ABA Banking Journal - December 2009 - (Page 14) Community Banking Pass the Aspirin some type, and then work somewhere else for at least five years. The father’s explanation for this last requirement, was: “I want you to learn the mistakes that they are making,” he said, “and then come back to so we don’t make those mistakes here.” One is a formal board of directors, which can begin as a less-formal board of advisors. Ideally, such a body consists of outsiders with experience in agriculture who can oversee an operation and advise the stockholders-family members. Typically, these directors aren’t in it for the money—fees tend to be relatively low and “perks” few—but to be of service. In fact, Koenig advised bankers to urge families to avoid tapping professional board members, and to stick to parties qualified by some essential skill or background. Boards are not without risks, Koenig acknowledged. Some can become dominated by a strong-willed member. Ideally, a board should consist of even-handed individuals who aren’t worried about being a friend to the farmer, but instead a trusted overseer. A related structure that brings the family to the oversight role more directly is called the “family council,” sometimes, “ownership council.” The Overdraft Challenge S Favors you can do your customers Koenig gave the bankers numerous words of advice on dealing with the generational gap and keeping constructive peace in family farms and businesses. Among them: 1. Don’t let them go cheap on the bookkeeping. All too often, family farm financial accounting is handled by one member of the family. This can breed mistrust and worse. Koenig suggested that bankers insist that all farm bookkeeping be done professionally in accord with certified public accounting standards by a mutually trusted non-family member. 2. Talk to the family, and avoid all jargon when doing so. Many family farm family members are not farmers, and don’t know the lingo. Don’t use it around them, aiming for clarity and plain English instead. Further, even the ones who know farming don’t generally know banking—so keep banking jargon out of the conversation, too. 3. Educate the family in the basics that they need to watch. Koenig suggested giving family members a selection of key measures that will serve as a “scorecard” by which they can monitor their family operation and thereby get a sense of how things stand. This makes a good beginning, he said, “and then they can learn to drill down.” 4.Where and when appropriate, encourage the family to explore a governance structure. In all of the examples cited in this article, a single individual made all the key decisions, oversaw operations, and knew the whole situation and finances. Koenig said there are cases where a banker will be doing the family farm or agri-business a favor by suggesting adoption of a structure that broadens oversight and certain decisionmaking. Bankers’ key tool: Questions Koenig noted that most ag bankers, because of their business experience, walk into farm family situations with many answers. However, he said they shouldn’t give answers unless asked. Further, Koenig believes that giving answers directly isn’t always the way to go. Far better, he said, is to ask questions that will help elicit information, and, building on that, help the customer find their answer. “The more they get their stories told, the better,” he explained. This takes patience. You have to listen to the whole story, and it will come out haltingly. Sometimes the best place to ask the questions, is outside the office. “I’ve had some wonderful interviews at the back of pickup trucks,” said Koenig. Besides putting customers at ease, it means something to them when their banker comes to their place. BJ How has your bank addressed family succession issues for farms—indeed, for any small business you serve? Share your ideas on our “Pass the Aspirin” blog at www.ababj.com/blog/277.html o much acrimony, and much of it over a cup of coffee. An exaggeration, perhaps. But a senior lobbyist recently spoke of the seemingly daily barrage of articles that he sees about consumers who have had to pay multiple overdraft fees of $30 or so because they overdrew their accounts by buying mocha latte with a debit card. (No one ever mentions the money spent on overpriced coffee.) Surveys and banker experience demonstrate that consumers want and appreciate overdraft service. But, as the lobbyist continued, “What can we do as an industry to get rid of the horror stories?” ABA recently formed a special overdraft task force to address the entire issue. The controversy over fee-based overdraft service has raged for more than five years. The matter has come to a head now that Senate Banking Committee Chairman Chris Dodd (D.