Life’s Lessons Learned #52: Philadelphia

I do not remember certain specifics about my time at the First Pennsylvania Bank: (1) the year I was there, (2) and how many weeks/months I spent in Philadelphia. I know I was at least the third person from LCFNB to spend time training with our correspondent bank. The other two were: Charlie Bender (Credit Officer), and Charlie Van Dusen (Exec-VP and Commercial Lending Officer). I would leave very early Monday morning or Sunday night and drive to Philadelphia, where I would leave my car with the valet parking attendant, check into the hotel, and walk over to the bank. On Friday, after work, I would get my car back from the valet parking attendant, and drive back to Lancaster. The drive of 76 miles took two hours – allowing for traffic.

For all but two weeks of my training, I was a resident of the Bellevue Stratford Hotel on Broad Street. This hotel was, at the time, the grand old dame of Philadelphia hotels. In July 1976, the Bellevue became notorious as the site of the first known outbreak of Legionnaires Disease. 211 people were stricken, and 29 died, of what was, at the time, an unknown cause. Occupancy dropped to 4%, and the Hotel finally closed on November 18, 1976. It wasn’t until 1977 that the cause was isolated. The building is now a Hyatt property.

The Bellevue Stratford Hotel, circa 1976

My first week of training was conducted in a classroom, in a two-story building, above a Horn and Hardart automat. I joined a small class of about a dozen young male bank trainees for a one-week course on loan documentation. In this course we learned about the various paperwork that was necessary, at the time, to process commercial loans. It was a very complex process, and one that mirrored the paperwork at LCFNB. First Pennsylvania Bank was large enough that they had a full-time training person, Nancy Lee Ogle. From there I was assigned to the bank’s credit department, which was located in a building across the street.

The First PA Credit Department was in an upper floor. The department head, Wally Klosterman (sp?), was located in a glass-walled cubicle across from the entrance and overlooking a large open room filled with desks. Each of us had a desk, an adding machine, a phone, and our own slide rule. This time period predated personal calculators. We were given the job of first creating or updating spreadsheets for the bank’s commercial loan customers. It was necessary to have a minimum of three years for proper analysis, but longer histories were preferred. The spreadsheets covered balance sheets, operating statements, and various ratios for each. In addition, cash flow statements were developed to identify cyclical short-term working capital needs (for line of credit purposes). Our addition and subtraction was checked with an adding machine that generated a paper tape that was then attached to the spreadsheet. Our ratios were confirmed on the single Marchant calculator in the back of the room. (

Part of the training included learning the boilerplate terminology used to describe various financial statement characteristics. We learned how to discuss both positive and negative trends demonstrated in these financial statements. We also learned how to locate and discuss comparative trends in generalized industry financial statements (through what were then the ICS codes – now NAICS). This facilitated the analysis of the performance of a particular bank customer through comparison with others of similar size in the same industry.

The end objective of this process was the writing of a recommendation for approval or rejection of lending packages. Each bank has their own format for structuring these loan applications. LCFNB’s loan committee presentations followed quite closely the First PA Bank’s format. As I now look back on what I learned during this intensive training period, I am amazed at how complex, and in a way quite beautiful, these analyses were. Wally had developed this systematic approach to loan decision making.

Every write up that we did in this department had to be first typed, and then reviewed by Wally, before it was sent to the lending officer to take the appropriate lending committee. All of this was done on a very tight schedule. The financials would arrive in the department along with the customer’s file (history). The customer’s loan and deposit history with the bank would be gathered internally. The package would also include the initial request of the loan officer (line or loan amount and terms). The Credit Department would then complete: an analysis of the company’s financial performance, past deposit and loan balance relationship with the bank, industry comparisons and trends, and then develop a recommendation for action.

The bank had a secretary pool system. With this system, anything that was not typed by a personal secretary was sent over the phone and recorded. It was then typed by someone in the secretary pool and sent back to us through the bank’s interoffice mail system. At that time (late 1960s) there were no personal computers, and drafts were written in long hand in either cursive, or (if your cursive was illegible) print.

Wally was a strict task maker and ran a tight office. His recommendations (positive or negative), it was believed, would have a significant impact on the future advancement of bank management trainees. Among other things, all of the young men in the department wore long sleeve white shirts and conservative ties (as did Wally). The first Pa bank trainees in the department came to me after the first week, and asked if I would wear a colored shirt to work. They said that Wally might get mad, but that since I was there for a correspondent bank for training, I might be able to get away with it. The following Monday I came to work wearing a pink shirt and a very tasteful pink and green striped tie. Wally stood there and looked out over the room through his glass-walled office. He looked straight at me, and then sat down without a comment. By the end of the week, the office was filled with shirts (all quite tasteful) of many hues.

Later I would spend two weeks with the bank’s Factoring Department, a department that, I was told, was headed by a stylish dresser (rare in the pin-striped world of 1960’s banking). When I arrived there, and was introduced, he said that he had heard about the story of Wally and the colored shirts and wanted to meet me. Apparently, Wally was infamous for his white shirt only rule.

I did not spend enough money on my expense account. I come from frugal stock, and felt a bit awkward spending somebody else’s money. After my first two weeks in Philadelphia, I handed in my expense report (with receipts) for reimbursement. Charlie Bender pulled me aside and told me that I should at least double my spending. It seems that both he, and Charlie Van Dusen, had spent much more, and I would otherwise make them look bad. It was suggested that I treat at least one of the other trainees to lunch every day (making for future banking contacts), and eat my dinners each evening in restaurants.

Next up – the bars of Philadelphia…

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