Matt’s good on the long climbs,” says a close friend of Matt Williams, who rides mountain bikes with him on the hilly terrain south of Gothenburg, Neb. The friend attributes that to Williams’ years of running almost every day since he was a high school track star. A few years ago, a bad knee forced him to give up running, so he took up cycling, and pursues that with the same competitive zest that he does with everything he puts his hand to.
Being good on a long climb is an ideal attribute for the leaders of the nation’s largest banking trade group. Although the industry faces new challenges seemingly every day, the resolution of these problems is usually a long slog requiring determination and a lot of hard work. Williams, whose term as ABA chairman begins with his election at the association’s Annual Convention this month, understands this well. He’s been part of the ABA leadership team for five years already. He also understands the need to move quickly at times—sort of like being a sprinter and a marathoner, of which he’s done both.
People who know the fourth-generation banker, chairman and president of Gothenburg State Bank, say that he has the ability, much like his father, Robert, to look on problems as opportunities.
Nothing makes this point more strongly than the ongoing, multi-year community development effort that’s helping Gothenburg draw its young people back home.
Four Fortune 500 companies have substantial operations in the farm community of 3,800—not all of them agriculturally related. Williams does not claim credit for all this. But others will tell you that he has been instrumental in local development efforts, devoting up to 40% of his time to it some years.
Some may feel that time would be better spent on behalf of the bank’s shareholders, by focusing more on how to grow the bank. But for Williams, the two things are one and the same. Growth for Gothenburg State Bank, currently just under $120 million in assets, comes from the growth of its community. The bank has only two locations, and Williams has deliberately not set up shop in fast-growing communities far afield from Gothenburg. He has chosen instead to grow his own market, and the bank has grown along with it.
Deep roots in deep soil
Gothenburg is situated about in the middle of Nebraska, two-and-a-half hours west of Lincoln in the Platte River valley. Before the city was founded in 1882, the Oregon Trail wound through the area, as did the route of the Pony Express. Named after Gothenburg, Sweden, the city has been a center of agriculture from the start, with corn and soybeans the dominant crops, along with cattle ranching.
In addition to its rich soil and tall prairie grass, Gothenburg (and much of the state) sits atop the vast Ogallala Aquifer. That, plus a network of irrigation canals and reservoirs built in the 1930s and 1940s, have insulated the region’s crops from this year’s drought.
Matt Williams’ great-grandfather, a Pennsylvania coal miner, came west for health reasons in the last part of the 19th century and founded two Gothenburg institutions that survive to this day under family control: the 96 Ranch and the Gothenburg State Bank; the bank was founded in 1902. Another local institution, the Presbyterian Church, resulted, in part, from a Williams family member’s vision—in this case, Matt Williams’ great-grandmother. She and five other women organized the formation and building of the church in 1904. It has been a big part of the family’s life ever since.
A lifelong lesson
Despite having a bank in the family, it was farming that shaped Matt Williams’ work ethic. Even though his father was the bank’s president, he also managed the ranch, where young Williams spent many summers and weekends working. He hauled hay, worked cattle, built and mended fences, and did a host of other farm chores.
“You worked no matter what the weather,” he recalls. “It didn’t matter if it was 100 degrees, because the job had to be done.”
One summer, when he was about 15, Williams was working on a new bale wagon with the farm’s foreman. After a stint driving, it was his turn to pile bales on the wagon. He tried to keep the pace set by the foreman, but he realized he couldn’t do it. Mortified, he called “time out.” As he says, he hadn’t been prepared for the job—either physically or in terms of knowing the proper techniques—and he vowed not to let that happen again.
“It taught me a lot about what you have to do to be prepared,” he says. Since then, Williams has kept himself in shape physically by running (and, now, cycling), and he also makes sure that whatever he undertakes—be it an ABA speech or a visit to a corporate prospect for the community—he is prepared.
