WEEKLY ADVISER: Schmidlap Chief Says Major League Banker Can Score in

The latest contest for the presidency of Schmidlap National Bank had to do with a man who has been downsized from a superregional after running a division that had credit dealings with about 1,000 correspondents.

The man had asked me if he should try to become CEO of a community bank. I discouraged him, saying that first and foremost such a job involves knowing the community and its people, and being a good listener.

I asked my readers if I had been too negative. The responses were varied.

One-among the most vitriolic-said this man would not only be a weak local CEO, because his knowledge of the community would be poor, but might even be a terrible one.

A big-city banker who takes over a smaller bank often wants to show the old employer that "I was the man for the top job," this respondent wrote. Such a CEO, the writer argued, tries things appropriate only to larger institutions-and practically kills the new organization in the process.

Dennis W. Burnette, managing director of Sanford Rose Associates, an executive search firm in Atlanta, wrote that community banking might indeed be the next step for this man-but not a job as CEO.

Mr. Burnette, who has been president of a community bank and has worked for a bigger one, wrote:

"We often hear from a banker from a large bank who wants to become president of a community bank. Maybe they like the idea of the perceived simpler life and being involved in those 'mundane issues,' as you put it.

"The truth is that those 'mundane issues' require lending and investing skill sets and interpersonal-relations deftness that a correspondent banker may not have.

"If the board of directors is making the decision to replace a CEO, it is unlikely that they would wish to select someone without community-bank management experience or local knowledge.

"We have seen correspondent bankers make the transition from big banks to become CEOs of community banks. The scenario is usually that of a CEO of a well-run bank looking to hire a quality individual with whom he is personally acquainted. The person is brought in as a No. 2 person and over time moves up.

"But that scenario is rare. So you did offer good advice."

Our winner, though, felt I was off base. He is Ted Doll, senior managing director at Greater Community Financial LLC, an investment house in Clifton, N.J., and a former bank CEO himself.

Ted wrote:

"This individual seems to possess some unique talents that would be well suited at a community bank.

"Your concern about the time it takes to learn the territory is unfounded. Assuming 25% to 50% of the loans have a commercial loan profile, he probably will have seen all his clients within two months.

"His unique talents in structuring loans and raising capital will not only impress present clients but will also lead to considerable referral business.

"Also, what a joy for a board to have a CEO who is well versed in the planning and structuring of loans, investments, and capital to gain the greatest return with the least risk.

"Give the guy a chance. That community bank he will head will have a problem in years to come explaining why the ROA went up 50 basis points and the ROE went up 3% to 5%."

It is hard to dispute Ted's optimistic scenario. The Schmidlap certificate is on its way.

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