CEO's Corner

About this BlogNoah W. Wilcox, President and CEO

Over the years, we've distributed statement stuffers, newsletters, including electronic ones, and other mailings - all of which are effective media for communicating with our customers.  In addition to these delivery methods, which we will continue to use, I wanted a space on our redesigned website to share industry information, my business perspective, personal experience and insight, and make it an informal forum for sharing information in our very digital age.  I hope you enjoy it.  If you are wondering about a specific topic, have a question or would like me to address a specific subject, please email us using the link above and I will do my best to work it in at some point as I go along.  Thanks for reading!

Independence & Freedom

July 3, 2008

In June of 1776, a committee was commissioned to draft a Declaration of Independence.  The committee was comprised of Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman and Robert Livingston.  The draft was made by Thomas Jefferson and after a few verbal alterations by Franklin and Adams it was submitted to Congress on June 28, 1776.  On the first of July, nine states voted for independence from the British crown.  On July 4, 1776 (232 years ago) the thirteen united colonies declared themselves free and independent states.  John Hancock, the president of Congress, was the only person to sign the declaration that day.  In fact the Declaration of Independence was released to the world with just his signature.  On august 2, 1776, all but one of the 56 signers put their pens to the parchment.  Matthew Thornton, the lone absentee did not sign until November 1776 creating the document as we know it today.

 

I wish each of you a safe happy 4th of July celebration this weekend.  Celebrating the independence of our great nation is rite of freedom that can get lost in the daily shuffle.  We are all so fortunate to enjoy the freedoms that we do. I wish you yours the best for a great holiday weekend

SERVICE. with a smile

June 19, 2008

We hosted our annual Customer Appreciation Day yesterday.  If you missed it then I hope you will join us next year as we missed you.  If you were there, then you know what a truly terrific event it was - and is every year. 

Along with absolutely stunning weather we enjoyed each others company and there seemed to be a general sense of welcoming summer weather to the area - finally.

We served more than 1,300 of our valued customers and by my guess a few prospective customers as well.  I had the opportunity to visit with many of you, but regrettably I was not able to visit with each person who attended the event. I am thankful for each of our customers and I tried to express that to those with whom I had the pleasure of speaking to.  Our customers are what make our business so great.  It is about relationships.  They are mutually beneficial and we are proud and honored to have the opportunity to work with so many unique and wonderful people and to help them build and realize their dreams.  It is what I love so much about my job - helping sustain and create a sense of community, watching young families grow and businesses succeed.

Thank you for allowing us to serve your financial needs.

It's The Economy ...

June 13, 2008

People keep asking me how the economy is, whether we are in a recession, what rates are going to do and what the cost of oil is.  Usually I can answer the latter by virtue of CNBC tracking oil cost, by the barrel, by the second throughout the day, but the former three questions are more difficult to answer.  If you are reading this and have asked me one or more of the above questions then you have heard my stock answer - "If I knew the answer to that, I would not be sitting here".

It is not quite that simple, but almost.  The media has helped and enabled us to get hung up on a need to label everything.  I tell my staff that perception is sometimes reality, and so to it goes with the economy.  If consumers and the tax paying public think things are bad, then generally things get worse by.  If nothing else, they spend less and talk more about the doom and gloom.  If, by contrast, the general public of this fine nation feels things are rosey they invest, spend, speculate and talk wildly about their success and fortune.  It is a seemingly simple phenomena with a complex underside. But the snapshot is that perception and expectation can and sometimes does drive markets - at least in the short term.  Before the last rate cut by the Federal Reserve Bank, the markets had priced the cut in leaving Mr. Bernanke and the Board of Governors of the Federal Reserve Bank with two choices, comply or tank the markets and be blamed.  And while their efforts would not be the cause, it would be where blame is placed due to market expectation.  In my, humble, opinion the last rate cut was bad for monetary policy - what took place was simple pandering to the market.

At the end of the day (Friday the 13th) and the end of the week I offer the following observations:

Our local economy is vibrant.  We are on the cusp of the potential for economic expansion that this region has not witnessed for decades.  People are buying, yes buying, and selling homes.  Familes and retirees alike are moving to the area.  New businesses are starting up and we have good jobs and by all accounts, historically, low unemployment.  In a nutshell I find all of those prospects promising. 