-Conn.) has introduced his S. 1799, the Fairness and Accountability in Receiving (FAIR) Overdraft Coverage Act of 2009. It joins New York Democrat Rep. Carolyn Maloney’s H.R. 3904, the Overdraft Protection Act of 2009. On Nov. 12, the Federal Reserve Board issued in final form—effective July 1, 2010—its final rule, with commentary, implementing new changes to Regulation E in connection with overdraft service offered in connection with debit card overdrafts. An important overall change, to both existing and new accounts: Consumers will have to opt-in to overdraft service tied to onetime debit and ATM transactions. We asked prescribers about overdraft. Add your own ideas on our blog at www.ababj.com/blog/277.html. Remedy 1 Rheo Brouillard, president and CEO, Savings Institute Bank and Trust Co., $864.3 millionassets, Willimantic, Conn. We recently changed our program to pay, but not charge for, a single overdraft under $20. We also finalized, and had the board approve, a formal policy documenting the practices followed in our overdraft protection program. 14 DECEMBER 2009/ABA BANKING JOURNAL Subscribe at www.ababj.com http://www.ababj.com/blog/277.html http://www.ababj.com/blog/277.html http://www.ababj.com Table of Contents for the Digital Edition of ABA Banking Journal - December 2009 ABA Banking Journal - December 2009 Contents Editor's Column Briefing ABA Resources ABA Chairman's Position Community Banking Pass the Aspirin CRE Pain Fraud Looms Large on BSA Menu Tech Topics Compliance Clinic Mailbox The Economy ABA Banking Journal - December 2009 ABA Banking Journal - December 2009 - ABA Banking Journal - December 2009 (Page Cover1) ABA Banking Journal - December 2009 - ABA Banking Journal - December 2009 (Page Cover2) ABA Banking Journal - December 2009 - Contents (Page 1) ABA Banking Journal - December 2009 - Editor's Column (Page 2) ABA Banking Journal - December 2009 - Editor's Column (Page 3) ABA Banking Journal - December 2009 - Editor's Column (Page 4) ABA Banking Journal - December 2009 - Briefing (Page 5) ABA Banking Journal - December 2009 - Briefing (Page 6) ABA Banking Journal - December 2009 - Briefing (Page 7) ABA Banking Journal - December 2009 - Briefing (Page 8) ABA Banking Journal - December 2009 - ABA Resources (Page 9) ABA Banking Journal - December 2009 - ABA Chairman's Position (Page 10) ABA Banking Journal - December 2009 - ABA Chairman's Position (Page 11) ABA Banking Journal - December 2009 - Community Banking (Page 12) ABA Banking Journal - December 2009 - Community Banking (Page 13) ABA Banking Journal - December 2009 - Pass the Aspirin (Page 14) ABA Banking Journal - December 2009 - Pass the Aspirin (Page 15) ABA Banking Journal - December 2009 - CRE Pain (Page 16) ABA Banking Journal - December 2009 - CRE Pain (Page 17) ABA Banking Journal - December 2009 - CRE Pain (Page 18) ABA Banking Journal - December 2009 - CRE Pain (Page 19) ABA Banking Journal - December 2009 - CRE Pain (Page 20) ABA Banking Journal - December 2009 - CRE Pain (Page 21) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 22) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 23) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 24) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 25) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 26) ABA Banking Journal - December 2009 - Fraud Looms Large on BSA Menu (Page 27) ABA Banking Journal - December 2009 - Tech Topics (Page 28) ABA Banking Journal - December 2009 - Tech Topics (Page 29) ABA Banking Journal - December 2009 - Tech Topics (Page 30) ABA Banking Journal - December 2009 - Tech Topics (Page 31) ABA Banking Journal - December 2009 - Compliance Clinic (Page 32) ABA Banking Journal - December 2009 - Compliance Clinic (Page 33) ABA Banking Journal - December 2009 - Mailbox (Page 34) ABA Banking Journal - December 2009 - Mailbox (Page 35) ABA Banking Journal - 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