Magazine article Independent Banker

Turning It Around

Magazine article Independent Banker

Turning It Around

Article excerpt

Ken Holt boosts investment yields with new strategy and education

would you like a high return on your bank's investment portfolio? Ken Holt wanted it and got it. He raised his bank's investment yields by $13,400 for every $1 million invested.

As president and CEO of Union State Bank in Uniontown, Kan., Holt improved his bank's investment yield from 123 basis points below his high performance peers in 1993 to 11 basis points above his high performance peers in 1996 (see table below). In that three-year span, he boosted his bank's portfolio yield by 134 basis points in relation to his peers.

And, as Lee Chandler, Holt's IBAA Securities Corp. broker says, "It takes time to turn a ship or to improve a bank's portfolio safely. If you try to improve yields overnight, you might guess right, or you might guess wrong and wind up with a low-yielding portfolio for a long, long time. Unless, of course, your successor relieves you of the problem."

To begin at the beginning, Union State Bank was founded in 1901. Five Holt family members now represent the fourth generation of managers of this family-owned bank.

Toward the end of 1993, after assuming primary responsibility for the bank's investment portfolio, Holt contacted IBAA Securities with a simple objective. He wanted his portfolio to work harder. He wanted higher yields while maintaining an adequate level of liquidity and a reasonable level of interest rate risk.

With that in mind, the IBAA Securities' staff of consulting Certified Public Accountants prepared a study of Union State Bank that included its current portfolio structure, liquidity needs, interest-rate risk profile and peer comparisons. With the study as a point of departure, Holt worked with the consulting staff and his IBAA Securities representative to develop a plan that, over time, would reflect his management style and would meet Union State's investment objectives. …

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