Slideshow Teaching moments courtesy of the Bankers of the Year

Published
  • December 04 2017, 11:16am EST
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Teaching moments courtesy of the Bankers of the Year

If you make American Banker’s “Best in Banking” list, you probably have a tale (or perhaps more) to tell.

The stories run the gamut: Skepticism about business strategies. Achievement. Colorful anecdotes passed down through generations of a family bank.

This year’s Bankers of the Year had all those things, but the 2017 class provided something more in in-depth interviews with our reporters that went beyond the sound bites and the line items. This group was unusually candid and reflective, talking about their worries, their failures along the way, the slights they endured and the obstacles they overcame. Yet their insights were ultimately uplifting and provided memorable takeaways for every bank and any financial services employees regardless of where they are at in their careers.

And that’s really the point of reading anyone’s story — not to gawk, not to suffer through, but to learn something about how to do things better.

Executives cannot help try harder, to think bigger, when KeyCorp chief Beth Mooney says: "We will be judged by shareholder metrics, but that starts with doing the right things, the right way. If we really put our customers, our employees, our communities first, do the right things by them, then our shareholders win."

But the didactic element of leadership gets lost in a world of quarterly targets, downsizing and “collapsing of layers.” Howard Bank’s Mary Ann Scully reminded us of that indirectly when she said, "People told me to look at insurance companies and banking because they had the best training programs." Many lament that such programs are no more and that the consequences of their absence could be felt for a long time to come.

So that’s why these Bankers of the Year are important. When longtime New York banker John Kanas talks about the “cold sweat” induced by a credit crisis, that’s a good tale. But when he talks about how he powered through it and possibly saved a bank — and his career — from the brink of failure, that is something more. It is especially valuable when he repeats it to make a point to his successors.

"Never, never, never give up,” he said he tells young employees. “If you're honest and competent, and if you return to work, you can fix just about anything."

The following slideshow shares some of those takeaways from each winner. That’s the value. That’s the teaching moment. That’s the Best in Banking.

Stick to your guns

When KeyCorp announced that it was buying First Niagara Financial Group for $4.1 billion, the consensus reaction from investors and analysts was that Key overpaid and that its cost savings and revenue projections were overly optimistic.

But CEO Beth Mooney never wavered in her belief that the acquisition was the right long-term move for Key and its shareholders and, some two years after the deal was announced and 14 months after it closed, it is hard to argue that she was wrong. Profits are soaring, its stock is among the best-performing in the industry over the past year, and Key has already hit some of its post-merger targets for efficiency ratio and return on tangible common equity.

The even better news: Key is still a long way from fully reaping the benefits of the deal. “It takes three to five years to fully realize all of the synergies that you are going to get out of an acquisition,” said Marty Mosby, a bank analyst with Vining Sparks.

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See the business opportunity in front of you

Mary Ann Scully realized that she lived in an untapped market that bankers and other businesses had underestimated. It was a big reason she decided to lead the startup of Howard Bank in Ellicott City, Md.

Though Howard County was a prosperous and growing suburb, nestled between Washington and Baltimore, it had been largely overlooked as banks instead stumbled over each other to carve out niches across the Potomac River in affluent northern Virginia.

Scully said, "I remember at the time saying to people, Has anybody noticed that Howard County and Anne Arundel County have demographics very similar to Fairfax and Loudoun counties?"

Treasure outside perspectives

Dominic Ng was a certified public accountant for 10 years before going into banking, which helped him see things from a different perspective.

He said it was apparent to him early on that that the pre-crisis housing market was distorted. Long before the housing bubble burst, he recalls speaking at the 2004 Milken Institute conference and getting booed by the audience for saying, "The American dream will become an American nightmare.”

He saw that lenders were enticing borrowers into taking out loans they would later regret. A native of Hong Kong who got an accounting degree in 1980 from the University of Houston, Ng recalls first coming to Los Angeles and learning of real estate brokers who paid appraisers to inflate the price of homes sold to Chinese immigrants.

"I've seen it all,” he said. “It's so ugly."

During the run-up to the 2007 housing bubble, Ng said East West "intentionally did not do those loans. We thought it was wrong.”

The bank was hurt by problem loans to homebuilders, but it could have been worse.

Waste no time feeling sorry for yourself

John Kanas, the chairman of BankUnited who was also CEO until the beginning of the year, has had a successful career. But he was candid about how his earlier bank, North Fork Bank in Melville, N.Y., nearly failed.

The bank made a lot of bad commercial real estate loans, its stock plummeted, and nonperforming CRE loans at one point eclipsed equity capital, nearly leaving Kanas broke personally. He got some helpful advice to get through it — at home.

"I remember one night, in the middle of the night, my wife saw me changing my shirt because I woke up in a cold sweat and couldn't get back to sleep," Kanas said. "She said, 'Stop feeling sorry for yourself. You're a smart guy. You built this company so far, and you're the only one who can put it back together.' "

He ultimately threw himself into working out loans for two years, and he hired a veteran of the thrift crisis to help him assemble a team of workout specialists.

When Kanas talks to young employees today, he always shares this lesson: "Never, never, never give up. If you're honest and competent, and if you return to work, you can fix just about anything."

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You can adapt lessons from anywhere

It would seem that Amarillo National Bank, which has about $4 billion of assets, has little to learn from megabanks. But Chairman and President Richard Ware says one of his big influences was the late Walter Wriston, legendary chairman and CEO of Citicorp. They struck up a friendship after playing tennis together in California.

"Big-city philosophies can be translated and travel well," Ware said, noting that Amarillo National has adopted these ideas — with a "local touch."

Wriston, for instance, believed that risk is inherent and must be taken into account when setting interest rates. Amarillo National has followed that reasoning in areas such as auto lending, where it refuses to automatically reject borrowers with credit issues.

"We'll make some bad loans to get to some good loans," Ware said. "You just price for risk."

Ware has a very definite idea of what risks he’s willing to take in commercial lending. He is willing to make "good loans no matter the pricing," even if it’s a little low as long as it boosts market share, but the bank steers clear of non-owner-occupied real estate.

The strategy has worked for Amarillo National, which over Ware's tenure has gone from less-than-spectacular returns to performance results that top industry averages.