Maysville JEWEL - Robert D. Vance

Well over twenty-five years ago, I met Bob Vance when he first arrived in town.  I think it was 1972.  When he first got here, Bob had an old blue Chevrolet car and otherwise, as he later told me, barely  enough money to pay his first month's rent.  He was married and had a very young child.  He had attended and graduated from the University of Kentucky, sold Ford cars for Paul Miller in Lexington, had been trained as a stock broker for Bache & Company, and worked in the Cleveland Federal Reserve District as a Bank Examiner of trust departments.  At one time or another, he had examined the trust department at the State National Bank, where he met Trust Officer Viola Owens and Bank President Douglas P. Newell.

Mr. Newell was getting along in years, and although his mind was very acute, he was beginning to have  some physical problems. Even so,  he worked like a mad man in his massive vegetable garden for 12 hours every Wednesday and Saturday and 8 hours most other days.  Anyway, Mr. Newell and Mrs. Owens sought out and hired Bob Vance as Vice President of the bank.

For the first several years he lived here, Bob worked assiduously at his job.  He got to know every bank employee and what they did and almost every bank customer, particularly if they banked in the downtown bank lobby.  In two or three years, Mr.Newell and Bob had differences over some bank matter, and Mr. Newell threatened to fire him, indeed was fully intent on doing so.  I never knew exactly what happened, but the firing was called off and Bob Vance, then Executive Vice President, became President of the State National Bank and Mr. Newell, the Chairman of its Board.   By whatever title, Mr. Newell remained the boss until his death on January 1, 1976.

Bob was named a director of the Hayswood Hospital in about 1974, and he and Bob Zweigart carried the lion's share of the fight against the Steelworker's Union (I think) which was trying to unionize the hospital.  There had earlier been union activity at various manufacturing companies in Maysville, so that the fight wasn't brand new to the area.   But basically, in a union fight, management seeks to convince the labor force that they would be better off without a union.  Some ugly things can happen during union organizing and many wouldn't have the gumption for the fight.  Not so with Bob Vance or Bob Zweigart.  They spent hours and hours a week talking to employees and determining their grievances.  Finally, when the vote was taken, the union lost the election, not by a whole lot, but nonetheless, it was a loss.  Then the Board of Directors began addressing the employees' grievances and fired the administrator; there was never another attempt to organize the hospital.

It wasn't long after that the idea of a local YMCA began to percolate through the community.  This project became a cause celebre for Bob Vance, Bob Zweigart and Bob Blake.  The three Bobs, as the fundraisers knew them, met daily before work at Bob Zweigart's office strategizing the fund raising effort.  Those three men, with a little help from other volunteers, raised $3 million and the YMCA, once a dream, became a reality.  The facility remains one of the most outstanding in the state, and is an incredible accomplishment for a community this size.

Continuing his career vector, Bob Vance decided to attend Rutger's University working toward a Masters Degree in Banking.  It was one of those schools where you were given assignments, one per month, and you had to send in your work product by a certain date.  My description might make it sound easy, but it certainly wasn't.  The assignments entailed vast amounts of work after work, so to speak, and the submission of the work was often voluminous.  Then for about two weeks every year, the student traveled to Rutgers for lectures, labs and whatever else you study at banking school.  It's my recollection that the effort lasted three years. I do know that a final thesis was required, as well as a defense of the thesis before a jury of professors at the school.

While Bob Vance went through this rigorous training, he learned several things.  First, he could read and interpret financial statements of individuals and corporations, a skill which few people possess.  He could also assess a  loan application and, from the information furnished by the prospective debtor, could analyze the prospects of re-paying the loan if made.  Finally, Bob Vance learned to analyze a bank, using very sophisticated financial formulae and ratios, so that he could accurately assess the health of the bank he worked for as well as the health of his competitors, not to mention banks which might be purchased.  Finally, and most important, Bob Vance understood debt and how to use it to his advantage.

Things went along pretty smoothly for several years after Mr. Newell died.  The bank countined to prosper and to pay dividends.  Deposits grew substantially, and everything was going well.   It was then that Bob Vance noticed the Farmers and Traders Bank in Mt. Olivet.  Using the knowledge he had gained at Rutgers, he first studied bank's financial statements, which are available at the Federal Reserve.  He then arranged financing with a Lexington Bank and approached the president of the bank about selling it to him.  His name has escaped me for the moment, but he apparently agreed to help Bob convince the bank's board of directors.  With the help of Larry Banks, a Lexington corporate lawyer, Bob completed the purchase of the bank and immediately re-organized it.  In this process, he met Norma Linville, then the cashier at Farmers and Traders, and they formed an association in the banking business which has lasted to this day.  Norma was put in charge of the Mt. Olivet bank.