That optimism is not without challenge, there are individuals, families and business that are facing tough times. If you read the legal section of the local paper you will see foreclosures and other action.  There are individuals who are unemployed, there is hunger and poverty.  And, while all of those things are bad - they are ever present in our community and our nation.

So, the question becomes - as I see it - is the glass half full, or is the glass half empty.  It is about attitude, it is about perception.  I have a little friend who wears a shirt that states - "LITTLE BODY , BIG ATTITUDE" -  I think we could all learn a lesson from that.  Replace the word "body" with whatever you like, but it takes a big positive attitude to make a difference and continue the terrific momentum that this community has.

June is National Homeownership Month

May 30, 2008

June is National Homeownership Month.  Community bankers are interested in not only helping people buy homes but we are very interested in helping folks find mortgages that they can afford, so that they can stay in the home as long as they wish to.  This is reall about common sense and our dedication to responsibly building the future of our customers.  With that I offer the following ten tips for National Homeownership Month:

  1. Know your budget: how much you spend on rent, utilities, entertainment, clothing, food and transportation.
  2. Organize paperwork: pay stubs, W-2 forms, tax returns, and bank and investment statements.
  3. Check your credit report and bring it to your community banker. Credit reporting agencies must give you one free report annually. 
  4. Work with your community banker to find out how much you can borrow and which mortgage is right for you.
  5. Get pre-approved. It helps you shop for a home that fits your budget and shows sellers you are a serious buyer who can close on a home quickly.
  6. Learn as much as you can about the home buying process. Your community banker can help explain it to you. Look for classes on home buying and home maintenance. There are free online educational tools at www.hud.gov, www.federalreserve.gov/consumers.htm.
  7. Investigate if there are special first-time homebuyer loan or grant programs available to assist with down payment and closing costs.
  8. Ask your loan officer to carefully explain the wide variety of mortgage options available including rate adjustments and other loan features so that you aren’t surprised by payment increases down the road.  Don’t be taken in by promises of low payments and 100 percent financing. 
  9. Request a written good faith estimate to compare the real costs of your mortgage. It will tell you what your interest rate, monthly payment and closing costs will be.
  10. Attend real estate open houses to learn what you are getting for your money and what fits your budget.

The Business of Politics

April 30, 2008

It has been longer than usual since my last post.  During the past month, or so, I have spent a good deal of time working with our members of Congress both here in Minnesota and in our Nation's Capitol. 

As you may suspect, with the greed that seems to prevail among "Wall Street" banks our Senator's and Representatives feel compelled to "do something" - if for no other reason than to be sure that their constituents back home see that they are indeed "working".  Part of my effort during the past several weeks has been to outline the very real and stark differences between "Main Street" banks and "Wall Street" banks.  The premise is that as a community, or "Main Street", bank we know our customer, we know the communities that we operate in and we are highly engaged in the credit underwriting process.  As a result we have a very strong and sound business and happy customers. 

There is a credit crisis in this country BUT it is simply the "Wall Street" banks that are experiencing it.  If these "wall Street" banks had funded their loans with dollars that came largely from their depositors it is arguable that we would not be experiencing the sub-prime mortgage meltdown in our country, that we not have government bailouts of "too big to fail" financial institutions and we very possibly would not be teetering on the very real and razor sharp edge of a recession. 

Let me be clear.  Community banks did not cause the sub-prime problem, or push the country to the edge of of financial crisis.  If all banks had underwritten loans and conducted business the way that we do and the way that most community banks do we would be in much better financial shape as a nation.  Community banks outnumber "Wall Street" banks by a very large margin, yet they manage their size and deposit concentrations carefully - unlike their "Wall Street" counterparts.  The fact that our government has allowed such high concentrations of deposits and market share has led to a situation where banks grow so large that it is simply impossible to peel back the layers of the onion enough to understand what is actually happening - this leaves them "too big to regulate" which means they then become "too big to fail". 

If you share these concerns I urge you to let your members of congress know both here in the state as well as in Washington D.C..  And perhaps most important, be sure to understand where your members stand on these kinds of issues when you go to vote this fall and in the future.

