The Road Best Traveled

0214_RoadLess_770

John Buhrmaster, ICBA’s incoming chairman, walks the community banking walk in upstate New York

By Ed Avis and Michael Blankenheim

1st National Bank of Scotia
Headquarters: Scotia, N.Y.
Bank assets: $425 million
Retail locations: 10
Employees: 140
Founded: 1923
Website: www.firstscotia.com
Notable fact: 35 members of the
Buhrmaster family are shareholders/owners of 1st National Bank of Scotia

Joseph Merli needed help. His 93-year-old father had just passed away, leaving him with medical bills, credit card debt and back taxes that he couldn’t pay. He tried getting a mortgage on his father’s house, but every bank he approached turned him down.

“Since I was not living in the house, even though it was rented, no bank would give me a mortgage,” remembers Merli, owner of a 71-year-old family-run wagon and pushcart manufacturing company in upstate New York.

Then he had the fortune to meet John Buhrmaster, president of 1st National Bank of Scotia in Scotia, N.Y., at a local auction.

“I remember asking John what he thought about banks not helping me out, and he stopped, turned to me and said, ‘Our bank would be happy to give you a mortgage.’ I set up an appointment to meet with him, and two days later I received a check for $30,000.

“John paid off all my credit card balances for my dad’s health care needs and the back taxes. I paid 1st National Bank of Scotia with my rent income and the mortgage was paid off in full in two years.”

That kind of customer relationship illustrates Buhrmaster’s belief that a community bank is supposed to be there for people who are facing major challenges in their lives.

John H. Buhrmaster
President
1st National Bank of Scotia
Scotia, N.Y.

Current and Past ICBA Leadership Service

  • Executive Committee, member
    since 2012
  • Federal Delegate Board,
    chairman
  • Board of Directors, member
  • Policy Development
    Committee, member
  • Strategic Planning Committee,
    member
  • Congressional Affairs
    Committee, member
  • Technology and Payments
    Committee, chairman
  • Membership Committee,
    chairman
  • ICBA Bancard, board of
    directors, chairman
  • ICBA TCM Bank, board of
    directors

Other Industry Leadership Service

  • Independent Bankers
    Association of New York State,
    treasurer and past vice
    chairman
  • Fidelity National Information
    Systems advisory committee,
    member and past chairman

Local Community Service

  • Niskayuna Central School
    District, elected school board
    member
  • Scotia Rotary Club, member
  • New York state high school
    track official
  • Boy Scout Troop 3036,
    assistant scoutmaster and past cubmaster
  • Scotia United Methodist
    Church, member and past
    finance committee chair
  • Galway Lake Sailing Club,
    member and past commodore
  • Niskayuna Soccer Club, past
    treasurer and assistant coach
  • Niskayuna Baseball League,
    past assistant coach

Buhrmaster, 49, who begins serving a yearlong term as ICBA’s volunteer chairman this month, in various ways has walked the walk as a hands-on, conscientious Main Street community banker throughout his life in upstate New York.

“A community bank is the anchor of the community,” Buhrmaster says of his purpose-driven role at 1st National Bank of Scotia and in the communities the $425 million-asset community bank serves. “It’s where people come to when they’re facing life’s biggest decisions—when they want to talk to someone who understands what they’re going through, when they need someone who can help them meet their dreams and solve their problems.”

Relationships, not transactions

Buhrmaster, who has been president of 1st National Bank of Scotia since 2005, carries a deep, personal understanding of the special community role of local independent banks. For years in his community and with ICBA, he has helped tell the story, through both his words and deeds, about how community banks are built on trusted relationships, not transactions—and that often those relationships drive the decisions at the nation’s community banks.

Scott Stevens remembers one of those decisions. Stevens serves on 1st National’s board of directors and as president of Scotia-based Dimension Fabricators, a small but highly productive manufacturing company in Scotia that makes concrete reinforcing steel products. During a recent 1st National board meeting he and his colleagues discussed a financing proposal for a local apartment complex that did not seem to fit the bank’s typical metrics of approved credits.

