Questionable leadership in Washington has left a significant void that has affected our country's recovery.
Leadership of any organization is only as good as the leadership at the top. Should we resign ourselves to the reality that individually, community banks cannot have much of an impact on Washington, or should we be doing something impactful within our reach?
I have seen many community banks repeatedly blame bad balance sheets on the economy and borrower fatigue rather than emphasize proactive steps that can be taken to buffer their business model. Quarterly newsletters are often filled with complaints about the local economy falling victim to the Great Recession, when in reality their communities have experienced fragile conditions for decades. The appearance of similar language quarter after quarter signals to me that these boards and management teams see themselves as victims of the past five years instead of leaders that will help their local economy thrive going forward.
I do not question whether these banks' officials are involved in the community, as I am sure they are attending all of the local club events. I question if they are leading their communities. Are they showing up to have lunch or to lead? There are plenty of examples of neighboring communities all across our nation with markedly different economic success rates. Most of these reflect the impact of community leaders over a period of years. What is your leadership legacy going to be?
Community bankers could go on and on that the Dodd-Frank Act is too burdensome, the Federal Reserve's monetary policy is troublesome, Basel III is unfair, etc. These are important issues to resolve, but we should not let them consume our energy to the extent that we fail to lead. Bankers should be a resource for their communities in ways that go beyond making loans to people that walk in the door and sponsoring little league teams. Many bankers are already leading their communities, but here are a few fresh ideas:
- Meet with the local Chamber of Commerce and City or County Council and find out what they are doing to push a pro-growth agenda for the local economy. What transportation, housing, labor, education, health care or other issues are most important to the community. Which issues cause businesses to relocate outside of your community? If leadership is lacking in those organizations, charge someone in yours with providing the necessary leadership to develop a growth platform and an action plan for the community entity in need. It doesn't stop there; senior bank management must remain a significant player in helping with the execution. This could mean being creative with funding ideas or lending manpower from within your organization.
- Meet with local contractors and developers and give them updates on what is expected regarding mortgage underwriting in the post-financial crisis environment. Explain the benefits of a strongly performing mortgage industry and make them aware of state, federal and local assistance programs for groups such as first-time homebuyers. Listen to what they have to say about their efforts to provide housing in the community and try to match their efforts with the growth plans of community leaders. Ask yourself how you can use your balance sheet to improve the business climate without taking imprudent risks.
- Meet with your local school district to familiarize yourself with what they lack in tools or programs to provide quality education in your community. Years ago, my father was the school superintendent in our small town. A family came to him and explained that they would like to purchase a home in our town, but they had two sons that would require calculus in their curriculum in order to pursue the college careers they envisioned. My father knew that he had a teacher qualified to teach calculus and committed to the family that they would get the class they needed when their children were ready for it. He also knew that our community would benefit by having this highly intelligent and thoughtful family living in it and he was willing to put in the extra effort to help bring them to our town. Quality schools build quality communities. Consider being the catalyst for developing a local education foundation that can provide funding that will fill in the gaps in educational programs. Partnering with other banks in your area will underscore the importance of the initiative to the entire community.
Whether your business is sourced solely from your local community or from a national footprint, leading in your community is a good thing for all of its residents, the industry and each financial institution. Attending meetings is not "providing leadership." Helping to drive and execute ideas that benefit your community is.
Raymond Dardano is President and CEO of Marlin Business Bank in Salt Lake City and has over 30 years of banking and bank regulatory experience.