Creative Accounting - Part II

March 16, 2008

As a follow up to Friday's posting I feel compelled to share the following.  Earlier today Bear Stearns agreed to sell itself to JP Morgan for a mere $2 per share.  If you are wondering that price is a 93% discount off of the Friday market close price!  In what has amounted to a basic "run on the bank" Bear Stearns was literally forced to sell and policy makers and bankers have been working fevershily over the weekend to get the deal complete before the Asian markets open Monday in order to prevent global market panic...will a last minute move fool global trading markets?  I think I mentioned that we would all be celebrating the genius of Mr. Dimon rather than seeing Bear stearns collapse in my post on March 14, 2008.

If you are an American taxpayer reading this you should reach over your sholder and pat yourself on the back for doing your part to avert a major, global market panic. Now ask yourself this question:

Should an organization like Bear Stearns be so difficult to regulate that management can take it to the literal brink of bankruptcy before anyone really has a clue that the ship is sinking?  Is that where you would want your money?  I won't mention names but I leave you with this to think about - buyer beware, investor beware, tax payer beware.

Creative Accounting

March 14, 2008

On the eve of the Ides of March there is a tale of woe that I think the general public should be aware of.  The Ides of March is best known as the date that Julius Caesar was assassinated in 44BC.  Loosely it has been a metaphor for impending doom.  As I ponder that metaphor this afternoon I cannot imagine better timing as I sit down to share a tale of Too Big To Fail.

In the banking business there are many, including the Federal government that insist that there is no such thing as an institution that is too big to fail (TBTF).  Today I believe that myth was shattered.  For as long as I can remember the TBTF issue has been a divisive one between Main Street banks and Wall Street banks.  Earlier this afternoon Bear Stearns, the nearly 100 year old titan of Wall Street took on emergency funding from the New York Federal Reserve Bank via JP Morgan, another Wall Street stalwart.  In the largest government bailout of a US securities firm Bear Stearns has been pulled back from the brink of collapse, for now.  Earlier this week Alan Schwartz, CEO of Bear Stearns, insisted that Bear Stearns was not in trouble and today indicated that the cash position had deteriorated significantly.

So here's the rub.  First, you and I, the tax payers, get to pick up the tab.  But the real issue relates back to my heading for this entry.  When is the last time investors witnessed a bank failure?  Scratching your head yet?  Since the Savings and Loan crisis, which the "banking" industry is still paying for, there has not been a major collapse in the system.  Ailing organizations merge into healthy ones or are acquired and the result is a party for all involved.  Will the investors see Bear Stearns hit the wall at 100mph?  No, instead what will be celebrated is Mr. Dimon's, CEO of JP Morgan, genius as he acquires one of the strongest brands in the business.  Does anyone remember Countrywide mortgage? Three months ago it was the largest home mortgage lender in the country.  Today it has largely been forgotten after Bank of America saved it from the brink of utter disaster almost certainly at the behest of the government.  How's that for creative accounting?

So I pose this question to you as an American citizen, a tax payer, a financial customer:

Should you reconsider how you shop for financial services? Are you working with a financial partner that you know and trust?  Or are you working with an organization that is too big to fail, too big to regulate and too big to manage?  Perhaps consumers and investors alike need a dose of tonic dispensed as a troubled and mismanaged financial institution that cannot make it is not bailed out but allowed to falter.

Happy Pi Picture (Device Independent Bitmap) Day!

Change, Pomp and Politics

February 16, 2008

I, like so many citizens, have been consumed by the political posturing in the run up to the election process for our next President.  I did not say that I am a willing participant in that consumption.  It seems that you cannot turn on any television, pick up any newspaper or magazine or browse to any news related Internet site without being bombarded by the political promises of change, leadership and experience.

I don't generally talk politics, so I will be brief.  I just want to ask a few questions on the topic of change.  Is the fact that we have had 32 consecutive years of trade deficits and a field of contenders that support free trade change?  Is the fact that we have a field of contenders from two long established parties change?  Is the fact that all of the contenders are currently involved in the bureaucracy of Federal government, some for decades, change? And for that matter does the fact that a person has held power in government for a long period of time equate to experience?

