Thinking Big in Small Towns
Country Bank Maintains Its Community FocusTo describe how Country Bank is getting stronger, Robert Kolb used an apt analogy.
Specifically, Kolb — the bank’s senior vice president and chief commercial banking officer, who came on board six months ago — said he wants to take a “barbell approach” to growing its loan portfolio. Picture Country’s reach geographically, he said, with Springfield and Worcester representing the weights and all the smaller towns in between, where Country has a branch presence, as the bar.
“If we want to continue to grow the portfolio, we have to put our toe in the waters of other areas,” Kolb said, noting that the bank does not have physical branches in those two larger cities, but sees opportunities there. “We’re looking to do more in the Worcester market and the Springfield market … we want to expand our presence in those markets.”
As a mutual savings bank with $1.4 billion in assets, and boasting 14 branches and 245 employees — Country has the reach to grow, said its president, Paul Scully, but continues to maintain an emphasis on small communities.
“We’re still focused on providing a full range of consumer and business products and services within our marketplace, and we view our marketplace as the geography between the Worcester and Springfield areas,” he noted. “Our branching strategy is the same: smaller towns.”
However, he noted, “branch locations don’t matter as much anymore; between mobile banking, remote capture, and other services, customers have really caught on to the fact that they can do all their banking and really never go into a branch. Technology has allowed us to expand our product offerings within more urban marketplaces without having a physical presence there.”
And growth is what Scully has in mind.
“Last year we originated about $105 million in commercial loans — pretty respectable, considering what the market was and what the competition is,” he said, noting that the bank boasts a loan portfolio of $838 million. “A lot of banks are looking for the same opportunities as we are, but there aren’t as many opportunities to go around. What every bank tries to do is differentiate themselves from the crowd.”
One of the ways Country has always tried to do so is through an emphasis on service.
“We look at ourselves as a small business,” Scully said. “We’re a good-sized bank, but we’re still a small business able to offer personalized service. We don’t have a high level of turnover; people who come into the branches see the same people who have been working with them for a long time. Customers are recognized and feel comfortable with the people they’re doing business with. They’re not calling an 800 number where someone across the country is answering. The service element is really a key factor in our success and has set us apart since 1850.”
Added Kolb, “on the commercial side, as an organization, we provide a nice match for what the market demands. We’re not too big and not too small.” But he also echoed Scully’s sentiments about service.
“The money’s still green at the bank across the street. It’s a pretty homogenous product. We all make mortgages and commercial loans; we all do deposits,” he said. “But what really differentiates us is service. It’s not just a tagline; it’s something that’s ingrained and apparent.
“When you walk around the teller line, the average tenure there is 20 years. In the business lines, it’s 10 to 15 years. They don’t stay here because it’s a local, sleepy bank in Massachusetts; they take a lot of pride in the relationships they’ve forged. It is the difference between us and the bank across the street.”
Wiring of the GreenBut how important is that physical bank on the street, in the era of Internet and mobile banking? Kolb said it will always have its place.
“There are still customers out there that like to see the branch bank on the corner,” he explained. “Having that visibility is important, and it’s never going away; it’s the doorstep to us being active in the community. And giving back to the community is really part of the culture at Country Bank.”
But technology has certainly changed the way customers interact with banks, Scully told BusinessWest.
“We’re pretty much able to have a full range of products to meet everyone’s expectations, from savings accounts straight through to mobile banking and e-bill payment,” he said. “Last year, we converted our ATMs to digital ATMs, so there are no more envelopes; you put the check right into it. That’s the convenience factor; it expedites the transaction for a person sitting in their car with a couple kids or a dog who wants to be somewhere else.”
Those high-tech advances extend to remote capture for businesses that can conduct transactions without going to a branch, and retail online banking has come into its own as well, but there’s no longer as dramatic a split in the ages of people who use it.
“We used to think of it as a generational thing, with the older client base wanting to come into the branch,” Scully said. “People still want to know the branch is on the corner, but we’ve learned that age doesn’t matter. Almost everyone uses a computer, and we have a lot more seniors using e-billing and other technology, and we have people feeling more and more comfortable with security.”
For that reason, the bank’s educational outreach spans generations as well. Country conducts a banking program in area elementary schools, building early financial literacy by teaching students about savings and investment and providing them with passbooks to open their own in-school accounts. It has since expanded that to a ‘credit for life’ program for high-school seniors, teaching them about credit scores and smart handling of paychecks and expenses.
“But the other thing we’re focused on is the senior piece,” Scully noted. “We do a lot with senior centers, talking about banking technology and security, so they don’t feel intimidated using a computer for their banking.”
