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CONTENTS

Jason Myers

November 2014 Vol 124 No 10

18 18 The Case for Cultivating Careers First Horizon’s Employee Leadership Program, championed by CEO Bryan Jordan, has been described as “life changing” by some of its graduates. It has also helped solidify First Horizon’s status as one of the banking industry’s most employee-friendly companies.

22 The Best Banks to Work For American Banker Magazine’s second annual ranking of the banks that win high marks from employees for providing a positive work environment, top-notch benefits and ample career-advancement opportunities. The perks, like free lattes and subsidized gym memberships, are great too. American Banker Magazine (ISSN 2162-3198) Vol. 124 No. 10, is published monthly except for February and December by SourceMedia, One State Street Plaza, 27th Floor New York, NY 10004. Subscription price: $120 per year in the U.S; $139 for all other countries. Periodical postage paid at New York, NY and additional U.S. mailing offices. POSTMASTER: Send address changes to American Banker Magazine/SourceMedia, P.O. Box 530 Congers, NY 10920. For subscriptions, renewals, address changes or delivery service issues contact our Customer Service department at (800) 221-1809 or (212) 803-8333; fax (212) 292-5216; email [email protected]; or send correspondence to Customer Service, American Banker Magazine/SourceMedia, One State Street Plaza, 27th Floor, New York NY 10004. Send editorial inquires and manuscripts to American Banker Magazine, One State Street Plaza, 27th Floor, New York, NY 10004. American Banker Magazine is available from the following online services: Information Access (800-877-GALE), Mead Data Center (513-865-6800), and UMI (313-761-4700). For permission to Reprint Published Materials, call (800) 367-3989 or (212) 803-8367. Back issues of the magazine are available for $10 per copy (prepaid) and past articles $6.00 per article (prepaid). Copying for other than personal use or internal use is prohibited without express written permission of the publisher. This publication is designed to provide accurate and authoritative information regarding the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering financial, legal, accounting, tax or other professional service. American Banker Magazine is a registered trademark used herein under license. © Copyright 2014 SourceMedia, Incorporated and American Banker Magazine. All rights reserved. www.americanbanker.com.

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CONTENTS

November 2014 Vol 124 No 10

More Best Banks

Metrics & Measures

To Your Health 23

Loans in Demand 14

Some banks have creative strategies for dealing with the rising cost of health care

Bank lending surged in the second quarter. Will the trend continue?

People Problems 36 Recruitment and employee engagement are among the big challenges for humanresources execs

Meet & Greet The Circuit 42

9

Briefings Branding on Wheels 9 Citigroup’s sponsorsorship of New York’s bike-sharing program is generating serious bang for the buck

Cybersecurity, M&A and Operation Choke Point were the hot topics at American Banker’s annual regulatory symposium

BankThink 44 U.S. companies should aim to have women occupy half of all senior management positions by 2020, writes MUFG Union Bank’s CEO.

History of Capitalism 11 Rare books recall the days when the Clearing House ran the banking system

42

FSOC’s Data Drive 11

Backporch 48 Quotes from Daniel Tarullo, Jamie Dimon, Beth Mooney and other notable names from around the industry

The proposals are wonky, but they just may prevent the next banking crisis

IN EACH ISSUE

48

Editorial Index 4 Editor’s Note 5

44

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EDITORIAL INDEX

Volume 124, No. 11

H-N

A-C Alerus Financial 38 Alta Bicycle Share 10 American Savings Bank 34 AmericanWest Bank 14 Aon Hewitt 23 Avenue Bank 4, 25 BancorpSouth 14, 42 Bankers Bank 39 Bank First National 38 Bank of Fayette County 42 Bank of New York Mellon 12 BankPlus 23, 32 BAV Consulting 10 Bell State Bank & Trust 26 Best Companies Group 32 Blue Line Media 10 BNC National Bank 38 Boiling Springs Savings Bank 36 Bridge Bank 38 Business First Bank 32 Capital City Bank 27 Center for Responsible Lending 43 Centier Bank 23, 29 Central Bank (Ky.) 34 Citigroup 9 Charter Bank 30 Chesapeake Bank 23, 28 Citizens Bank (Ohio) 36 City Bank 27 Clearing House Association 11 Clearing House Payments Co. 11 CoBiz Financial 28 Columbia University 11 Community Financial Services of America 43 Community Trust Bank (La.) 32