I am not choosing sides or endorsing a candidate, instead I am watching our democratic process chug on as it does every four years.  It starts nice, then devolves into false accusations, mud slinging and finally personal attacks.  What gets missed is what they believe, and realistic (not political) ideas on how to address some of the issues that this country faces.  I think many Americans are ready for a change and ready for a fact based realistic approach to leading this great nation.  At a recent conference that I attended I had the opportunity to meet Lou Dobbs, of the CNN variety, and one thing he said made some sense to me.  Lou commented that the number of people who badly want to be the President scares him.  He followed that by noting that it wouldn't be a bad idea for the person to not want the job, but to accept it out of a sense of duty and sacrifice for the greater good of the people.  I believe, and I will leave you with this, that if any of the contenders currently vying for their party's nomination knew what really needed to be done over the course of the next eight to ten years they would think twice about how badly they want the job that they are spending millions to try win.

Stay warm!

Happy New Year

January 4, 2008

As we bid 2007 farewell, we welcomed 2008 with enthusiasm here at GRSB.  In addition to my responsibilities here at the bank, I serve in a number of volunteer capacities around the community.  One of those leadership positions is as a Director with the Grand Rapids Area Community Foundation. The Community Foundation provides a tremendous vehicle for giving in the Itasca County area and really in greater northern Minnesota.  As many around the community saw, I am sure, the Foundation had a New Year's Eve celebration - The Great Gatsby Gala - which was a smashing success.  The event was designed to broaden awareness of the Community Foundation, as well as focus attention on the Foundation Fund.  The Foundation Fund is critical for ensuring that donor funds are managed in perpetuity. 

During the course of the evening, along with many exciting silent auction items and live auction items, all of which were generously donated, I offered a New Year's challenge on behalf of Grand Rapids State Bank.  If I could encourage a minimum of 24 individuals to give $12 per month for 12 months in 2008, I made the commitment that 100% of Grand Rapids State Bank staff would give at least $12 per month for the 12 months of 2008.  I am pleased to say that we had over 40 individuals respond to that challenge!  If you are reading this and would like to participate, you can contact the Community Foundation by calling 218-327-8855. 

The final numbers are not in from the New Year's event, but I do know that we successfully raised more than $35,000 to benefit the Foundation Fund.  I thank all who attended, all who donated and all who accepted my challenge.  Please consider giving yourself, if you have not already, and if you have already committed consider asking 12 people you know to get involved.  It is the power of community that will make the Community Foundation even stronger than it already is.

Happy New Year!

Tried and True

December 20, 2007

Two days ago we held our 93rd annual Christmas party.  Yes that's right, I said Christmas.  There may be a place in our world that is appropriate for political correctness but I do not, nor does my family, believe that the celebration of the birth of Christ is one of them.  I go out of my way to greet people with a Merry Christmas this time of year, versus the more PC version of seasons greetings or happy holidays.  True indeed that the season is worth celebrating and that the holiday is happy but too often we lose the real meaning of Christmas in the commercialization of society.  Old Chuck Brown, of the Charles Schulz variety, had it right when he helped Charlie Brown tell the world that Christmas is too commercialized.  I remember that line from when I was a child and it has stuck with me ever since.  In fact I used that tid bit in a trivia question at our recent Christmas party.

Gathering with friends and family during this time of year is as much a part of the tradtion as anything.  Take time to slow down for a few days and enjoy each others company.  Catch up on the time that has passed between and listen.  Our annual Christmas party allows my family and I to spend time with out entire staff in a less formal and festive environment.  My family gathering brings us all together from the various areas of the country and globe that we are scattered across.  The heart that gives gathers and sometimes the gift of time to spend with loved ones is the most precious gift of all.

Merry Christmas!

Of Family, Giving Thanks and Commerce

November 26, 2007

Many of us have been fortunate to spend this Thanksgiving Day holiday with our family and friends.  I spent this Thanksgiving with my in-laws.  By all accounts it was a wonderful time.  Most of the family was there and we spent time catching up on the time between visits, exploring their new home and watching all of the kids embark on adventures of the imagination.  We all have so much to be thankful for.

