Keith Costello | Crain's Orlando

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Keith Costello

Background:  

Headquartered in Orlando, First GREEN Bank was founded in 2009 with the goal of doing business in a financially, environmentally and socially responsible way. With additional Florida locations in Mount Dora, Clermont, Ormond Beach, Winter Park and Fort Lauderdale, First GREEN Bank offers personal and commercial banking services such as loans, mortgages, checking and savings, CDs, IRAs and money markets.

The Mistake:

I almost conducted a transaction with a person of questionable character.

In banking, character is one of the most important criteria in terms of who you’re going to do business with. You have to have a high degree of trust. Early in my banking career, at my first community bank, I was involved in a transaction with a prospective client where we could have done tremendous business. And in the process of our due diligence, we discovered some things that were a little unsavory about his background. Criminal activity. It was an issue that clearly demonstrated this person had character issues and couldn’t be trusted.

It was something that you probably could have rationalized – which I was trying to do. We probably could have protected ourselves as a bank just fine, and made a lot of money on the transaction. But I’ll never forget my boss at that time. His father had started the bank in 1947, and he had taken it over. And he said, "You never do good business with bad people, and you never do bad business with good people." And it just stayed with me throughout my career.

It’s a simple thing, but it was something his father had told him. And he said, “It’s a rule that I’ve lived by.” And sure enough, so many people find that out where they get involved in a business transaction and think they’re going to be fine because they’re protected by lots of documents and laws. But the truth is, if you’re involved in a business transaction with someone who doesn’t have any character, there’s a way that they can take advantage of you or do something bad, and a lot of times that happens.

Bad things happen to people all the time. It doesn’t mean that they’re a bad person.

The Lesson:

It was really the lesson of a community bank. It’s a decision that I wouldn’t have made otherwise, but I came to understand it. I would have made a mistake were it not for that advice. It’s something that I’ve used to this day, and that I tell everybody that works for me.

And the flip-side to this is, the opposite happens – all the countless times when we take a chance on someone. That’s what community banking really is. That’s what makes it special. It’s somebody you know, from the local community. And they may have had a hard time. And they can sit down with you and explain it, and it’s rational and it makes sense. And maybe it was something outside their control. Bad things happen to people all the time. It doesn’t mean that they’re a bad person. It’s not a character flaw or a trust issue.

The bigger lesson was how to assess risk from a personal point of view. Knowing how to assess character really is the most important thing. I’ve worked in a big bank. But there’s a frustration, I think, because inherent inside any really good banker there’s a desire to do good things to help people. And some bankers don’t have that flexibility, so [our employees] really embrace it.

It’s a component of community banking that attracts a lot of people who’ve come from the big banks. That’s what I love about community banking. We’re part of the community.

Follow Keith Costello on Twitter at @browardbanker and FIrst GREEEN Bank at @FirstGREENBank.

Photo courtesy of Keith Costello

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