Academic journal article ABA Banking Journal

Growth for Its Own Sake

Academic journal article ABA Banking Journal

Growth for Its Own Sake

Article excerpt

IT CAN BE FASHIONABLE TO declare that growth for its own sake in business is misguided. And that quality of earnings, productivity, consistency are more important. Those things are important, and unbridled or unmanaged growth can be harmful. But when you get right down to it, every business must grow.

Growth can come in a dozen ways, of course, but what got us thinking about this subject was a comment made at last month's ABA Community Bankers Conference:

"The single most important question for a strategic plan to address is, 'Where are future revenue and income growth going to come from?"'

The statement was made by Cass Bettinger, well-known consultant and president of Cass Bettinger & Associates, Salt Lake City. Growth is an imperative to avoid falling behind on return on equity, he said. Further, while you can lose the battle because of inflated costs, you can't win by cutting costs. You can only win by increasing revenue.

The session at which he was speaking focused on strategic planning, and the two bankers on his panel described how they set specific asset-size goals to be achieved by specific dates.

One of the bankers, Earl McVicker, CEO of Central Bank and Trust, Hutchinson, Kan., realized he had to expand beyond his two existing markets, which were slow-growth areas. But first he set growth goals in his traditional markets and involved all employees in reaching them, thus helping to generate the capital he used later to move into a faster growing market through an acquisition.

In the special supplement accompanying this issue, you can read how Commerce Bancorp of Cherry Hill, N.J., fuels its growth engine by opening branches relentlessly, which gave it deposit growth of 32% last year. …

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