What it takes to run a bank

dollar-budget-sq“Management is doing things right. Leadership is doing the right things.”

So said America’s most famous management consultant ever, Peter Drucker. His famous aphorism is not so easily understood, let alone accomplished.

Though Drucker believed the role of management consisted of putting the right people in the right jobs, his emphasis was focused on the job. He was concerned with fundamental questions. The first question a business had to answer, he said, was “What business are you in?” And the only valid definition of business purpose, he believed, was to create a customer.


This isn’t the hierarchical mumbo-jumbo it might seem to be. When I taught business management several decades ago, I at first resisted this style of thinking. But I gradually came to believe that Drucker was more correct than I had been willing to acknowledge. By the time I stopped teaching the management course based on Drucker, I actually believed what I was teaching.

Since Drucker’s time, there have been thousands of books on business leadership and tens of thousands of courses, mostly in winter at tropical resorts, to hone the skills of already overcompensated business leaders. The premise behind most of them is that the game is indeed worth the candle: that the difference between poor and good performance in large organizations is important enough that improving leadership is almost always worth the expense.

The Harvard Business Review, notorious for abstruse study of the styles of leadership, outdid even itself in a December 2013 article, “The focused leader.” “Focusing inward and focusing constructively on others helps leaders cultivate the primary elements of emotional intelligence,” author Daniel Goleman wrote. “A fuller understanding of how they focus on the wider world can improve their ability to devise strategy, innovate, and manage organizations. Every leader needs to cultivate this triad of awareness, in abundance and in the proper balance, because a failure to focus inward leaves you rudderless, a failure to focus on others renders you clueless, and a failure to focus outward may leave you blindsided.”

This sounds like sage advice, though I haven’t the slightest idea how a real-world leader can benefit from it.

Two local leaders of substantial regional banks of similar size, Glenn Sutherland of Ulster Savings Bank and Donald Gibson of Greene County Bancorp, are for the most part in the same business. Though they have different backgrounds and very different personal styles, they have both been successful at leading banking institutions. Both leaders seem widely respected within their banks; perhaps that’s one of the secrets of successful leadership.


Retired last March as a bank president, Glenn Sutherland said he was sitting comfortably in his Florida living room several months later when the phone rang. Would he consider stepping in as interim leader of Ulster Savings Bank? The community, in which he had been active in various causes his entire career, had been good to him, he said, and he “wanted to see this bank and this community survive and succeed.” So in June he agreed to a one-year contract, which may be extended another year if a new CEO hasn’t been chosen at the time of its expiration.

For more than a decade, Sutherland was an owner with his wife Cynthia Lowe of Sutherland and Lowe, Kingston CPAs. He held senior posts at several regional banks before becoming president of Ellenville National Bank and its successor bank, where he served for nine years. He then became CEO of Catskill Hudson Bank for ten years before retiring. Catskill Hudson, which specialized in commercial business, more than quadrupled its deposits and more than tripled its branches during Sutherland’s decade of stewardship. It had $79 million in four branches on mid-2005 and $375 million in 13 branches ten years later.

Sutherland saw his new and unsolicited job at Ulster Savings as improving the perception that the bank’s reputation in the community had slipped in the past decade. Rightly or wrongly, people felt that the bank, which has had four presidents in the past ten years, might no longer be the trusted neighborly institution it had been in the good old days. “They made some bad choices,” he sums up.

The bank board felt Sutherland was the proper steady guiding hand to restore stability and trust. Sutherland, known in the community for his bluntness, can rarely be accused of not speaking his mind. When he expresses himself, it is not always in the diplomatic terms many bankers have cultivated. One is never at a loss to know what Sutherland thinks. He is direct and decisive.

In the next three to five years, he thinks, banks like Ulster Savings are going to need to grow. In order to continue to meet customer needs, they’re going to have to have the size and the leverage to be able to propel themselves into the future. Regulatory requirements are unlikely to diminish. Technology will continue to advance, but community banking will continue to be based on relationships.

The small new branch at Ulster Commons opposite Adams Fairacre Farms in Ulster is more for the convenience of local customers, he says, than to expand the bank’s deposit base. Total deposits as of mid-2015 were $641 million.

Ulster Savings has a $1.2-billion off-balance-sheet mortgage origination business. The bank operates mortgage origination offices in Westchester and Orange counties, on Long Island and in Connecticut. The mortgages are sold to long-term holders, and Ulster Savings pockets the mortgage origination fees. Sutherland says the bank is hoping to grow this business at a hefty $240-million annual rate.


Donald E. Gibson joined The Bank of Greene County in 1987 as part-time teller and management trainee when the bank had one office and 25 employees. Ascending the organizational ladder step by step and becoming the bank manager in Cairo at the age of 23, Gibson became president of the bank 20 years later. “I grew with the bank,” he explained.

The holding company, Greene County Bancorp, of which Gibson is also CEO, owns the Greene County Commercial Bank, which handles governmental accounts and contributes $174 million in deposits. Eight years after his assuming its leadership, the bank holding company has 14 branches and $623 million in deposits. As of last week the whole enterprise had 150 employees.

Under Gibson’s leadership, a new level of position has been added: relationship manager. Like Sutherland, Gibson believes customer relationships are the keystone to bank success.

Gibson expects the growth to continue. Shooting for a billion-dollar bank by 2020, he doesn’t rule out new bricks-and-mortar branches. He says he’s noticed a pattern in branch banking: After more than ten miles’ distance, “market share falls right off the cliff.”

The bank’s southernmost location is perhaps a mile south on Route 9W from Ulster Savings’ newest branch. “The move cements our commitment to Ulster County, where we were already writing commercial and residential loans,” says Greene County Bancorp’s 2015 annual report. “As of this writing, Kingston has been our most successful branch opening ever in terms of deposits and loan volume.”

Bank of Greene County dominates its home market. Large or small, competitors have only relatively small deposit bases and small market share. “Big banks don’t have any interest in our market,” Gibson says.

Unlike Ulster Savings, The Bank of Greene County doesn’t sell its mortgages. It keeps them. “We take ’em for life,” he explains.

The bank’s holding company, listed on Nasdaq, is very thinly traded. Since 55 percent of the stock is held by insiders, the bank president says, the locals will keep control.

Gibson’s bank has recently housed some of the administrative offices for its commercial accounts (“the lending center”) in a bank building formerly occupied by the Catskill Savings Bank. That historic structure, up Catskill’s Main Street from bank headquarters, has an imposing, remarkably high arch-shaped lobby ceiling. The commercial business is doing very well these days, says Sean DuBois, a former Kingston banker who’s now vice president of commercial lending and business development.

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