Banking – A Changed World

Guest Article By: A.G. Divers, Founder and former president, The Bank of Tampa

(Editor’s note: The Bank of Tampa currently holds over $1.2 billion in deposits and is considered the premier community bank in the Tampa-Clearwater-St. Pete market)

When I was young, the old guys would clench their teeth around their cigars and grumble “the world ain’t what it used to be.”  If I sound that way I apologize in advance.

In the mid 1950’s I attended St. Petersburg Junior College and had no idea what I wanted to do with my life.  I took a course called Money and Banking and heard the professor explain that “the role of a bank is to take the surplus funds of a community and lend them wisely to local businesses to help them achieve their goals – and in the process enhance the economy of the community.”  That stuck with me (as you can tell it did if I remember it sixty years later) and I went home that day and announced that I wanted to become a banker.  I majored in banking at the University of Florida – a specialty that included only 18 students.  I was asked by one of them “Jerry, what are you doing here?  You don’t have a father, grandfather or an uncle who owns a bank!”

After serving in the United States Navy, in 1961 I began my career in Tampa at The Exchange National Bank of Tampa.  That bank was at that time seventh largest in the state with $126 million in deposits.  It was a close second to the largest bank in Tampa, and the two were by far the largest banks along the West Coast of Florida.  There were no out of state banks operating in Florida, no holding companies, no branches and no computers. Most banks were managed by families which had a large stake in their ownership.  And most of the banks in Florida at that time were survivors of the depression, and operated very conservatively.  The staffs of Florida banks considered themselves part of the “bank family” and there was negligible turnover of staff.

Banking was commonly referred to as a profession, and bankers in Tampa were part of the respected elite.

The president of my bank, whose father had preceded him in that role, told me a bank should keep one third of its assets in cash, one third in bonds and one third in loans.  Because our deposits were subject to overnight withdrawal, no loan should have a maturity of over a year, and under no circumstances were we to make a loan secured by real estate.  Not long after I started I worked with the manager of the bond portfolio, and learned that we kept 10% of the portfolio in municipal bonds, laddered over twenty years, and 90 % in treasuries, laddered over five years.  The bank was open Monday through Friday from ten to two.  The staff – including officers – were gone by three thirty.   I remember thinking “this is the life.”

Early on I was in training to become a loan officer.  I thought it a good idea to go see the customer and learn his business first hand.  I was told that was undignified and that “if someone wants a loan they can come in and ask for it.”  As my grandfather, an Indiana farmer, used to say “them was the good days.”

One message from that bank president, which I thought then was timeless, and I still do though there aren’t many like me anymore, described what were the “first two rules of banking.”  The first was “know your customer.”  The reason for this, of course, is to know the customer’s personal values – what the textbooks refer to as character; the customer’s ability; and the customer’s current financial condition and history, in order to properly assess the likelihood of the repayment of the loan.  The second rule was “know your customer’s business and financial goals so that you can help him achieve them.”  Sounds like that professor at junior college.

With all the changes which have taken place in banking, at The Bank of Tampa we have tried to live by those two rules in our relationships with our customers.  That, more than anything else, explains our success.  It explains more than anything else the need for banks like ours across the country.  We only have a small slice of the total banking market, but I read recently that community banks make more than half the loans to small business made in the United States.

Banking regulation has made it next to impossible to use our own judgment in making loans to individuals (we have to offer “products” and use standard criteria to grant them) but we still work closely with and tailor our loans to the specific needs of  our business customers to help them get where they want to go.  Let us hope with no doubt continued change in the future, those rules – and our ability to implement them – won’t change.