Bank Doom: An American CEO's Reflection

Author: Richard J. Jacobus (USA)
Translator: Xue Tao et al.
Publisher:
Publish Date: 1999-09-01
Features: In 1977, it was the fastest-growing financial institution in the United States. On February 14, 1986, due to mismanagement, it declared bankruptcy, causing a huge uproar nationwide. It was the seventh-largest bank failure in U.S. history. The author, the last president of Park Bank, recounts his personal experience of being appointed in a crisis, leading the bank's management to improve operations, plug loopholes, mend relationships, and strive to save the bank's fate, ultimately in vain. Narrowly speaking, Bankruptcy is a book about corporate bankruptcy, but broadly speaking, it tells how to lead a company through the most difficult times, overcome crises, navigate through dark periods, and find a way out when at one's wit's end. Bankruptcy provides a detailed review of the inner workings of Park Bank, conducts an in-depth study of contemporary business management ideas, and meticulously analyzes and compares the two, thereby integrating historical lessons with modern management thinking for a comprehensive understanding and reflection.
Excerpt: The leadership of the board, but encountered strong resistance like an iron curtain. In early 1985, a fierce struggle broke out within the board. This time, I finally convinced the Park Bank board. As a result, John Killeen resigned from his positions as Chairman and President of Park Bank. This was the most difficult thing I had ever done in my career. The intense debates between me and John Killeen, as well as later with the Park Bank board, were never disclosed to the media. The St. Petersburg Times reported the facts, stating, "Personal financial issues left Killeen unable to fulfill his duties at the bank. Meanwhile, he and Jacobus had disagreements over the severity of the bank's problems and how to address them. Several directors claimed that in May of last year, Killeen severed all ties with the bank, and Jacobus subsequently took full control."
When I assumed the presidency, the issues of lending and growth at Park Bank still seemed solvable. I still hoped that my role as president would only be temporary. My goal was to stabilize the bank's situation and seek a professional banker to take over as president. Unfortunately, Park Bank was already mired in its "black hole," and its rapid decline was hard to stop. The likelihood of finding a new president to replace him was also slim. The bank's viability was also in doubt. February 14, 1986, was a Friday. We held a heart-wrenching ceremony in the bank's lobby. After the teller line closed for the weekend as usual, I sent Park Bank's charter to the Federal Deposit Insurance Corporation and the Florida Department of Banking. The Park Bank employees, who had been working tirelessly to save the bank over the past few months, stood by, their eyes brimming with tears. Everyone was helpless. Park Bank's assets had been exhausted. It was like a nightmare where limbs collapsed after the engine stopped abruptly in outer space.
A banner titled "Winners and Losers" hung on my wall, reading: "Winners always charge forward to break through obstacles, while losers are always bound by difficulties. Winners always have grand ambitions, while losers are always in the habit of making excuses. Winners take the initiative and say, 'I'll help you,' while losers timidly say, 'This isn't my job.' Winners always find answers in every problem, while losers always find problems in every answer. Winners are skilled at spotting hope in adversity, while losers always focus on despair and ignore hope. Winners say, 'Although it's difficult, it's not hopeless,' while losers say, 'Perhaps there is hope, but it's too hard.' This poem about winners and losers had long hung on the wall of Park Bank's headquarters. It perfectly became a prophecy of the bank's rise and fall."
Before its collapse, Park Bank had a vibrant history and was once a topic in the business world. It was the fastest-growing mutual bank in Florida and had once been the fastest-growing bank in the United States. In its promotional materials for the competition, the bank spoke with great pride of its excellence and discussed the ambitious goals it pursued and its to achieve them. Despite its arrogance, Park Bank still had a strong corporate spirit.
Afterword: Work is also an achievement—we will leave the judgment to time. —Albert Hubbard
In June 1988, I received a call from my lawyer, Charles Ruff. He informed me that the plaintiff and defendant lawyers in the shareholder lawsuit and the Federal Deposit Insurance Corporation lawsuit had reached an agreement on the unresolved legal disputes with the Park directors and executives. It took 13 months to prepare the documents and obtain approval from the Federal Deposit Insurance Corporation and other involved institutions for various details. Finally, in the summer of 1989, the last few clauses of the agreement were completed, and the lawsuit against the executives and directors was finally settled. Before the agreement was reached, more than half of the insurance proceeds for the involved directors and executives were used to pay legal fees. To facilitate the agreement, our insurer (who, like us, was eager to close the case) agreed to break policy restrictions and provide legal expenses. The six financially capable directors, including myself, covered the remaining legal fees. The entire settlement was somewhat credible, but the money the plaintiffs and their lawyers received was far less than the legal expenses paid by the insurer for the defending directors and executives.
When Jeff Smith, a reporter from The Tampa Forum, asked me whether I thought the settlement agreement exonerated me and the board, I replied that there was no innocence in the lawsuit. I was 58 years old when Park collapsed. I was 54. I didn't want to continue the lawsuit until I was 65, until I wanted to prove something—which, if anything, could be proven. Former directors Frank Bias, Bill Zamp, Wayne Vierny, and Phil Vierny had retired. Dr. Peter Dawson continued to solidify his international reputation with his dental research seminars and the latest revision of his theory of reconstructive dentistry. I learned that he had added new insights (based on Park's experience) to his recent speeches. Gary Froud's insurance business had once again become successful nationwide. Lloyd Williams had resumed his real estate business in markets outside of Florida. Harold Kelly, Park's last president and chairman, was also selling insurance and investing. Jim Matthews, a former senior loan officer at Park Bank, was serving his prison sentence. John Killeen continued to work as a real estate consultant. My original law firm had been downsized after restructuring. I returned to St. Petersburg and resumed my legal career—with greater wisdom and realism in evaluating things, the ability to empathize and persuade others more effectively, and deeper insight and eloquence when giving advice. I could also cite numerous examples to persuade others when giving advice. At the same time, I was writing and speaking about crisis management and crisis leadership, and I was writing another book.
After fully taking over Park Bank's deposits, Chase Bank moved its Florida headquarters to Tampa. Some employees of Park Bank continued to work for Chase. In November 1990, Chase appointed a new director for its Florida operations and announced expansion plans, claiming that Florida would become one of the most attractive states for Chase's business. Similarly, the morning sun, symbolizing harvest with its orange-yellow hue, once again pierced through the thick clouds, outlining the beautiful silhouette of the mangroves behind our house on the Tampa beach.
December 15, 1990