Platinum Bank’s website makes it clear from the get-go that the $134 million-assets company is something different. Very different.
“BANKING FOR INTERESTING PEOPLE AND COMPANIES,” shouts a headline on the home page of the five-year-old bank, based near Minneapolis, Minn.
The message includes this: “You’re a do-it-yourselfer. But it’s more like settling into a leather chair by the fireplace—or taking a long lunch at your favorite grill—to get down to business. And your banker is right there with you until the ice in your glass melts down, and you walk away feeling like somebody finally gets it.”
Very different—intentionally. David Rom, president and CEO, says he doesn’t care for the phrase “relationship banking.” He prefers to think about client talking, banker listening. “Money is the most personal thing to people, yet it gives them the most anxiety. You have to be technically good to understand their business. But if I can provide some piece of trust to them, then price won’t be a consideration.”
If you’re looking for George Bailey, rebooted, look elsewhere. While Rom, 42, is community minded, he won’t call Platinum a “community bank.” If you work for him, you’d better not either. “I make our employees put a buck in a bucket every time they say ‘community bank’,” he says. “That’s because it’s a way of thinking that’s geographically bound. To me, it comes across as small, slow, stupid....”
Whoa there! ... So what does Rom let his people call it? “They say, ‘We’re a bank’,” he answers, sharing his views with five other bankers in an ABA BJ roundtable discussion. Rom won’t accept the limits he perceives in the traditional phrase.
And he isn’t alone.
Avoiding limiting labels
“I started changing my lexicon a bit because ‘community’ was bothering me, too,” says Trey Maust, 41, co-president, CEO, and board member, at $125 million-assets Lewis & Clark Bank, Oregon City, Ore. He prefers “independent bank,” but not for the reason you might think.
To him it’s about independent decision making. Maust’s bank proclaims itself the home of the “Bankerpreneur.” On its website, Lewis & Clark says, “We are bankers who’ve started our own business, too. This gives us a unique perspective in how we partner with proprietors and assist local businesses of all sizes.”
This perspective affects the way Maust approaches his work. “I don’t want to think like a ‘bank’,” he explains. “In fact, there’s a quote on our website to the effect that we run the bank as a business, not an institution. We want to think about what makes good business sense.”
While Rom and Maust dislike the implications of “community,” Josh Guttau, 35-year-old president and CFO of Treynor (Iowa) State Bank, worries about regulators. His family-owned bank has evolved beyond its traditional footprint. For example, while the core business lies around Treynor, a rural suburb of Omaha, Neb., the bank has carved out specialties, such as a feedlot lending program that goes beyond state lines.
“Dave is right, ‘community’ tends to be geographic,” he says. “I’m waiting for the argument from examiners when they say, ‘Well, you’re lending outside your community,’ because they look at the Community Reinvestment Act geographically.”
Guttau’s point is, these days, what does “community” actually mean? Physical community? Industry community, such as feedlots and beef operators? “I don’t think there is one definition anymore.”
Those who think a “community” bank should stay at home don’t get it, Guttau insists. “We’re in a town of 1,000 outside of Omaha,” he says. Because Treynor State has developed nonlocal business lines, “I’m funneling more money through our community. It’s creating jobs. And it creates community donations, because we give 10% of our profits to the community.”
To these three bankers and three more fellow members of ABA’s Community Bankers Council, the bottom line is this isn’t your father’s community banking anymore—it means much more. In four of the six bankers’ cases, they were literally talking about banks where they’ve stepped into leadership posts of institutions headed by their fathers’ generation. Alex Williams, 38, president and CEO at $80 million-assets Halstead (Kans.) Bank, and his sister are the fifth generation involved in the bank, which serves markets near Wichita. Jim Edwards, 47, CEO at $1.1 billion-assets United Bank, Griffin, Ga., is third generation. Bryan Luke, 37, of Hawaii National Bank, is executive vice-president of a $580 million-assets institution started by his grandfather. Guttau, formerly with a large bank, came to his parents’ bank.
Overview of a generation
The distinction all members of the roundtable had was that they are under 50. Four still work to some degree with the previous generation, while de novo bankers Rom and Maust are atop their organizations.
Overall, we found the bankers have commonality with earlier and present generations, but they are, in many ways, an update, a new breed. Some things older bankers hold dear, they don’t. Culture is important, but it’s not always old culture.
There is respect for the last generation. Georgia’s Jim Edwards recalls how it was his father, the bank’s chairman, who brought an early Apple II home years ago, when he was in junior high, and who admonished him, on his way to the 2012 ABA National Conference for Community bankers, to attend “anything digital.” But some of these bankers express frustration with fellow bankers who consider new technology a leg up competitively. Take mobile banking: “It’s just something you have to have,” says Hawaii’s Bryan Luke.
They benefit from fresh perspective. Take compliance cost. Many bankers today have been worn down by it. Red tape costs just as much. But they haven’t been beaten up by it for so many years.
“I don’t spend any time on compliance,” says Iowan Josh Guttau. He has a competent compliance officer and other related support staff. While he came out of a bank capital markets background, where risk gets rewarded, he sees no such rewards in compliance—only a downside. “I can’t afford to have a problem pop up that will blow the rest of what we’re doing.”
