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Opportunity through Challenge
By Robert Cera
Guest Columnist – Finance
The Business News

October, 2008 -In what has become the most challenging and turbulent financial market I have seen in my twenty- three years of business, I write today to provide the best advice possible in this environment: Stay calm and positive no matter how difficult or stressful the environment becomes.

I have recently been focusing on some inspirational quotes from great leaders who successfully managed through difficult situations. A key theme that resonates loudly is that success is predominantly determined by attitude and perseverance. One of my favorite quotes as applied to the current economic crisis is from Thomas Jefferson: “Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude.”

According to the Wisconsin Banker’s Association (WBA), Wisconsin-based companies and consumers are well-prepared to weather the storm due to our economic strengths and low exposure to more of the problematic issues at the national level. According to the FDIC (Federal Deposit Insurance Corporation), bank earnings for the first quarter of 2008 show that Wisconsin banks outperformed their peers nationally. That is due to the Wisconsin banking industry’s historic conservative lending culture, as well as to experienced management teams, solid industry capitalization, low loan losses and almost nonexistent subprime exposure.

But Wisconsin banks were not immune to the problems plaguing the U.S. banking industry in the second quarter of 2008, according to additional figures from the FDIC. Wisconsin commercial banks posted an 88 percent decline in profits compared to a year-ago, and the number of unprofitable Wisconsin institutions increased from 18 in the first quarter to 30 in the second quarter. Nationally, profits at FDIC-insured institutions were down 87 percent from the same period in 2007 and nearly 17 percent of U.S. banks reported losses. The FDIC said that the poor earnings numbers reflect an industry aggressively responding to challenging times by adding to reserves and charging off bad loans. WBA was quoted in the Milwaukee Journal Sentinel touting the industry’s deposit growth as proof that consumers “trust banks and FDIC insurance.” WBA also said the FDIC numbers “show that banking conditions in Wisconsin are tough but manageable.”

All FDIC-insured banks, such as Baylake Bank and many other local institutions, must meet high standards for financial strength and stability. The FDIC, with other federal and state regulatory agencies, regularly reviews the operations of insured banks to ensure these standards are met. FDIC insurance on bank deposits, including savings accounts, checking accounts, and certificates of deposit, are insured by the federal government up to $100,000 per account. Depending on how your accounts are titled, your coverage could be up to $2,000,000. Contact your bank or go to www.fdic.gov/edie/ for more information.

Our friends and neighbors are looking for information and solid financial advice to make the most informed decisions possible given the incredible amount of negative publicity that the U.S financial market crisis has generated. We recognize our own challenges, including working out of some local problem loans, and therefore are extremely sensitive and attentive to working with our customers as they navigate through a challenging environment. To put things in perspective, it helps to have a long-standing history such as that of Baylake Bank (f.k.a. Bank of Sturgeon Bay), which has overcome: the financial panic of 1893; a fire in 1895; the 1907 collapse of the fortune of a principal founder of the bank; the Great Depression; a 1932 reorganization that involved a ten-business-day “holiday” for the bank; times of prosperity & periods of rapid expansion; transitions through eight corporate presidents; occasions of natural internal strife throughout its entire history; the Savings & Loan crisis of the 1980s; and Y2K. Those were all great challenges that we successfully dealt with which ultimately provided the impetus for our organization to grow, change, and prosper over a one hundred and thirty-one year span.

Since being successful over long periods of time requires some objectivity to keep you steady when headlines tell you to be afraid, it’s important to find a point of stability. While a recession can create a sense of fear and self-preservation, by allowing it to degrade our confidence – in our own resources, our employer/ees, our community – we can unfortunately create a self-fulfilling prophecy that continues a downward spiral.

So what can you do, personally and professionally, to weather the storm? Be confident with hope and expectations for a successful future. “Recovery” and positive change will take time, but by working together with a sense of realistic optimism, we can all help each other ride this tide in history, to a new and better day. Keep the faith and remain steadfast in your conviction to work hard for your customers and community. Challenging times are often accompanied by real opportunities to change your business model and focus upon the things you do best.

Robert Cera is President and CEO of Baylake Corp. (OTC:BYLK.OB) and CEO of Baylake Bank. Baylake Corp., headquartered in Sturgeon Bay, Wisconsin, is a diversified, one-bank holding company with total assets of $1.1 billion. Baylake has 28 financial centers serving communities in central and northeast Wisconsin.

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