Are Fox(es) Watching Your Bank Hen House?

We’re all familiar with the old adage,“ Don’t put a fox in charge of the Hen House”! We’d all agree that doing that is a very bad idea. And yet, since the dawn of the new oppressive banking regulations era 6 or 7 years ago, I’ve observed that bank after bank across the country is doing exactly that. This leads to sleepless nights, and daily scratching of CEO and Board of Directors heads wondering why their bank’s earnings and growth continue to suffer!

Well, here’s the bad news: There is more than one fox that may be sitting and gazing at your bank, salivating! The good news is that these foxes can be eradicated if we recognize them, and have the guts and fortitude to do something about them. Today I’m going to briefly overview just one fox, and in future discussions we’ll overview some of their fox siblings and cousins.  

The first fox for many of you: Your almost paranoid emphasis on compliance. Should you stay on top of compliance? Absolutely! Should it become the CEO of your CEO and board emphasis? Absolutely not!!! Never forget that every bank, large or small, local or spread across the nation, should first focus on the two “P’s“: Performance and Perception. If your bank is so focused on compliance that your compliance focus interferes significantly with your bank’s Performance, you have a problem! In many banks today, the bank CEO has effectively allowed the bank’s compliance officer to become the bank’s CEO in critical areas. This affects your bank’s Performance, and your diminishing Performance affects you, your board, AND your customers. Now you have a second problem: Your Performance drop  negatively affects your market Perception.  And your bad Perception then further affects your bank Performance. It’s a Catch 22 which you must avoid, or get out of, as quickly as you can!!!

Compliance emphasis. Where does it fit in your bank? That’s something you really need to focus on so you can develop the emphasis that is specifically right for your bank. For one bank  that I’m very familiar with, the emphasis has been on making a large volume of quality loans to carefully selected key markets, and on controlling bank wide expenses. The result has been that they are the best earnings on assets bank in their state, and resultantly face less regulatory interference than most banks face. Compliance emphasis. It’s a “One size does not fit all” situation. Compliance. You can’t take it or leave it. You can control your focus and exercise more control over your bank operating results! It’s up to your bank to set the course. Every bank has likenesses, and every bank is as individual as a fingerprint. Get the help you need from whomever you need, but get it as soon as possible.

The next blog from Early & Company: Another fox watching the Hen House.

“Gentlemen, this is a Football!”

I thought I had seen it all. After years as a banker directing three of the six divisions of a  $600 million community bank, and now more than 20 years after founding Early & Co, which now helps banks across multiple states with Marketing, Advertising, Staff Training, and Leadership Development, I’ve been amazed by the deluge of regulations reigning down on bankers over the last couple of years. I’ll confess that on more than one occasion, like most of you have also thought if you’re completely honest with yourself, I’ve been briefly tempted to just throw up my arms and surrender! Take me government, take me regulators, I’m yours! Fortunately, I’ve managed to get over it and move on!

Two things always get me back on track:  1) Gentlemen, this is a football, and, 2) Some very wise and sage comments from the CEO of one of my highest performing client banks.

Let’s start with football : When new coach Vince Lombardi held his first team meeting with his Green Bay Packers team…following several years of inept Packers performances…he held up a football, made his famous “ this is a football” announcement, and proceeded to take the team back to the beginning, focusing on fundamentals and performance under pressure. Did it work? The Super Bowl Lombardi Trophy isn’t named for him because he developed the largest number of football plays or complex solutions. It is named for him because he didn’t make excuses, he instead developed the most fundamentally sound performers and winners the game had seen!

Now, the sage thoughts from my wise bank client CEO. After he and I had met for several hours with his bank’s Executive Management Team and listened to their worries and legitimate concerns about all the new and onerous regulatory burdens, he simple stated, “ Folks we’re going back to what made us”, and in essence picked up his “ banking football .“ Over the following months, he proceeded to lead the bank in re-focusing on customer service, appealing new services, making sound and well documented loans, AND the resultant high earnings performance they wanted.  

High Performance Banking. It isn’t Rocket Science, it isn’t complicated. It’s still about fundamentals, service, and performance. Don’t drop that football!

Steady, Not Spectaclar, Gets It Done!

This past week-end, I was glued to my flat screen TV watching the greatest golfers in the world at the US Open Golf Championships at California's fabled Pebble Beach course. The views were spectacular, the course challenging and difficult.

Its often been said that sports represent a microcosm of life. I think there is certainly some truth to that. I've observed that week-to-week on the regular courses the PGA plays, the winning score is often 10, 15, or 20 under par. Spectacular scoring! The courses are not set up to be as difficult as the US Open courses are set up to be. At the Open course every year, the course is so difficult that par or over often wins. Par won this past week-end when Northern Ireland's Graeme McDowell won, shooting a final round with only one spectaclar hole, but avoiding the disasters that hit every other leading contender as they tried for the spectacular!

What does that say to us about life? Two simple things: One, the more difficult the circumstances...like an on going tough economy and rapidly changing regulations...the more bankers need to focus on fundamentals like great customer service, sound lending, and time honored banking practices. Its not the time to go for the spectacular " birdies " of life, that can lead to the bogies, double-bogies, and " others ." And, its the time to make sure our people understand and buy into that! Stay steady, and make the birdies when clear opportunities arise. Think about it!