Minnesota’s David Rom is all for supporting industry lobbying efforts to trim the burden and keep new burdens from growing. But otherwise, he says, “compliance is a pain in the butt. But let’s quit talking about it. Let’s go figure out how to make some money in a different way. Let’s get over it.”
Who they look up to
The bankers are interesting for who they admire in the business, too. Several praise their own banks’ older generation, but they also admire models far from home.
Ray Davis, president and CEO at $11.6 billion-assets Umpqua Bank, Portland, Ore., is someone both Rom and Maust admire because of the innovation he brought to what was once a small bank.
“I went to a conference one time where he spoke, and during the break, bankers were talking to each other, discounting him,” says Rom. “And I’m thinking, ‘You know, man, you’ve been shrinking, and you’re making fun of him?’ He doesn’t care if he tells every bank in the country his secrets—because no one else will do it.”
“He’s a master marketer, there’s no question about that,” adds Maust, whose business-focused bank shares the same headquarters market as heavily retail-oriented Umpqua. “Their trading multiple is incredible, and they’re able to access capital that others can’t.”
“Bankers need to step back and not be so focused on just talking to bankers,” says Georgia’s Jim Edwards. “We’re in a service business, not that different from other service businesses.” Edwards recently read Delivering Happiness: A Path to Profits, Passion, and Purpose, by Tony Hsieh, CEO of online shoe store Zappos. “He’s a fanatic about customer service, and Zappos has reinvented the shoe business. What more boring business could there be? Yet my kids would rather go to Zappos online, instead of a store.”
There also is a willingness among these young bankers to assess and reassess the traditional community bank model’s viability. Alex Williams’ family bank is the most traditional of the institutions involved in the roundtable, but it has branched towards Wichita and become less of an ag-concentrated bank. And it has found ways to penetrate deeper into customer relationships.
“Over the last couple of decades, we failed about three different ways trying to get into home lending,” he says. “We finally got it right a few years ago, and it’s been very profitable for us. Beforehand, we were sending them down the street, and that didn’t feel very good.”
Worries about survival go way back. Williams notes that his father, now chairman, fretted, as far back as 1965, about being relevant and profitable in the future. “But at this point, we still are,” he reports.
Reinvention strikes a chord among the group. Rom says he finds little value in business books. One exception: the story of how IBM came back from near-extinction. “They were the most classic, stuffy business, resting on their laurels. But it was interesting how you could take an older company like that and make change happen by bringing in a different way of thinking.”
Rom didn’t come from a banking background. Like Maust, he had been a CPA. In some ways, he didn’t have to unlearn old ways.
What business they are in
When Josh Guttau was 12, his dad asked him what he wanted to do in life. The kid mentioned a few ideas, and then the father said, “Well, what about banking?” Young Guttau replied, “Oh, no, I want to do something where I can help people.”
Ouch. Today, Guttau looks back and recalls that his dad looked like he had to pull a knife out of his heart with that remark. “Because I didn’t understand what banking was,” says Guttau. “It’s all about helping people.
Now, that’s classical community banking. We asked the other bankers in the group how they view their jobs. A common feeling that came out in the conversation concerned being an owner-operator of a growing business, with less focus on it being a “bank.”
Bryan Luke, in taking over from his father, arrived at a time when many senior managers were retiring. He has wound up with a revamped team—at least half of whom are under 40. Another difference: He hasn’t hired for banking background. “Most of our customers are business owners,” he explains. “So I look for people who have been business owners or who think like business owners. Most of them came from financial services, but none of them came from banking.”
Interestingly, while some of the roundtable bankers tend to like to hire younger employees, they respect experience. Says Rom: “Our team is younger. But some of my most stuck-in-the-old-way of thinking people are under the age of 30. And one of my most innovative people is my oldest guy—he’s 63.”
Edwards says he went to work for an insurance company after graduate school. “I thought, ‘I grew up in a small town, and that’s not challenging enough for me. It’s so boring,’” says the Georgia banker.
When his father suggested coming to the bank, Edwards agreed to give it a year. “And I realized that it was much more challenging running the business than I’d ever imagined growing up around it,” he says. “I’ve found it really rewarding.”
“I’m actively pursuing three different pathways,” says Maust. “We’re actively acquiring, and we’re also being pursued. But I’m also actively looking at alternatives for other companies to acquire on my own and still retain my interest in the bank.” His interest lies in expansion. “I can’t just operate a business; it’s too boring,” he explains. “If we can’t get enough traction acquiring other banks or growing organically, without changing our business model dramatically, I’ve got to do something else.”
When Guttau came back to the family bank, he bucked tradition: “I decided not to become a lender. So I have very, very little client contact from a transactional or service standpoint. Obviously, I’m out in the community, but my focus is working on the business and not in the business.” Growing up “more as a CFO, rather than a loan officer, that focus has allowed us to pursue a different strategy than simply being a local bank relying on local deposits and local loans.”
Guttau and others seek opportunities to spend time with nonbanking business groups and obtain ideas and exposure from completely different perspectives.
But not every “young banker” favors business on the edge. Williams felt his bank’s approach conservative compared to other participants. “I guess that’s ‘risk and reward,’ right?” he says.
“I don’t think you need to be embarrassed about that,” says Edwards. “The challenge is to be innovative and ‘think young,’ if you want to call it that, while remembering that this business is not about throwing ‘Hail Marys.’ You fumble in banking; it hurts bad.”