D-F DeCoBike 11 Elmira Savings Bank 39 Facebook 28, 34 Federal Reserve 12, 48 Federal Deposit Insurance Corp. 14, 42 Financial Crimes Enforcement Network 42 Financial Stability Oversight Council 11 First Citizens National Bank (Tenn.) 26 First Federal Savings and Loan Assoc. of Pascagoula-Moss Point 26 First Green Bank 32 First Horizon National Corp. 18, 30 First Internet Bank 30 First Tennessee Bank 20, 30

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Hackensack University Medical Center 36 Happy State Bank 38 Hudson City Bancorp 42 JPMorgan Chase 48 Justice Department 44 Kaspersky Lab 48 KeyCorp 48 Live Oak Bank 24 Matthews, Young Management Consulting 36 Memorial Sloan Kettering Cancer Center 21 Mitsubishi UFJ Financial Group 44 M&T Bank 42 MUFG Union Bank 44 Muncy Bank and Trust Co. 34 Muncy Valley Hospital 34 North Shore Bank 34, 36

O-R Office of the Comptroller of the Currency 11, 14, 42 Office of Financial Research 11 Old Point National Bank 29 Percolate 10 Permian Basin Rehabilitation Center 36 Pinnacle Financial Partners 23, 24 RBC Capital Markets 14 Redwood Capital Bank 27

S-Z Security Bank 36 Smead Capital Management 48 Somerset Trust Co. 29 SoupMobile 28 Square 1 Bank 35 Talmer Bancorp 14 TCP Capital Corp. 48 Treasury Department 12 United Community Bank of West Ky. 34 United Way 36 University of Mississippi Medical Center 23 University of North Dakota 38 U.S. Bancorp 42 Veritex Community Bank 23, 28 Visa 28 Working Mother 20 Zions First National Bank 35, 36

# 1st National Bank 25 1st Summit Bank 29

magazine

One State Street Plaza, 27th floor, New York, NY 10004 Tel 212.803.8200 Fax 646.264.6800 www.americanbanker.com/magazine Executive Editor Bonnie McGeer 212.803.8430 [email protected] Senior Editor Alan Kline 571.403.3846 [email protected] Group Web Editor Christopher Wood 212.803.8437 [email protected] Contributors: Joel Berg, Rob Blackwell, Chris Cumming, Sarah Todd Senior Art Director Scott Valenzano Associate Art Director Kyung Yoo-Pursell Group Editorial Director, Banking Richard Melville 212.803.8679 [email protected] Group Creative Director Hope Fitch-Mickiewicz Publisher David Cleworth 813.929.6907 [email protected] New York, New England Liesbeth Severiens 212.803.8691 [email protected] Mid-Atlantic, Southeast David Cleworth 813.929.6907 [email protected] Midwest Jeffrey Dembski 847.498.4520 [email protected] West Sara Culley 831.438.8408 [email protected] Europe Peter McManus 212.803.8357 [email protected] Marketplace JoAnne Kao 212-803-8325 [email protected] Customer Service 800.221.1809 [email protected] Reprint Services Howard Gilbert 800.367.3989 [email protected] Director of Research Dana Jackson General Manager, Digital Content Paul Vogel Executive Director, Print & Digital Manufacturing & Distribution Michael Candemeres [email protected] Group Production Manager Christine Spataro 212.803.8867 Production Manager Michael DiCarlis 212.803.8831 Group Marketing Director Jeannie Nguyen 212.803.8324 Marketing Coordinator Ashley Tavoularis Distribution Brian Alexander

Chief Executive Officer Douglas J. Manoni Chief Financial Officer Rebecca Knoop Chief Marketing & Digital Officer Minna Rhee EVP & Chief Content Officer David Longobardi EVP & Managing Director, Banking & Capital Markets Group Karl Elken EVP & Marketing Director, Professional Services Group Adam Reinebach SVP, Conferences John DelMauro SVP, Human Resources & Office Management Ying Wong

Text is printed on 100% Recycled Paper with minimum 85% Post Consumer Waste

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EDITOR’S NOTE By Bonnie McGeer

The Art of Creating A Best Bank to Work For Avenue Bank’s Ron Samuels says sports teach young people to work toward goals and manage their emotions — traits he likes to see in employees

