I tip my cap to community bankers

RMA Journal, The, April, 2004 by Richard A. Hamm

Welcome to the April issue of The RMA Journal and community banking month. As mergers of larger banks garner headlines, community bankers continue to do their work while playing the many positions of banking. This analogy is appropriate as baseball spring training gives way to opening day this month. And, like the versatile baseball players who may be equally skilled at playing in the outfield as in the infield, community bankers are skilled players of many positions.

Think about the many skills, products, types of customers, and organizational issues community bankers face. In larger institutions, bankers have the luxury of specialization. In community banks, the banker is consumer lender, business lender, agricultural lender, cash management expert, credit analyst, branch manager, vendor relations, disaster recovery planning, compliance, and the list goes on.

This month, we bring you articles that cover several bases of community banking, plus others that apply to our entire readership. Our opening day looks overcast but with a good chance of sun, as a Grant Thornton survey of community bankers reveals--76% of us are fairly optimistic about the future. Now let me highlight the remaining community banking themes and topics (think "plays").

The first play involves family-owned businesses and consumers as borrowers (think "throwing and hitting"):

* Do you know the seven key elements of a good succession plan? Oriented toward the credit analysis of family-owned businesses, I throw the starting pitch in this issue with a discussion of an often-overlooked ingredient of generational survival.

* What should you do when a business owner dies? What legal steps should you take when a consumer debtor dies? This is the first article in a series about how to improve debt-collection practices in probate.

The second play involves operational risks (think "equipment managers"):

* Related to succession planning for our customers is business continuity planning for banks. Read about the five phases of disaster recovery and the five key elements of a disaster recovery plan.

* Learn about using vendor SAS No. 70 certifications/ audits/reports (various names are used). Do you know the difference between a Type I and Type II report? This is important if your community bank outsources various services.

The third play involves the people (think "players"):

* Read a reminder about using mentoring as a way to train inexperienced lenders via the experience and knowledge of more senior officers.

* Meet RMA volunteer and community banking entrepreneur John Barrett and read about his young Citrus Bank in the Tampa Bay market. Look for his "Big Five" principles that govern the level of communication in his bank's culture.

* Meet another RMA volunteer and community bank commercial lender, Andy Mahoney. In addition to being president of his local RMA chapter, he ably plays many positions while serving his customers. Look for his Four Ps--skills used every day, internally and externally.

The final play is strategy oriented (think "game plan"):

* Review the results of an extensive survey of community banker attitudes about hotel feasibility studies. Do you agree that these studies are weakest in the area of financial projections (versus general market issues, supply-demand analysis, site/neighborhood analysis, recommended facilities, and occupancy/room rate analysis)?

* Based on a telephone inquiry about existing RMA Journal articles and other RMA publications, it was discovered that there was no current (last 10 years or so) information on the topic of loan committees. Still an important aspect of community banking credit risk management, your Editorial Advisory Board and the Journal staff went to work, and this issue has two articles on the topic.

* Finally read excerpts from a recent RMA audioconference featuring three top-level community bankers and their primary concerns for the next 18 months. Can you say "real estate bubble"? Are exceptions to loan policies an issue in your own competitive environment?

Beyond the community banking topics, recent RMA Journalistic Excellence Award winner Greg Prescott returns to coauthor some credit analysis tips concerning FSP FIN 46 issued by FASB, and Frederick Rice advises caution as bankers "warm up" for the expected economic recovery. Rice has a great checklist of no-longer-early-warning signs.

On behalf of the Editorial Advisory Board of The RMA Journal, I hope you benefit from the expertise of our contributing authors (your "coaches" this month). They are "all-stars" from our many constituencies.

And I tip my cap to hardworking community bankers everywhere for the many positions they play.

Contact Richard Hamm by e-mail at richard_hamm@colonialbank.com.

Richard Hamm is EVP and Regional Credit Officer for Colonial Bank in Huntsville, Alabama. He also serves as an instructor for several RMA courses and various banking scholls, where he has worked extensively with community bankers.