Book IV
Sue sat in the front row of an audience inside the hotel ballroom that Prominent Bank had rented to host a meeting for its employees. Randall Edwards, the bank’s CEO, had just announced he was stepping down and had introduced Ben Strauss as his successor. No one looked at Edwards. Everyone’s attention centered on Strauss. He wore a fitted, dark gray suit with a red silk tie and Italian loafers.
The attire was modestly trendy but appropriately traditional and reflected an unconventional sense of wealth and power. The lady sitting next to Sue commented on his good looxks.
Strauss had approached Prominent Bank’s board of directors nine months earlier with a proposal to transform the bank into a financial institution with unlimited growth potential. Despite being virtually unknown in the banking industry and describing himself as a banking entrepreneur—an oxymoron that should have tipped them off—the directors couldn’t resist him, and they wanted Prominent Bank to match or exceed the performance of other banks in its peer group that had posted high, double-digit returns on shareholder equity.
With help from directors who then served on the bank’s board, Strauss and his investors had acquired control through a reverse merger using a small community bank in the Texas Hill Country they had purchased the year before. Although Prominent Bank was substantially larger, they traded their community bank stock for enough Prominent Bank stock to control its board of directors, and at the end of a series of complex, contemporaneous legal transactions, the newly constituted board voted to merge the two banks and elected Strauss chairperson of the board and CEO of the bank.
Strauss commanded everyone’s attention when he took the podium. He looked across the vast room but said nothing. For a long moment he stood silently and surveyed all who gathered before him. With a booming voice, he then declared, “We’re going to triple the size of this bank in two years!”
Applause erupted. He threw his hands into the air to encourage celebration.
When the applause finally subsided, he shouted out a choreographed question. It echoed off the walls. “Who has the best mortgage-origination business in this state?”
Though they were anxious to please, the employees were unsure of the answer, and laughter sputtered among them. Strauss watched while the tension built. Finally he called out for the executive who managed the bank’s mortgage lending division. “Where’s Francis Butler?” She jumped out of her chair, walked toward him, and waved. He waved back. “Frannie! Who has the best mortgage origination business in Texas?”
She screamed, “We do!”
He shouted a parallel question to the employees and again threw his hands high into the air to encourage them. “Who has the best network of correspondent banks in the hottest parts of the country?”
They roared back. “We do!”
“Is there anyone who services mortgage loans better than us?”
The crowd roared again. “No!”
He pumped his fist and shouted another question. “So, what does that make us?”
This time, however, the room fell silent. Strauss cupped his hand to his ear and pretended he expected the employees to answer, but as he had intended, the question confounded them, and laughter sputtered again. He smiled and let the tension build once more. Then he supplied the answer. “That, my friends, makes us the darlings of the capital markets.”