Life imitates art in Gothenburg
Although it’s almost a cliché to say it, nevertheless it’s true that Matt Williams has lived a real-life Wonderful Life. No angels have approached him (at least not that he’s mentioned), but early in life he was forced to choose between the career he really wanted and returning to his hometown to help out at the family bank, much as in the movie, when Jimmy Stewart had to stay behind to run the Bailey Bros. Building & Loan while his younger brother went off to war and fame.
While an undergraduate at the University of Nebraska in Lincoln, it was law, not banking or agriculture, that most interested Williams. He did very well in law school, inspired by an uncle who was a noted Washington tax attorney. At UNL, he met and married his wife, Sue, a nursing student who supported him through law school. The two looked forward to moving East, where Williams had opportunities to work for large law firms.
Life had other ideas. Between Williams’ junior and senior years of law school, his father died of cancer at 56. The family, most of whom were involved in the farming side of the family business, asked Matt if he would come back to help run the bank. That was in 1973 and he was just 24.
It was a blow in many ways. But the sense of duty and responsibility to the family outweighed both his desire to pursue the law and the young couple’s natural wish to see the world beyond a small town. After much discussion, they decided to look on it as an opportunity and agreed to come back after he finished law school.
Almost 40 years later, there are no regrets. In fact, Williams really can’t imagine living anywhere else or doing another job. Both the bank and the community have benefited from the couple’s decision to come back.
For her part, Sue put her RN training to good use, bringing Lamaze childbirth classes to Gothenburg and working at a cardiac rehab facility before staying home to raise the couple’s two children, Robert and Julie.
Though never used formally, Williams’ legal training has been useful. “It did teach me a method of critical thinking—how to analyze issues and negotiate solutions—that I’ve used all my life since then,” he says.
It also helped develop good communication skills, notes Nebraska Bankers Association President George Beattie. Williams, NBA chairman in 2003-4, usually speaks from points and stands away from the podium.
The ag crisis—never again
Like many other Midwestern institutions, Gothenburg State Bank got caught up in the lending mistakes of the agricultural crisis of the 1980s. “As a bank and as an industry, we should not have let it get as far as it did,” says Williams. “The problem was, to some degree, everybody was doing it. If we didn’t make the loan, another bank would. I would never say that to justify our actions, however, because in your own bank you are the custodian—you have to make the decisions.”
During the crisis, farmers were going broke and that hurt the rest of the local business community as well as the bank. With his legal training, you might have expected Williams to stick to the letter of the contract in dealing with troubled borrowers. Quite the contrary.
Duane Oliver, a board member who recently retired as the bank’s operations officer, says that under Williams’ direction, the bank worked with struggling farmers, giving them as much leeway as possible and treating them with dignity. As a result, over the course of the crisis, only two farm customers filed for bankruptcy—far fewer than many other banks experienced.
The difficult episode left a lasting impression. “It changed me,” says Williams, “and it changed our management team. You became blood brothers. The oath you swore was, ‘We’re never going to let this happen to our bank again’.”
Fast-forward to 2012.
Over the past decade, agriculture has enjoyed a string of very profitable years. Land prices in Nebraska increased 40% last year, and people have raised the specter of another bubble. As Williams testified in Congress earlier this year, the situation now is different from the 1980s. Farmers have much less debt, and would be better able to withstand a sharp downturn in land values. However, Williams also is adamant that bankers have to carefully monitor the situation. “We can’t ignore the possibility that this could be a bubble and be sure we are positioned to withstand it.”
Work hard; play hard
Lest you get the impression that Matt Williams, while he may be a good guy, sounds a little bit like, well, “George Bailey” (did we mention that he sings in his church choir?), his friends and family—and Williams himself—will disabuse you of that notion. It’s true that the years, greater responsibilities, and broken bones have slowed him down a bit. But not much. It was just this past February that he broke his collarbone riding his mountain bike through a patch of mud and ice one morning.
Over the years, much of Williams’ energy when not working has been focused on Jeffrey Lake, one of the irrigation reservoirs outside town where his family has had a cabin for many years. The accompanying photo of him, his wife, and grandchildren on a jet ski (p. 38) doesn’t do justice to the adventures he and his friends have had. Years ago, they built a water-ski jump out of barrels and plywood and then launched themselves off it behind a ski boat. There also was a kite-skiing experiment, among other enterprises.