In those days, and perhaps today as well, the method by which one acquires a bank or, for that matter, any company, is to buy the bank and let the bank's profits pay off the acquisition loan to the financing bank.   Because of the tax code, it is infinitely better to have the purchased bank restructure its capital into stock and bonds.  The bonds pay interest, which the bank can deduct for tax purposes, and the holder of the bonds uses the interest to pay his debt to the financing bank.  Since Bob held almost all of the bonds (and, for that matter, the stock) of the bank, the bank's profits were paid to him as interest so that the bank paid almost no income tax. Of course, Bob had to pay tax on the interest, but there was still enough left over to pay on his loan to the Lexington bank.   This worked so well that Bob used the strategy to buy several other banks.

One of the reasons that his strategies worked so well was because of his attitude toward the regulators.  The State National Bank was a bank chartered by the federal government (a national bank).  All national banks were examined by the federal reserve bank as well as the FDIC.  Most bankers despise bank examiners because they are looking for bankers' mistakes.  Some mistakes are small infractions; some are major problems and all can be dealt with by the examiners with the most draconian means, should they be necessary.  Bob always welcomed examiners, believing them to present learning opportunities.  He forged a wonderful relationship with the Cleveland Federal Reserve, which proved most beneficial to his later banking acquisitions.

All the while, Bob had been accumulating State National Bank stock and became its largest shareholder.
He did not, however, own enough stock to control the bank.  When Bob tried to utilize some synergies to cut costs both for the State National and the Farmers and Traders Bank (which he largely owned), some of the directors at State got very upset and thought he was scheming to have State pay expenses which would inure to the benefit of Farmers and Traders.  None of this was true, but a real rift developed between those directors and the directors who supported Bob.  And so, as the Annual Meeting of Stockholders date approached, the anti-Vance group was gathering proxies from shareholders everywhere.  They were successful in keeping these activities a secret, so that when the day for the meeting arrived, they had almost enough proxies to elect a majority on the board, that majority being committed to firing Vance; and Bob entered the building that morning completely unaware.

The meeting was a furious event; the  judges were deciding which proxies were valid and which weren't.  Adding machines were clacking as each entry moved the score a little closer to "for Vance" or "against Vance."  Telephone calls were received cancelling proxies and granting proxies. Attorneys were baring their teeth at one another.  It was the ugliest business conflict I have ever seen in Maysville, Ky.  As I recall, there were about 120,000 shares to be voted.  Late in the day, the final talley favored Vance by only a few votes, but it was nonetheless a triumph and victory for him..

Perhaps a month later, Bob, nevertheless, resigned as President of the Bank, realizing that a split board was inimical to the bank's best interest.  It became one of the most fortunate days of his life.  With the changes in state and federal banking laws,  bank were allowed to have branches across county lines and, ultimately, across state lines.  Bob and Steve Beshear, the greatest of friends and compatible in every respect, began to slowly expand their bank activities.  Banks in Warsaw, Kentucky, May's Lick, Kentucky, Ripley, Ohio and other small communities around the state were acquired.  Bob Vance became literally famous among Kentucky bankers as the most agressive and smartest banker in the state.   Bob may have once been President of the Kentucky Banker's Association, but was definitely involved in its most important activities.  He began a banking school, not unlike the one he attended at Rutgers, teaching there frequently.     

The association between Bob and Steve Beshear, now Governor of Kentucky, propelled Bob into the limelight once more.  He had decided to retire about the same time Beshear decided to run.  Beshear was elected by a large majority, defeating Ernie Fletcher who ran for a second term.  Steve asked his friend to come along and nominated him as Secretary of the largest cabinet in state government.  Later, under Bob's leadership, the cabinet was reduced in size and responsibility, and is now called the Cabinet for Public Protection.  Maybe that's not the full name, but it's close.  Anyway, Bob supervises the Department of Insurance, the Department of Banking, the Horse Racing Commission, and lots of other things all of you would recognize.  By all accounts, he has done a superior job and continues to do so.  He comes home to Maysville each week-end.  If you didn't know him and met him on the street, you would have no idea of how important this man is!

Why a jewel?  Well, Bob Vance started at the bottom rung in Maysville, Kentucky.  He worked very hard and, more importantly, very smart.  I would argue that he, on his own, has been far more successful in the business world than anybody else living in Maysville, Ky. today.  And finally, his success was obtained honestly and honorably. Bob Vance has lived the American dream; he's played the American game  -- and won!