First Person: Steve Tscherter

Building a bank as a young, new bank CEO in the 1980s.When I became CEO of Lincoln Savings Bank, Cedar Falls, Iowa, in 1979, I was 33 years old. The bank wasn't ready to die but it was in dire straits. The state regulator had decided the bank's board and management were unable to see the bank through its troubles. I soon found out just how deep the rabbit hole could go as I worked to pull the bank's bacon out of the fire..Up to that point I had focused on building my skills as a banker. A native of Ankeny, Iowa, I graduated from Drake University in Des Moines with a degree in accounting in 1968. Having gotten married in 1966, I decided to keep my growing family close to home and work for the FDIC. .I saw the good, the bad and the ugly in my seven years as an FDIC examiner based in Burlington, Iowa and later in Marion. I wanted to use my experience in a banking career. I went in search of a bank where I could quickly become president. My first bank job was at Iowa State Bank, West Bend, as the second man in a two-man shop in 1976..I wasn't hired by the board when I came to Lincoln Savings Bank in 1979. The state regulator had taken away the board's hiring power and had given it to a correspondent banker for the Iowa Des Moines National Bank by the name of Bob Buenneke. He hired me to put the bank back on track..In the eyes of the board, whose members averaged well into their 60s, I was just a kid. My challenge was proving myself to them, the community and the staff while also repairing the bank. I wasn't a popular guy in town for some time as I attempted to work the community and the bank through all their issues. I still have a file of letters from disgruntled customers. One letter says that the bank is "no dam good anymore." I knew the customer wasn't talking about barriers to obstruct the flow of water when she said our company was no "dam" good..I also had to straighten out the bank's staff and procedures. Two brothers had run the bank for three years prior to my arrival. They had inherited leadership from their father, who passed away without training them on how to run the bank. The board let them have free rein. One of the brothers was a lending catastrophe in motion, even after I came. We had to take his lending authority away because he was making loans and hiding the documents in his desk. I also had to fire the president's wife. I promoted a lead teller but the president's wife wouldn't take orders from her. She even went so far as to purposefully disobey orders. Fortunately, the board stood behind my decision..Despite the friction along the way, the bank emerged from its troubles by 1985. We managed the 1980s without foreclosing on a single farmer. Today, one of my loudest critics on the board will call me when he's deciding if he should buy more bank stock..With the bank's credit messes cleaned up, we set upon a new goal: to grow to larger than $100 million in size. It was already apparent in 1985 that small community banks would not do as well under a certain size. Of the $705 million assets held by our bank today, about 60 percent came from organic growth, another 40 percent came from acquisitions. In the years that followed we purchased seven other banks which added eight locations to our footprint. We now have 16 full-service branches..We have opened some de novo locations over the years. We have used loan production offices to move into an area before establishing a full-service branch. All you need for a mortgage production office is a lease for office space and lenders. It's a head start on commercial loans because your lenders can build a pretty good book of contacts as they chase residential loans..In 2000, we decided to diversify into commercial lending. An acquisition in Cedar Falls-Hudson, Iowa, gave us the opportunity to hire experienced personnel with commercial real estate and C&I lending..Now, about 52 percent of our portfolio is commercial related loans. We have about 30 percent in ag loans. The change was necessary even though I love what I call "farm character." It is not often you have to go to court with a farmer over anything..There is just not enough opportunity in ag-only lending for us to be successful. Every rural bank in Iowa calls ag banking their niche. Our competitors were nearby, community banks which have specialized in ag since they were chartered. Then there's the good old U.S. government behind Farm Credit..Over the years, I have always found that developing people is the way to drive profitability. At the beginning of this year, Erik Skovgard took over the CEO's responsibilities from me. I report to him now as the bank's president until I retire at the end of this year. I am proud to have remained the leader of this organization for 35 years; it has taken dedication to principle and the good sense to do more right than wrong. Now, the best compliment for a successful career is to walk out the door and have no one know you're gone.