In a special category is University of Nebraska football. Williams’ son Robert describes his dad as “a Husker fan to the nth degree.” The family has season tickets, which are probably worth more than Apple stock, considering Husker games have been sold out since 1961.
They work hard and play hard on the Great Plains. They also take their music seriously—at least the Williams family always has. Matt’s sister, Jan, is director of the church choir, as were both their father and mother before her. Matt, who led the church children’s choir for years—now led by his daughter, Julie—played trombone in high school and sang and played guitar in a band. He still loves to sing and has a marvelous tenor voice, which he also uses to good effect in the bank’s radio commercials.
It’s people that enable Gothenburg State Bank to excel, Williams firmly believes. “We never view ourselves as having limited resources,” he says in tribute to the 28 people the bank employs. In fact his ABA service has been made possible by these employees stepping up to do more. He cites three in particular who have taken on additional executive responsibilities: his long-time executive secretary, Ruthie Franzen; Luke Rickertsen, senior ag lender, board member and Williams’ son-in-law; and Mike Hilderbrand, senior lender and board member.
The staff, plus the technology choices community banks now have, has also enabled GSB to stay up with customer expectations. The bank’s slogan is, “Still pioneering.” It connects with the bank’s heritage and with the Pony Express logo it uses. But it means much more.
“It’s a slogan we challenge ourselves to live up to,” says Williams, adding, “No customer should have to take a step backwards with products or services to do business with us.”
The bank has made a major commitment to technology with online banking, mobile banking, and a recently launched Facebook page. It is rolling out mobile check capture this fall. Not keeping up with technology is slow death for a bank, says Williams.
Because 75% of GSB’s loans are agricultural—either direct or ag real estate-related—the bank’s No. 1 ag-loan competitor is Farm Credit. With an advantage resulting from the implicit government guarantee of its bonds, and its tax-advantaged structure, Farm Credit is tough to match on rates. To compete, GSB relies as much as possible on its close knowledge of a customer’s business, and on its expertise in financial analysis.
The approach works. Through the second quarter, the subchapter S bank’s return on assets was 1.78% and its return on equity 14.05%. Both figures were down slightly from the previous year, due largely to a lower net interest margin and lower noninterest income—both resulting from the impact of government policies. Net charge-offs were just 0.03% of total loans. Core capital stood at 12.11%.
As important, if not more so, than core capital is the bank’s core values. Williams brings them up frequently at the bank’s Friday all-staff meetings. They are:
• “Recognize the importance of people—customers and employees. Together we can accomplish much.”
• “Conduct ourselves with a sense of responsibility and an unwavering commitment to doing things right. The ethical line is a bright yellow line, not a gray one.”
• “Strive to reach our potential—we don’t know how high we can reach.”
• “We are the custodians for our business, our community, our families, and, most importantly, ourselves. Custodians take responsibility. They don’t quit, and they don’t blame.”
Williams’ son, Robert, a lawyer in Omaha, who is a GSB director, says he thinks the bank’s success is the result of doing things the right way.
The chairman’s gavel
Matt Williams recognizes that ABA leadership doesn’t really have a starting and ending point because each chairman overlaps with new leaders joining the team as others roll off. Still, each chairman has his or her priorities, and the same values just described will guide Williams in his role as ABA chairman in the coming year.
Which issues are most critical varies by each member’s situation, says Williams. “If your bank is struggling on the low side of the capital bar right now, then Basel III and Dodd-Frank’s higher capital requirements are absolutely critical.” For all banks, the piling on of additional rules and regulations under Dodd-Frank is vitally important. The focus on those challenges, as well as the effort to rebuild relationships with regulators, will continue as ABA priorities during Williams’ term.
The fact that ABA covers all this and much more was a key reason why Williams got involved with the association.
“Matt was convinced ABA was the way to take care of banking; they had the power in Washington,” observes Duane Oliver. Says Williams: “I just felt that ABA makes a difference, and I wanted to be a part of that.”