“We were a little unsure about this particular proposal,” Stevens remembers. “Then John stepped up and said, ‘Guys, you have to understand that this is what makes community banks better than the big banks. We are going to lend this money on the strength of the borrowers, not just on the potential for the loan.’”

1st National approved the loan, and the borrowers have met their obligations faithfully.

“A community bank is the anchor of the community. It’s where people come to when they’re facing their life’s biggest decisions.”
—John Buhrmaster, ICBA incoming chairman

Mike Chrys, a developer and civil engineer, tells a similar story about Buhrmaster and 1st National. Chrys first worked with Buhrmaster’s grandfather, Kenneth. He remembers meeting the senior Buhrmaster in 1984 about obtaining financing to build a medical building on an undeveloped parcel of land.

“I was 29 years old, and this was my first commercial construction project,” he recounts. “No one else would have even bothered to talk to me. We talked for about an hour, and then Ken stood up, shook my hand and said, ‘I think we can help you.’”

Chrys received the financing, and has financed many other projects through 1st National since. “This is an embracing community bank that really cares and has helped the commerce of the communities they are in. I could not have been as successful as I am without them.”

Buhrmaster and 1st National have proven themselves during times of crisis as well. When Wall Street’s credit markets froze up in 2008, many of the community bank’s midsize business customers suddenly had their credit cards and small lines of credit shut down by the big banks. 1st National snapped into action to meet their needs.

“We had several dozen people come in within a few days who needed help,” Buhrmaster says. “We had a very small business card portfolio, but we ramped that up within a couple of days. We gained a lot of customers in that period. We gained a lot of loyalty.”

After musing a bit, Diane Faubion, 1st National’s senior vice president, sums up the 91-year-old community bank’s lending culture and principles this way: “I think ‘creativity with financing’ is the best way to say it. We are conservative, but we like to think outside the box.

“We try to see how we can make things work, rather than look for reasons for them not to work.”

More than lending

Being a productive community banker means much more than lending money, of course. Buhrmaster sits on the Niskayuna Board of Education, serves as a New York state high school track official and as assistant scoutmaster for Boy Scout Troop 3036, and is a member of Scotia Rotary.

“We are the heart of the community and we provide leadership for some of the many worthwhile ventures in our community,” explains Buhrmaster, whose gentle, soft-spoken demeanor contrasts with his physical six-foot-tall bearing. “Someone needs a treasurer, they ask a community banker. Someone needs money raised, they ask a community banker. Someone needs a school board member, they ask a community banker.”

One of the largest causes 1st National actively supports is financial literacy. The bank partners with the Scotia-Glenville Children’s Museum to bring a financial literacy program to elementary schools throughout the communities served by the bank’s 10 retail locations. The program gives the kids small cardboard piggybanks to construct that have three compartments—one for saving, one for spending and one for sharing with others.

“John is a big proponent of financial literacy at all levels,” Faubion says. “We feel if you can start them young, that’s the time to really get kids interested in saving money.”

During his year as ICBA chairman, Buhrmaster hopes to increase awareness among community banks about the pivotal role they can play in increasing financial literacy. “I believe the financial crisis in 2008 was caused by greed, but greed can’t exist without a naïve public waiting to be taken advantage of,” he explains. “It is imperative that we find a way to educate the people so that the next crisis is not caused because people are financially naïve.”

ICBA provides financial literacy tools for this effort, but Buhrmaster says the responsibility ultimately falls on community banks themselves to help empower the industry’s current and next generation of customers financially. “Every community bank should talk to their schools and ask, ‘What can I do to help make your students be financially literate when they graduate?’”

Out in the community

Buhrmaster is known as the kind of leader who hires good people and lets them do their jobs.

Susan Salvaggio is superintendent of the local Niskayuna Central School District and sees Buhrmaster’s leadership in action. “As superintendent I work under the board, so not only do I see John’s leadership, but I experience it as well,” she says. “His leadership style is to ask questions, gather information and then allow people to do their work.”

Lou Buhrmaster says his son’s leadership style centers on a thorough knowledge of the situation. “He can delegate, but he makes sure he knows what he’s talking about and makes sure the people know that he knows what he’s talking about.”