Immediately following our great meal Thursday night came "Black Friday", as it is known by retailiers and shoppers alike.  As I watched news reports on Friday morning all of the buzz was on how much consumers were spending, what they were buying, how retailers felt it was going and what it all meant for the coming Christams holiday shopping season.  (Yes really...a shopping season)  It all left me wondering why.

When I woke up today I turned on the news.  The first words out of the reporters mouth as the screen came to life were "Cyber Monday".  Perhaps I have been living in a cave, but apparently one "Shopping Holiday" is not enough anymore, we need to have two.  At this very moment CNBC is reporting from the floor of the New York Stock Exchange, that great icon of commerce, and the analyst is talking about retail confidence and how it will impact the markets, the dollar, the Federal Reserve's reaction and on and on.  Again, the "Christmas Shopping Season" works it's way into the conversation.  Amazing! 

Here is what I think about the "Christmas Shopping Season":

We don't need a fancy name for it.  It is a time to gather, share and rekindle old stories and to make new memories.  It is about tradition and family.  It is not about retail numbers or consumer confidence.  And really it is about those who may be less fortunate than others.  As you create your list and check it twice be sure to include something for those less fortunate.  Your community has hundreds of local ways to help and there are thousands in need.  Just to touch on a few think about Toy's For Tot's, the Food Bank, Community Cafe, Shelters and local funds that support those in need.  While everyone enjoys receiving a great gift, the joy that comes with warming anothers heart is priceless and worth the time spent.  The heart that gives gathers, as was once said, so please consider helping those in your community who may need it so badly.

Subprime Clarity

November 8, 2007

The media has covered the credit markets so heavily during the past several months that "credit crisis" and "subprime" have become common household expressions.  There is a clear gap between the facts from where I sit and the media spin in all of it's splendor, whether on television, radio or in print or on the web. 

Let's consider a few facts:

  • 35 percent of American homeowners own their homes free and clear of any mortgage.
  • Of the 65 percent of American homeowners with a mortgage 94% of them are paying on time.
  • Subprime mortgages represent just 14 percent of the entire mortgage lending market.  Subprime loans are not necessarily predatory in nature, instead they are generally loans with higher risk charachteristics.
  • Within the subprime market, 85 percent of borrowers are paying ontime.  This means that just 15 percent of the subprime market, which only 14 percent of the total mortgage market, is where the trouble exists.

The above four points are important for a couple of reasons.  First, it illustrates that in the larger picture the mortgage market in America is actually in very good shape.  The media would have you believe otherwise - bad news, shocking stories and tales of woe sell advertising, keep viewers hanging on every word and those headlines sell newspapers and magazines.  Second, it does show that there is a problem.  I will spare you examples of trouble spots, as I am sure you have had your fill through your media outlet of choice.

I would like to make a few additional points with respect to media coverage and the players in the subprime market.  First I want to make a very clear distiction between bankers and brokers, as there is a significant difference.  Much of the media coverage has take a blanket approach to reporting and often refers to the banks, or banking industry when discussing subprime issues.  The majority of the problems related to the subprime crisis were not originated by FDIC insured banking institutions in this country.  In short, it is not the banks that have, or are, causing the problem.  Banks, community banks in particular, are interested in developing relationships.  There is no incentive for community banks to sell products to their customers that do not match their needs or that the customer cannot afford to repay.  We are accountable to the communities that we serve.  We are accountable to regulatory agencies.  Institutions that are largely unregulated have no vested interest in the customer.  They are here today and gone tomorrow.  We have been for more than 90 years.

We will see this great nations lawmakers react in the coming weeks and months, as they did when Enron, Anderson, Tyco, Global Crossing, Adelphia and similar companies destroyed the confidence of employees and accounting standard.  Then they introduced legislation now known as Sarbanes-Oxley, it is designed to build uniform accountability into publicly traded companies - in the end it creates more expense and inefficiencies.  With the incursions of a few "too big to fail" financial giants and scores of brokers and non-traditional sources we will see mortgage reform legislation which will be designed to hold financial insitutions accountable - my fear is that what it may do in the end is hinder how financial institutions can help.

