Change was the name of the game when members of the Independent Bankers Association of New York State met for their 38th annual convention recently at the historic Gideon Putnam Resort in Saratoga Springs. While the group’s chairman, Paul Mello, and president and CEO, Frank Capaldo, reported on changes within the association itself, other speakers addressed coping with changes in business in general and specifically in the banking industry.
Mello, president and CEO of Solvay Bank, in his opening remarks declared the conference was about navigating change. “It is different today than it was 20 years ago, in terms of regulation, technology and competition,” he said. That means CEOs have to think more about strategy, he added.
Mello told the members that the process of change the association has been going through over the past two years has included the hiring of Capaldo in 2010 as full-time CEO and a planning session from which evolved four pillars to build on, labeled “advocacy/compliance,” “communications,” “education and training/governance” and “business services.”
Following up on Mello’s comments Capaldo said, “We’ve regained our focus and you need to help me spread the word. IBANYS is back with a purpose and a plan — to protect and preserve community banking in New York State.” New members have been signed up and others have been persuaded not to leave the group, he reported. Asking those in the audience to help build membership, he said, “We need to stay focused on building our collective strength. Together we can do anything. I challenge you to call other banks until you get a new member. No other organization fights for just you.”
Later in the program, Timothy Mescon, president of Columbus (Ga.) State University, advised the bankers that change is the norm, not the exception. “Today’s answers won’t solve tomorrow’s challenges,” he said. “This is true not just in banking but in industry after industry. Change is constant, like permanent whitewater.”
He suggested that the bankers should manage their own destinies. “No one knows their markets as well as you know yours,” he said. “Know yourself and your business,” he suggested, “set clear goals and priorities, follow through, reward performance and performers, and build high-performing teams and individual talent.”
In what he calls “new wave leadership,” Mescon includes these principles:
Other best practices for community banks in the current environment were described by Kristin Kiefer, associate deputy comptroller for the Office of the Comptroller of the Currency’s northeastern district. During a panel discussion that also included regional representatives of the Federal Reserve and the New York Department of Financial Services, Kiefer provided tips for managing interest rate risk and investments: plan for sudden increases in interest rates, including worst case scenarios; avoid yield-chasing and complex securities; manage concentrations in municipal bonds and other securities; be knowledgeable about investment products; and prepare timely and effective financial analysis. Top regulatory issues on her agency’s radar screen, she advised, include credit risk, asset/liability management, capital adequacy and planning, allowance for loan and lease losses, and compliance, in that order.
Good banks should not just maintain the status quo, Kiefer implied, but should strive to get better. Strategic planning focused on the basics is key, she suggested, along with discipline in staying with what you know. Knowing more about your bank, market and people are high on her list, followed by risk management involving good communications and controls. Superior talent is a must, either internally developed or recruited from outside. Be willing to adapt to change, she urged, and finally, “execute, execute, execute.”
Acknowledging that good banks sometimes get into trouble, Kiefer listed these reasons: ineffective risk management systems; weak internal controls; lax accountability; uncontrolled growth; entering new areas without proper controls, expertise or financial analysis; significant deviations from strategic plans; non-compliance with policies or procedures; outsourcing key functions to firms that do not possess the appropriate expertise; and insider fraud and abuse.
Banks in the Northeast are stronger than they are in other parts of the country, Kiefer noted, but competition is tough “and that puts pressure on you to find your niche in the market.”
Bill Poquette is editor-in-chief of BankNews.
Copyright (c) December 2011 by BankNews Media.