When John needs to make a decision, he works to see things from the perspective of those affected, Faubion says. An example of that leadership style was displayed recently when 1st National increased fees on its checking accounts. Faubion says Buhrmaster realized the new fees would disproportionately affect nonprofit organizations with checking accounts, so the bank created a new type of account for them, without those fees.

“He always tries to put himself in their shoes and look at things from their viewpoint,” Faubion says.
Buhrmaster’s empathetic treatment of the people around him extends to his extensive volunteer work. Dave Sammons, vice president of Capital District Track and Field Officials, the organization that certifies track and field officials in that part of New York state, remembers working with Buhrmaster on busy Saturday meets.

“John is really good with people, very patient. You would never know he is as important a person as he is. He comes across as a common Joe,” Sammons says. “And he works well with kids. At these meets the kids are often hyped up and the adrenaline is flowing, and he patiently helps them out and gets the job done.”

Lisa O’Connor, chair of the troop committee of Boy Scout Troop 3036, also has observed Buhrmaster’s patient and considerate work with young people. “The boys can relate well to him,” she says. “He’s got an insanely crazy schedule, but when he can go on a campout with us I breathe a sigh of relief, because I know he can rein the kids in if need be but also that they will have a good time with him.”

His industry leadership

A few years back, membership in the Independent Bankers Association of New York State was dwindling. John Buhrmaster stepped in and played a major role in turning that trend around, says Robert M. Fisher, president of Tioga State Bank, which serves southern New York state.

“There’s no doubt about it, John’s leadership role was instrumental in breathing new life into our state association,” Fisher recalls.

Many times Fisher saw Buhrmaster display a deep and personal passion for community banking. Over the years he saw Buhrmaster help tackle head on industry issues such as excessive credit union subsidies to challenging payment card issues, including ICBA’s opposition to the Durbin interchange price-fixing legislation.

“He’s never willing to back away from an issue he believes in,” Fisher says.

Viveca Ware, ICBA executive vice president for regulatory policy, vividly remembers the first time she saw Buhrmaster in action as a member of ICBA’s Payments and Technology Committee. “He came well prepared,” she recalls. “He asked carefully formulated questions, and he shined as a strong advocate for community banking from that very first time he participated in an ICBA meeting.”

Buhrmaster went on to become vice chairman and then chairman of the committee, where he helped lead the way on a long agenda of difficult issues that included payment system access, the role of the Federal Reserve System, the interchange battle and cybersecurity.

“He knows his subject matter,” Ware says. “He has the ability to drill down into a given topic, learn as much as he can about it and then formulate a position that’s appropriate for the ICBA membership. He’s a superb ambassador for community banking.”

“We are the heart of the community, and we provide leadership for some of the many worthwhile ventures in our community.”
—John Buhrmaster, ICBA incoming chairman

Sam Vallandingham, president of the First State Bank in Barboursville, W.Va., served with Buhrmaster on ICBA’s Payment and Technology Committee and on the board of directors of ICBA Bancard, the association’s electronic payments services corporation. Buhrmaster later served as chairman of both panels, and Vallandingham says his friend from upstate New York knew how to bring others on point and how to build consensus among his fellow community bankers.

“John brings people together,” Vallandingham says. “He doesn’t hammer you. He’s able to pick up on the cues that drive people and help relate the issues back to their own personal experiences. That’s what great leaders do.”

“With John’s rich work history, he has a superb grasp on all areas of banking, which will make him extremely effective in representing ICBA with regulators and other people in the industry,” adds Mike Brown, vice president of Foothills Bank and Trust in Maryville, Tenn., who has worked with Buhrmaster on industry activities.

In early 2009, Heartland Payment Systems Inc., which processes credit card payments for small to medium-size businesses across the nation, reported that more than 100 million credit cards had been compromised when its computers were hacked. Linda Echard, president and CEO of ICBA Bancard, says the huge security breach posed an unusual problem for community banks: What steps should the banks take in response?

