An old friend of mine, John A. Forlines Jr., chairman and CEO of $422 million-asset Bank of Granite in Granite Falls, N.C., is our latest contest winner.

Basically, the contest question was: How can a bank further economic growth without contributing to pollution, crime, and other quality-of-life problems in its community?

The answer is simple, John wrote.

"Growth for growth's sake is no good, just as bigness for the sake of being big is very bad.

"Bankers should promote economic growth in their communities only when it makes good sense.

"Creating well-paying jobs that 'fit' the community, and being sure there are no adverse environmental factors, are two major considerations.

"Naturally neither banks, utilities, nor (local) governments should go overboard on tax incentives. Don't do anything for a newcomer that you would not do for an existing business or industry that may want to expand its operations.

"Periodically, in our community, we have 'appreciation days' for the businesses and industries that have been with us for years and are the backbone of the economy, to let these folks know they are appreciated and not forgotten.

"Somehow, we've never been accused of not promoting what is in our community's best interest - and that is the key."


Mr. Forlines will not be accepting his prize - the august title of president for a day of Schmidlap National Bank, complete with certificate suitable for framing, but unfortunately, no epaulets.

"You don't need to worry about making me president of Schmidlap National," he wrote. "I would consider this a demotion, and I certainly would not want to move, since I already have the best job in America and live in the 'Garden Spot of the World.'"

As original incorporator of Schmidlap National and its honorary chairman, I might have been offended by Mr. Forlines' refusal of the presidency.

But I took it the other way - as an indicator that community bankers love their work, which is why they are so good at it.


John Forlines' friendly rebuff should not deter others from striving for the Schmidlap presidency.

Our new contest should give an opportunity for securities analysts, bank stock dealers, and other observers to vie for the honor.

The topic: What are the best indications that a bank is going to be sold in the near future?

This is certainly significant, because up to now at least, shareholders usually have been richly rewarded when a bank has been acquired. So investing in the stock of a community bank when there are indicators that acquisition is imminent makes good sense.

What are some of these indicators?

Ched McConnell, managing director of McConnell, Budd & Downes Inc., a Morristown, N.J., investment banking firm specializing in community banking, suggests that a bank is more likely to be in play if:

*The president is aging and has no children in the bank to replace him.

*Board members own a substantial portion of the outstanding shares.

*Officers and directors have a substantial portion of the their wealth tied up in the bank's stock.

*The chief executive's health is not the best.

*The CEO needs money for a new home or college tuition.

The bank is far less likely to be in play, according to Mr. McConnell, if:

*A lawyer is on the board and receives high fees for his service to the institution.

*Board members get unusually high payment for board service.

*The top officer has a nice salary, but few shares of stock either in the vault or under option plans.

Mr. McConnell's suggestions probably are better indicators than any information in the earnings statement or balance sheet.

Can you add to the list of indicators that predict if a bank is likely to be for sale?

If you can, and you are willing to share them with our readers, mail them to me at the address given on this page, or fax them to me at 908-273- 7309.

You, too, may be offered the job of president for a day of old Schmidlap - even if you don't promise to take it. Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

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