My visitor was a top officer of a superregional who had just been "downsized." He had run a division that had credit dealings with just under 1,000 correspondents, the majority of which were banks. He was experienced in working on credit risk problems and developing revolving credit facilities, and he had headed the bank's investment banking group, whose functions included providing capital to correspondents and advising them on investment banking issues such as mergers and acquisitions and private placement.
But after a recent merger, the bank found too many people working in these areas and released him, since he was the most expensive of the talent available.
He came for ideas on what to do next, and I was impressed enough with him that I wanted to help him.
"My real first choice is to run a community bank. How big? About a quarter of a billion in footings in an attractive area of the nation."
I'm afraid I was negative on the idea. The talents my guest has do not seem to me to be the ones needed to run a community bank successfully.
Sure, he would be great in planning the structuring of loans, investments, and capital to gain the greatest return with the least risk. And he would undoubtedly be a blessing to larger business customers thinking of raising capital, changing funding sources, and even entering into merger-and-acquisition programs.
But I think such opportunities for a community bank CEO are few and far between.
To my way of thinking, a community banker spends far more of his time on mundane issues. Issues like financing the second bay in a gas station, arranging for a customer's kid to go to college. Helping a widow put her inheritance and insurance funds to work safely. And-probably most important-simply being a hand-holder or amateur therapist for customers, employees, and board members.
In fact, maybe we could make up an axiom (would you mind if we called it Nadler's Law?): You show me a community bank CEO who doesn't spend more time listening than talking, and I'll show you a bank headed for trouble.
Then I added another downer.
"A good community bank CEO know the territory. He knows the strengths and weaknesses of most business customers and upscale individuals. Whom to lend to, whom to turn down, how to help, and when to help. When he comes back from lunch, he should know what every person who has left a message wants."
This takes time to develop. And I doubt if a board will pay a high salary to someone while he is taking the time to learn these facets of his new community.
So I recommended that my visitor look into investment banking-working with financial institutions from the Wall Street side as he had worked with them when he ran the bank's capital group.
But after he had left, I had second thoughts. Had I been too negative on the value of his talents as a community bank CEO? Are there banks today that would love to have someone like him on board and would pay a low six- figures salary to get him?
So I decided to turn to you, by making this the subject of our next contest for the presidency of the Schmidlap National Bank for a day.
Let us know. Should he try to get a job as a community bank CEO or second-in-command with a clear shot at the top? Or did I give useful advice?
Mr. Nadler, an American Banker contributing editor, is professor of finance at Rutgers University Graduate School of Management.