Echard says Buhrmaster, then as ICBA Bancard chairman, provided invaluable real-world banking advice on what community banks could do to deal with the Heartland breach. That advice involved how and when to monitor potentially compromised accounts and at what point, if any, cards should be reissued. “He helped us put ourselves in our client’s shoes,” she says.

Buhrmaster remembers well that it was the ICBA Bancard electronic payments program that helped him ramp up 1st National’s credit card program when his bank’s business customers suddenly needed them after the 2008 financial paroxysm. “The ICBA Bancard program was integral to getting our program up quickly,” he says. “If we were left alone to negotiate with the vendors, we wouldn’t have had the pull to get that done so quickly. If we had not been an ICBA member, we would not have been as nimble as we were.”

Unfortunately, not enough community banks take advantage of the association’s wide range of member services and programs, Buhrmaster observes. “We try hard to provide the best services in our industry,” he notes. “These are slam dunk opportunities for banks to earn more income.”

A family business

Buhrmaster is the fourth generation of Buhrmaster men to sit in the president’s chair at 1st National Bank of Scotia. His father, Lou Buhrmaster, is now the bank’s chairman and CEO.

Despite the lineage, Lou Buhrmaster says he never pushed John or his three siblings to work at the family-owned community bank. But they did talk shop around the dinner table, and John helped his father at the bank and at a fuel oil company owned and operated by his uncle and cousins.

“We once bought an old packing house and John and his cousin got the job of tearing down the smokehouse and the de-hairing operation,” the elder Buhrmaster recalls. “They came back stinking! So he doesn’t shirk from any duty.”
When John was young, his family lived through something very few community bankers can claim: 1st National survived nine years operating under a cease and desist order from the U.S. Office of the Comptroller of the Currency.

“My dad and I work together every day. It is one of the best experiences I could ever ask for in my life.”
—John Buhrmaster, ICBA incoming chairman

Lou Buhrmaster notes that of the 1,389 banks that received cease and desist orders during that period, only two survived with the same ownership and management. “And we were one of them.”

“It was very tough for us in the ’70s and early ’80s,” John Buhrmaster adds to those memories growing up. “We ended up with a lot of bad loans at that point. I was in high school and I was moving repossessed cars, cleaning out buildings we had repossessed. I remember using an ice scraper to scrape up junk on the floor of a movie theater we had repossessed.”

Given the longstanding stress of those years, perhaps it’s not surprising that Buhrmaster did not plan to go into banking after graduating from Syracuse University with a degree in management information systems and marketing in 1986. Instead, he accepted a job in sales with NCR Corp., and was due to report that fall. He decided to spend the summer after graduation working at his father’s community bank as a teller to learn more about the business, especially since the customers he would be calling on at NCR were banks.

“That’s when I realized banking wasn’t what I thought it was,” he says. “It wasn’t a bunch of ledgers in the back room. It was people. Good people, people who cared.”

So instead of reporting to NCR, Buhrmaster entered a management training program at 1st National. He held numerous positions there in subsequent years, from assistant branch manager to loan division manager. He was named president in 2005 when his grandfather retired. That’s when Lou was named chairman and CEO.

“My dad and I work together every day,” he says. “It is one of the best experiences I could ever ask for in my life.”
The cycle is continuing with Buhrmaster’s oldest child, Jennifer Buhrmaster, who is a junior at Hartwick College in Oneonta, N.Y., and works at the bank during the summer as a teller. John and his wife, Leslie, also have two younger children, David and Amanda. Amanda, a junior at Niskayuna High School, also works at the bank part-time during the summer in its deposit operations department.

Naturally, 1st National is a continual topic of conversation around the Buhrmaster home—just like when John was growing up.

“We talk a lot about responsible banking, how much to keep in savings and checking, the best way to manage money,” Jennifer says. “That’s pretty typical dinner table conversation for us.”

John Buhrmaster agrees: “Now that my daughters are working here at the bank, they’ll come home and talk about their successes and problems at work, and I just love it.”


Ed Avis is a writer in Illinois. Michael Blankenheim is a writer in Maryland.

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