One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sun with newsworthy business leaders. Kenneth H. Trout is president and chief executive officer of Signet Bank Maryland, a subsidiary of Signet Banking Corp. of Richmond, Va.
Q. Signet Bank lost $5.9 million in the first quarter and made only a small profit of $779,000 in 1990. Is the worst over for the bank and how are you doing to stem the losses or the reduced earnings?
A. I would say we think the worst is behind us. I would suggest to you that we have probably hit the bottom, but the recovery is not as fast as we would like to see it. I haven't seen finalized numbers, but we've probably lost in Signet Maryland another million dollars in the second quarter, so our year-to-date number [loss] is probably $6.9 [million]. The kinds of things we're doing is we're simply looking at all the efficiencies we can possibly find within the organization. That relates to expense controls. That relates to downsizing an organization where it's necessary, flattening the management so that you don't have needless layers. I think we're being very aggressive in terms of the management of the foreclosed properties, and I think that's something we're going to have to do to be effective.
Q. You became president and chief executive officer of Signet Bank Maryland in January. Can you tell me what that position involves in a bank-holding company such as Signet and also what other positions you hold in the organization?
A. As president and CEO of the bank of Maryland, I'm effectively the spokesperson for the Maryland bank, and really I'm responsible on a day-to-day basis for the running of that bank. Specifically, our holding-company organization is formed along lines of business. That is to say, we are divided at a holding company level into five lines of business, and we manage the company in that fashion as opposed to geographically. I'm a senior executive vice president in the holding company responsible for the commercial line of business, which means, in addition to being responsible for commercial business in Maryland, I'm also responsible for that function in Washington as well as Virginia. That's sort of the difference in the organizations.
Q. In the commercial business, you're talking about loans to businesses, both large and small. Obviously, real estate has gone down the drain in a lot of ways. Is commercial lending doing well?
A. Commercial lending has been soft and I think that's because so much of the commercial lending business we do in this marketplace is related to the real estate industry. This marketplace is driven by, in my opinion, two or three different things. One of them would certainly be the real estate industry. Another would be . . . the construction industry, the equipment people who are part of that industry. Certainly the government, and none of those are doing particularly well at this point in time. And the economy in general has had a tough time on the commercial line of business. I see an improvement, and have seen one, since January. We have what we call an early warning system that we use within the bank. And that warning is simply the account officers, any time we see any form of deterioration in a relationship, primarily a loan relationship, obviously, we place it on a watch list, and we look at those relationships on a monthly basis in a team fashion to try and determine the best way to manage that relationship back to health. And what I see in that watch list, when I first came up here in September, and subsequently in January, that number was a pretty hefty page. And the watch list used to take all day to go through the credits and our action plans, etc. Today that meeting is now probably down to a half an hour. So, what I've really seen is a decrease, if you will, in the commercial pipeline of upcoming problems which I take as a very positive sign.
Q. As you well know, a lot of other companies such as Sears, General Electric, Ford, are essentially going into traditional banking business, such as credit cards and certificates of deposit. Can you tell me what other businesses Signet has been trying to get into to combat this, and what will Signet do if Congress broadens the reach of banks?