I had lunch recently with a friend who worked at the old Central Hanover Bank in New York back when my father was its consulting economist.

We reminisced, and I realized that some of the goofs and foibles we recalled could provide lessons for community bankers. (My table mate was later chief executive officer of a community bank that became one of the largest and most profitable in his state.)

Hanover was a true wholesale bank. "Midmarket" meant the Vatican. It was the kind of bank whose chairman would bring his butler to American Bankers Association conventions.

In its effort to be exclusive, it trained a generation of lenders to believe that small-business borrowers were thieves, and only large companies were creditworthy. (Usually it was the other way. The small borrower, with no other source of credit, would worry continually, but the large borrower's attitude was that if he defaulted on his loan, the bank would be in more trouble than he was.)

Money-center banking could be tough. My father remembered several correspondent bankers who had to do so much entertaining that they became alcoholics.

Hanover had one dreaded custom: the annual awards dinner, where all promotions for the year were announced. Everyone got drunk after the dinner. Those promoted celebrated; those who were not commiserated with each other, lamenting that it would be a full year before they had another chance to advance.

Another example of questionable managerial style:

Four men were competing for the top job at the money-center bank. The contest was so vitriolic that you worked for one of the four men, not for the bank. No matter who got the position, three-fourths of the staff ended up unhappy.

Banking could be whimsical. I was told that an aide to the head of J.P. Morgan & Co. asked to check the balances of Pan American; the head of the airline was coming in for lunch.

The aide reported that the balances had been slim until two weeks earlier, when they had soared.

When the Pan Am honcho came in he asked for a loan, pointing out that the airline had large balances at the bank.

"Yes, you have $2 million with us today," the Morgan CEO said, "but until last week it was $20,000."

He then phoned called Bankers Trust Co. "We have Mr. X here for a loan," he said. "We don't want him. Do you?"

In my father's case, after two years at the bank as a consultant he asked the chairman, "Are you satisfied with my work?"

The answer: "Just keep doing your job. When we are not satisfied, you'll know."

Of course, such displays are not limited to big banks.

My friend told me about the time he met the chairman and the president of a similar-size bank to discuss a merger.

The chairman turned to his president and said, "Joe, get me a cup of coffee," and out the president went-fast.

My friend immediately ended the meeting. He could not see merging with an outfit whose chairman would treat its president that way.

The staff at my friend's own bank loved him; so did the community. But a consultant found a flaw in his management style.

The consultant had been hired to evaluate all the officers' performance. He observed that when my friend held board meetings, he would sit at the end of the table-and everyone else would face him. Not surprisingly, they usually kept quiet.

On the consultant's advice, my friend moved his seat to the middle of the table. That "opened up real dialogue," he recalled.

These stories are all about "people issues"-the part of banking where community banks are at their best. No matter how big your computers and phone centers, you still earn and keep customers one by one.

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