Community banks are uniquely poised to help in this climate of anxiety and credit tightening.  They are ready to do so because they have been common sense lenders all along and as such their respective loan portfolios have been relatively untouched by the subprime crisis.  Take a few minutes to read through the legals in your local paper sometime.  While you may see some local banks in the foreclosure section, as it does happen in the course of normal business, you will find that the overwhelming majority are out of town, internet or broker type companies.

Please feel free to stop by Grand Rapids State Bank and let us know if you have questions.  We are here to help, whether it is access to credit or providing a review of your current documents - whether we made the loan or not.

Relationship Orientation

October 10, 2007

An industry hotshot shared a story with me recently that really got me thinking about relationships.  I cannot share the name of the individual who shared the story or the name of the organization that he was referencing but I believe the point will be clear enough. 

To summarize, the story went a little something like this:

A consultant, my source, was hired by a large financial player in the United States.  One afternoon, while sitting with the CEO in one of the company's call centers they stopped to listen in on a few service calls.  During about the third call they were observing the CEO stepped forward, removed the headset from the service representative and indicated that he would take the call.  The CEO introduced himself to the caller and identified his role in the organization, the caller was suprised to say the least...but not nearly so after what came next.  The CEO told the caller that it was the fifth time he had called the call center, and that it needed to stop.  He indicated that he provided higher yielding products than most competitors and that his company was not there to serve him and that if he wanted to call that many times to seek a relationship with one of his competitors.  The caller asked the CEO of the unnamed company "don't you want a relationship with me"?  To which the CEO replied "no"!  Further indicating that if the caller desired a relationship with his financial insitution that he should seek another financial partner because, as the CEO explained, he was there to be a low cost leader running as efficiently as possible and taking calls from customers who sought their balance information was counter productive to his strategy.

All of this had me quickly reflecting on our own business model, which then made me wonder if our customers - and future customers - understand that what we strive for is a relationship with our customers.  We want to know our customers, understand their needs and anticipate their questions.  I believe, as the past three generations of my family have, that we have a duty and an obligation to the communities that we serve to build value in their financial lives by providing proactive service and guidance.  We are your local bank, we live here, we raise our family's here, we work here, we shop here and we will be here tomorrow with a vested interest in where the community is headed.  I am uncertain whether that is the case for some of the larger financial organization in this country.  We understand the communities we serve, the heritage and the familes that live there and because we do, we are able to deliver more value, better service and an experience that is unique to the area and personalized when contrasted with regional competitors.  Local is in, local is it and we are local! I invite you to talk with us, let us provide you with the information you need and the services that you require.  We are your dedicated financial partner interested in growing relationships over time.

Visual Acuity

October 1, 2007

Today is an historic one for Grand Rapids State Bank.  For the first time in nearly 20 years, we unveiled a new logo. As we gathered earlier this spring for our strategic planning session, we endeavored to accomplish many things.  We spent a great deal of time, however, examining our current positioning.  The determination was made that our current logo was no longer fully representative of the story that our rich history tells.  No longer was it representative, in full, of our mission, vision and values.  A separate effort was undertaken to further examine the issue.  Months later, our new logo, a classic etching of four white pines, is now presented to the public. 

Much thought went into the logo development process.  To present it shortly, I believe the logo represents stability, integrity and longevity. It is a tribute to one of the signature elements of northern Minnesota, the white pine.  More generally, it represents the great and abundant natural resources that we are so fortunate to be surrounded by in our northern Minnesota location.  Lastly, it symbolizes the four generations of the Wilcox family that have built Grand Rapids State Bank into one of the Northland's largest independent financial institutions on a legacy of trust and tradition.  It underscores the fact that we are a multi-generation business that fully understands the different generational opportunities and needs of the customers that we are so fortunate to serve.  I am very excited about our new look and believe that it allows our organization to more fully present our business to the public in a visual way.  It was a difficult decision to move on from our previous logo of the building roofline and rolling water.  Symbols become comfortable and our past logo was very effective in communicating our story and visually presenting who we were.  This is the next chapter and I believe we are only getting started.  If you have feedback, please let me know what you think.