The promise of financial education
Beyond the issues described above, Williams has a passion for financial education and already has been working with ABA’s executive staff on several initiatives.
“I think it’s a critical issue for the country,” he says. “As a banker, I have experienced situations where a lack of financial knowledge has damaged peoples’ lives. As an industry, it would be great if we could step up and assume a leadership role with financial education. Every bank, regardless of size, can get involved.”
As George Beattie observed about Williams, “He doesn’t ask you to do anything he wouldn’t do himself.” So, Gothenburg State Bank has made a significant commitment of time and dollars to bring a financial education curriculum to local schools, among other steps.
Williams believes increased support of financial education by banks could help reestablish a concept that has been lost by policymakers: that banking is critical to the economic survival of the country. “I believe we can change how banking and bankers are viewed.”
What needs to be done
Given the range, number, and complexity of issues the ABA wrestles with, is Williams daunted by the challenge? “Daunted” is not in his lexicon.
With the right people, he believes, you can tackle anything—“It’s not the size of the problem, it’s the size of the minds and hearts of the people who are trying to solve it that make the difference.”
On that score, he says the industry is well-equipped with the talented professional staff at ABA and the volunteer banker leaders that direct that staff and participate on committees and task forces.
But it will take more than that to move the needle, in Williams’ view. It will take a sense of responsibility from a far greater percentage of the industry’s ranks. He acknowledges the difficulties faced by many banks—sometimes from things not of their own doing.
But giving in to the difficulties by calling it quits or by pointing fingers will not change anything, he says. To Williams, the only effective response to difficulties is to take responsibility for the future of the industry and to stand up for banking.
“It’s our responsibility, as custodians of our industry, to work to repair relationships with regulators; to support BankPAC; to volunteer for association committees and task forces; to help improve the level of financial education; and to tell the stories of the good things bankers do across the country. We can’t depend on anybody else doing that.
“One more thing,” he adds: “Recruit another banker to do this with you. It is no longer acceptable to let someone else carry the water.”
Matt Williams’ other job
The crown jewel was Frito-Lay. It took three years for the Gothenburg, Neb., “sales team” to bring it about, but now one of two Frito-Lay corn-gathering facilities in the United States is based in this small city on the Great Plains.
Local banker Matt Williams, president of Gothenburg State Bank, was a driving force in making this happen. He flew to Frito-Lay headquarters in Plano, Texas, with other local representatives to make a crucial presentation.
Three other Fortune 500 businesses now have operations in the city of 3,800—recruited by Gothenburg’s development team.
“Like many agricultural communities, Gothenburg suffered during the farm crisis of the 1980s,” Williams relates. “A group of citizens made a commitment to be proactive to ensure that Gothenburg had a future. They didn’t just throw up their hands.” He was one of them.
As always, funding was needed. The group worked with the city to get an economic development sales tax on the ballot, which passed by just 22 votes. With the proceeds, the group turned their attention to bringing in companies to create jobs—the top priority. Their first success was Baldwin Filters, in 1990, which brought 200 jobs.
After Baldwin came Frito-Lay, Monsanto’s Water Utilization Learning Center, and others. In all, more than $60 million has been invested by companies coming into Gothenburg, and 550 new jobs have been added. Also, the tax base has grown from $39 million in 1990 to more than $183 million today, and the city’s population has grown 9%.
Much more was involved beyond recruiting new businesses. The companies—and their employees—needed housing, quality health care and educational facilities, plus recreational opportunities. All this was tackled, and the result was an upward spiral of growth and improvement. Williams and others, for example, were instrumental in working with the U.S. Department of Agriculture to finance a new critical-care facility. Likewise, they helped develop the links-style Wild Horse Golf Club, which now attracts 10,000 outside golf rounds a year.
In all these things, the community worked hard to get many people involved so they would have ownership in the broadest sense.
“We have always taken the approach that projects shouldn’t be funded only by people who can write large checks,” says Williams.
That kind of broad involvement combined with can-do leadership, made all the difference. Williams believes elements of this approach could prove useful to the challenges banks face.