Pub. 6 2011-2012 Issue 4

www.nebankers.org 14 Extraordinary Service for Extraordinary Members. T HE FIRST IS THAT THE PIONEERS looked at what they were do- ing as larger than themselves. They were not crossing for their benefit alone; they were crossing the Great Plains in search of a better future for the generations who would follow them. The second lesson is that they kept moving forward with boldness and courage in the face of opposition while assisting others to also reach their destination. Just as the pioneersmoved forward, so must Nebraska bankers. Each bank has a unique history filled with sacri- fice, struggle, and a desire to provide the community with a catalyst for growth and development. The average age of Nebraska banks is almost 98 years, according to FDIC.gov. As you consider that number, it is apparent that the long-term strength and growth of Nebraska communities directly cor- relates to the access that businesses, farms, and ranches had to capital. Al- most as staggering, we learn that close to 63 percent of the banks in Nebraska are “family-owned.” Why might this statistic be an exciting differentiator and how might it potentially represent a liability to the state? Banking on Family Business Success The Three C’s of Family Business Continuity Dave Specht Family Ownership as a Differentiator for Banks A high concentration of family- owned banks can be a very good thing for communities in Nebraska and for the state as a whole for a number of reasons. Families who have owned banks for several generations have a competitive advantage due to the long- term relationships they have developed and the knowledge of each borrower’s history. These same banks many times have children, or nieces or nephews, who grew up around the bank and gained learning experiences that most college students would envy. This ex- posure to banking at an early age boosts these individuals’ ability to discern risk and tomake tough decisions. Many are well ahead of their peers who didn’t have the opportunity to grow up in the same environment. Another important differentiator is that most of the bank’s best custom- ers are also family-owned businesses, whether they are farms, ranches, or other enterprises. Because of the banker’s personal experience with the unique nuances encountered in multi-generational business transi- tions, these family-owned banks end up having a competitive advantage because they know how to serve the needs of family businesses. Todd Adams, CEO of Adams Bank & Trust in Ogallala, explained, “Being a family business ourselves, I think people are more comfortable coming to us to seek advice on their family business issues.” Family Ownership as a Potential Liability for Banks With every possibility of reward comes a certain amount of risk. One of the biggest risks for family-owned banks in Nebraska is not preparing for management and ownership succes- sion. Every banker asks the borrower for contingency plans, but not every bank is as “intentional” with their own plans. Identifying potential successors is one of the first required tasks. Once the criteria and skill sets are identified for the leadership positions, each bank The state of Nebraska has a rich pioneer heritage that continues to influence the culture of the people who live here. As we consider the pioneers crossing our great state in the 1830s, we should remember and apply two important lessons.