive Offices: 345 Hudson Street, New York, N.Y. 10014-7115 Phone: (212) 620-7210 Fax: (212) 633-1165 E-mail: ababj@sbpub.com Internet: http://www.ababj.com Published monthly for the American Bankers Association by Simmons-Boardman Publishing Corp. and copyrighted 2008 by ABA; Edward L. Yingling, President, 1120 Connecticut Ave., N.W.,Washington, D.C. 20036, (202) 663-5000. Title registered in U.S. Patent Office. With the exception of official Association announcements, the American Bankers Association disclaims responsibility for opinions expressed and statements made in articles or advertisements published in ABA Banking Journal. Top performers by more than numbers THE STORIES BEHIND THE TOP performing banks and thrifts in this year’s community bank rankings are as varied as a Madras tablecloth. We didn’t speak with all 100 banks listed, but between the three of us on staff, plus Vanessa Mambrino of Capital Performance Group, who wrote the first part of the cover report, we researched quite a few of them. Vanessa identifies three common themes in her article (p. 28)— exiting a business line or market; avoiding residential real estate (now there’s a surprise!); and having a niche within commercial lending. Immediately following the ranking article are mini profiles of four of the banks near the top of the rankings (p. 36). Two of the four profiles achieved their high ranking because of a singular event. In one instance (First East Side Savings, Tamarac, Fla.), exiting a market as a strategic decision led to a windfall, which was not only interesting of itself, but something that other institutions may consider. All four profiled banks shared one thing in common: sound fundamentals, of which conservative lending was foremost. In the case of Michigan’s Mackinac Financial Corp., the soundness resulted from a strong comeback—engineered by new owners and management—from near failure in 2003. Three of the four banks would be considered very well capitalized. Such capital cushions tend to keep these banks much further down in the pack most years because it generally lowers their return on equity. In several cases, therefore, these banks wouldn’t warrant a second look most years, based on ROE. But like the many consumers and businesses that didn’t intone the “all debt is good” 4 JUNE 2008/ABA BANKING JOURNAL mantra, they can not only weather the current downturn comfortably, but can, with cash in hand, have their pick of just about anything (except gasoline) on the cheap. And so some of the top performers, like First East Side Savings, may go buying while the buying is good. Other than in annual rankings like those in this issue, well-run, solid banks and thrifts often aren’t given much notice, not that they necessarily are looking for the attention. It’s human nature to focus on the high flyers, of course, but the folks under the radar often can teach us something more valuable than the top guns. As much as we all admire a winner, the reality is that achieving stardom usually requires (or produces) extreme behavior. Dedication, focus, drive are all good things, but taken over the limit they can become fixation or promote an attitude of “win, at any cost.” Very few things justify that approach, and banking is not one of them. Far better is the enterprise that has balance. Not portfolio balance, although that may be part of it, but the steady, controlled, stability and equilibrium that act as a counterweight to the innovation and competitiveness required to succeed in an unforgiving marketplace day after day. Balance tends to not be thought of as very exciting, although it is far from dull. And as most of us come to realize in time (okay, with age) “excitement” is overrated, especially in running a business. Things like judgment, insight, caution, discretion, fairness are slow to develop, never flashy, but ultimately more rewarding, and far more valuable. Any bank led by principles like those, no matter its ranking, is a top performer. bstreeter@sbpub.com Editor-in-Chief Executive Editor Senior Editor Editorial Assistant Art Director Associate Art Director Art Production Manager Contributing Editors Leslie T. Callaway Lucy Griffin Mark Kruhm Orla O’Sullivan Advisory Committee Jeffrey S. Owen Production Director Circulation Director Publisher William W. Streeter bstreeter@sbpub.com Steve Cocheo scocheo@sbpub.com Lauren Bielski lbielski@sbpub.com Andrea Rovira arovira@sbpub.com Wendy Williams wwilliams@sbpub.com Phil Desiere pdesiere@sbpub.com Todd M. Blanchard tblanchard@sbpub.com Ed Blount Nancy Derr-Castiglione Kenneth Kehrer Bill Orr Lisa Valentine Edward L. Yingling Virginia Dean Mary Conyers-Brown mbrown@sbpub.com Maureen Cooney mcooney@sbpub.com Gus Blumberg gblumberg@sbpub.com Subscriptions: Call 1-800-895-4389; or write to: Subscription Dept., ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010 Subscription rates: PRINT OR DIGITAL VERSION: One Year Commercial Banks/Holding Companies FREE to qualified subscribers in the US; Commercial Banks/Holding Companies (Canada) $50.00; Other Businesses (U.S. & Can.) $70; Foreign (Air Mail) $380; Two Years Commercial Banks/Holding Companies (Canada) $85.00; Other Businesses (U.S. & Can.) $115; Foreign (Air Mail) $710; BOTH PRINT AND DIGITAL VERSIONS: One Year Banks, Holding Cos., Financial Insts. - US & Can $75.00; Other Businesses - US & Can $105.00 Foreign - Air Mail Delivery $570.00; Two Years Banks, Holding Cos., Financial Insts. - US & Can $128.00; Other Businesses - US & Can $173.00 Foreign - Air Mail Delivery $1065.00 Single copy rate: $25.00 (U.S. & Canada) $100.00 (Foreign) Reprints: PARS International Corp. phone: 212-221-9595 / fax: 212-221-9195 e-mail: SBPCreprints@parsintl.com. Research: full text of ABA Banking Journal is available on Nexis, a proprietary electronic database http://www.nexis.com. ABA Banking Journal (ISSN 01945947, USPS 544-030) is published monthly by Simmons-Boardman Publishing Corp., 345 Hudson St., NY, N.Y. 10014-4502. Periodical Class postage paid at New York, N.Y. and additional mailing offices. Canada Post Cust. #7204564; Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2; Agreement #41094515. POSTMASTER: Send address changes to ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010. Subscribe at www.ababj.com http://www.ababj.com http://www.ababj.com http://www.nexis.com http://www.ababj.com

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

ABA Banking Journal - June 2008
Contents
Editor’s Column
Do Fee-based Services Have an Edge?
Snapshot: Net Interest Margins Vary Sharply with Size
100th Anniversary: Then & Now
Letters
ABA Resources
ABA Chairman’s Position
"What? No Annual Surprise Bonus?"
Pass the Aspirin
Cover Story: Top Community Banks: How They Did...
...And How They Did It
Charter Bank
First East Side Savings Bank
Mackinac Financial Corp.
The Peoples Bank
Managing the E-mail Monster
In Brief
Handling PEPs in the Age of "L'affaire Spitzer"
Mailbox
Banker’s Mart
To Advertise/Index of Advertisers
The Economy

ABA Banking Journal - June 2008

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