How to Destroy Your Bank

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Spook Customers Spook Customers "People aren't running out of the doors with their deposits if [JPMorgan] Chase makes a mistake with $5 billion. If you're a $16 billion-asset bank and you make a mistake, albeit at a much smaller level, your clients will get nervous."

Joseph DePaolo, president and CEO, Signature Bank in New York
Lend Outside Your Expertise Lend Outside Your Expertise Commercial lending "sounds nice, but if they don't understand it and lack the expertise … it is a short trip to disaster. You have to make sure you don't outrun your headlights getting into new lines of business."

Aubrey Patterson, chairman and CEO of BancorpSouth in Tupelo, Miss.
Alter Your Business Model Alter Your Business Model "Some people have chosen to adapt or change their business model" in search of growth. "The problem with it is that it takes a particular bank out of their comfort zone or spectrum of knowledge."

Matt Williams, chairman and president, Gothenburg State Bank in Nebraska, and incoming chairman of the American Bankers Association
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Buy Long-Term Bonds for Yield Buy Long-Term Bonds for Yield "Margins are getting squeezed more and more and chasing yield in this part of the cycle can be disastrous."

Scott Smith, president and CEO, Fulton Financial in Lancaster, Pa.
"The biggest mistake is to not take the regulators seriously. If regulators give up on you, or they decide that you're lacking in an area, they will make your life that much more difficult. That translates into money: permission for a deal, changing strategy or opening a new business line."

John A. Kanas, chairman and CEO, BankUnited in Miami Lakes, Fla.
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Times are tough for community banks. Net interest margins are getting squeezed and loans are hard to find. Bankers must be mindful that their margins of error are also thin as they face temptation to take more risks. Here are some mistakes to avoid.

 

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