When Social Security switched over to electronic payments, “we did a lot with senior centers about what that change means and why e-banking is very secure,” he added. “Once seniors feel more comfortable with the technology and understand that their money is not at risk, they want to use e-banking; they want to use mobile banking.”
“The key,” added Kolb, “is to make those channels available, whether through the computer, at a branch, or on the phone, whether someone is 18 or 88 years old.”
In fact, Scully said, there’s no reason why remote banking shouldn’t be embraced by seniors. “Once people realize, ‘OK, I don’t have to go out in the snow and possibly fall down,’ suddenly they feel really good about it.”
For younger customers, he added, “it’s all about smartphones. They’re not looking to have a passbook; they don’t want to bring in some clunky old thing.”
The Country Bank name is only 32 years old, but the institution has been around since 1850, when it was known as Ware Savings Bank. It took on its current name after a 1981 merger with Palmer Savings Bank; another merger with Leicester Savings Bank 17 years ago further increased the bank’s holdings.
From the time of the name change, Scully said, it has been important to communicate a sense of community ties. That’s why the name of each branch reflects its hometown: Country Bank of Ludlow, Country Bank of Palmer, etc. “We like to think of ourselves as that town’s small-town bank, their community bank,” he said — despite the occasional confusion of a customer who goes into a branch in a different town and wonders whether he can bank there because of the different name.
The small-town focus is a positive when it comes to lending, Kolb said.
“Small business is really the backbone of America, and it’s certainly the backbone of the small areas we operate in,” he told BusinessWest. “In Central and Western Mass., it’s about small business; it’s about Main Street. With our branch network and experienced lenders on the commercial side and on the mortgage-origination side, that puts us in a great spot to serve the community with the resources of a big bank, yet we’re small enough to be able to jump in the car and see someone at 7 at night, or be reminded when walking down the aisle of the grocery store that you need to see somebody.”
The hometown emphasis is also at the heart of Country’s philanthropic efforts. In 2012, Scully noted, the bank donated more than $600,000 to community organizations.
“They’re causes that people don’t think about because they don’t necessarily apply to their life, but there are so many people whose lives are affected,” he said, citing the bank’s support of domestic-violence task forces, food pantries, and other organizations. “Unless you need that service, you might not pay attention to the fact that their funding sources have been reduced, or that their needs have grown.”
But the bank offers more than money, he was quick to add, noting that management staff alone volunteered more than 1,400 hours last year at community events — “that’s personal time, nights and weekends” — and the bank has been expanding volunteer opportunities for all employees as well. “Now we have more than 100 volunteers giving back to the community.”
All the bank’s efforts — from its lending business to its charitable work — boil down to an effort to improve people’s quality of life,” Scully said. “Maybe we lend to a business that puts up a building and hires more people. Or we could be giving a scholarship to a kid who then graduates from college. Or we could be supporting social services. It’s all full circle, quality of life.”
Kolb was quick to note that “philanthropy is not something that drives revenue; it’s not a profit center. What it is, really, is part of the culture; it’s consistent with the mutuality of the company. What we’re trying to do for the communities we serve is not a revenue driver; it’s really part of who we are.”
Specifically, Scully added, “the profit is in the long-term impact in the community. Everyone benefits from it. And we didn’t start those things; it’s the legacy of the bank as it relates to every aspect of community life.”
In many ways, despite its asset growth, some things have remained the same at Country Bank, Scully said. “Community banking is consistent banking. We’re taking what we believe we’ve done well and expanding it.”
And that requires constant reconsideration of business strategies. For example, “the [loan] portfolio is very heavy in real estate, so one of my objectives in coming here is to diversify the portfolio,” Kolb said, a process that will take some time considering an economy that is improving, but still far from thriving. “The idea is to start with small businesses and identify opportunities in that space where we can exploit our leverage with our infrastructure and the experience of our lenders and our service.”
Scully called today’s banking environment “an exciting time, but a challenging one,” but he noted that, particularly since the financial collapse in 2008 that was brought on partly by the misdeeds of the largest banks, there’s something appealing to many customers about a community bank’s consistency.
“That’s not to disparage super-regionals, but those organizations use their customer base as a means to produce revenue and income, which increase shareholder value,” Kolb noted. “What sets us apart, as a mutual bank, is that our depositors are in essence the drivers, and our mission is to service those individuals.”
“We have sort of a split personality,” Scully added. “Are we a big little bank or a little big bank? We’re sort of both; we can do almost any type of transaction a big bank can do, and by any standard we’re considered large, but by having a focus on the customer, the community perceives it as a little bank.”
But one that, barbells or not, is growing stronger.
Joseph Bednar can be reached at [email protected]