A Troubleshooter's Guide to Keeping A Bank on Course

After 13 years of working to rescue troubled banks in the Southwest and Northeast, troubleshooter Larry Connell has developed some key tactics for bankers to avoid problems.

*Build capital.

*Maintain the integrity of the credit process.

*Implement a strong credit review department and policy early on to prevent future problems before they occur.

*Continuously manage risk.

*Immediately determine the value of nonperforming assets and liquidate them, turning them into earning assets.

*Respond immediately to inefficiencies as soon as they are spotted. Appropriate cuts should be made quickly.

*Ensure that bank directors are involved and fully aware of the bank's activities and any problems.

"It's being ever alert and insisting upon good information systems and good checks-and-balances controls," he said. "You can never compromise on credit quality without paying a price."