Ron Samuels, chairman and CEO of Avenue Bank, was on vacation in Florida about four years ago when he struck up a conversation with a collegiate golfer who now manages one of his four branches. He happened to spot an “MTSU” on her golf bag while she was out on the course with her boyfriend and, being from Nashville, recognized it as a Middle Tennessee State University logo. So he went up and introduced himself when he saw the couple back at the clubhouse. “I asked her what year she was. She said she was a senior. I asked if she knew what she was going to be doing and she said no. And I said, ‘Well, have you ever thought about banking?’” Samuels recalls. He left his card, and she followed up. The timing worked out well, because Avenue needed a concierge banker at the time. Samuels first told me this story over lunch at the community banking conference that Keefe, Bruyette & Woods hosts in New York every summer. I knew then that Avenue had made our list of Best Banks to Work For, and I learned in that conversation a little about what it takes to be one of those best banks. Having employees who like the company they work for is not something that happens by accident. Executives at the best banks are cultivating that positivity in ways big and small. Samuels says Avenue, which opened in 2007, started with a philosophy of “employees being number one.” But he doesn’t think it is perks that ultimately win employees over, so much as it is a sense of being part of a family. He hosts an early morning meeting every Tuesday at the main office that he calls “a family gathering.” About half of Avenue’s 120 employees typically show up to have coffee, note milestones like birthdays and employee anniversaries, and ask questions. There is no agenda, and the meeting, which is not mandatory, is generally over in 15 minutes. “When you’ve got four offices in a wide area, it gives people a chance to say hello to each other, kind of connect again,” Samuels says. “And it’s not me telling. I’m just there. I’m in charge of the climate control, sort of.” That’s also another way of saying he’s in charge of culture, which he says is “hugely important” to the bank. Avenue’s very first ad had the headline, “Not another bank,” Samuels recalls. “And in the first line of that ad, I do remember that it said, ‘We’re going to challenge everything you think you know about banks and we’re going to redefine how you experience a bank.’”

To execute on that vision of creating a different experience, Avenue is particularly careful about who it hires, putting candidates through multiple rounds of interviews. The bank looks for what Samuels calls “a servant heart,” and other traits that, as it turns out, athletes often possess in great amounts. Since hiring MTSU’s Mallory Smith — who is now married to the boyfriend she was golfing with that day — Samuels has recruited two more collegiate golfers and a few tennis players too. Lauren Peck, who oversees another one of Avenue’s branches, played golf at Lipscomb University, as did Nathan Mueting, a newly hired concierge banker. Peck met Samuels about three years ago while working in the pro shop at a local golf club. She asked about the Avenue Bank hat he was wearing, and he invited her to come in for a visit. Like the other golfers, Peck initially came on board as a concierge banker (which is Avenue’s term for its universal bankers). In Mueting’s case, one of his college professors recommended him to Avenue. Samuels says being an athlete tends to train young people in working toward goals, motivating themselves and effectively managing their emotions — all traits that he likes to see in Avenue employees. “Golf is something that requires high integrity and respect for your competitor. You’re responsible for yourself, so you learn early to take accountability. And you have to make judgments. So, it seems to me, the kinds of things that create good employees really are found there,” he says. “And attitude is number one. They end up with a very positive attitude, which helps the work environment.” □

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What’s going on

@americanbanker.com

A Powerful Event

Did you miss the awards dinner celebrating the Most Powerful Women in Banking and Finance? For coverage of the event – including a video of the rousing speech by HSBC’s Irene Dorner, our Lifetime Achievement winner – go to americanbanker.com/women-in-banking.

New Connections

Calling all social media types. We invite you to join our members-only LinkedIn community for women in banking and finance. Just search the group listings on LinkedIn for “American Banker – Women in Banking.”

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Video: Beth Mooney on the Rapidly Shrinking Pool of Female Bank CEOs Today only three women helm major U.S. banks, and one of them is about to retire. See what Beth Mooney, CEO of KeyCorp, has to say about the persistent gender gap at americanbanker.com/women-in-banking.

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BRIEFINGS NYC Bike Share/Lars Klove

MARKETING

Brand-Building on Wheels Citi’s sponsorship of a bikesharing program in New York has been a marketing coup. Can the bank achieve similar success in Miami? By Chris Cumming

forget billboards and bus shelters. When it comes reaching the masses in New York, Citigroup is getting more bang for its buck sponsoring the city’s popular bike-share program than it is through more traditional advertising. Citi Bike has generated massive exposure for the banking giant and has proven to be a far better payoff than billboard space or ads in newspapers and magazines, marketing experts say. Citi executives also credit the sponsorship

for helping repair the company’s image following the financial crisis, as riders, and even nonriders, have lauded Citi for helping provide a crucial public service at no cost to taxpayers. “There are ways to interact with the consumer in the market that go way beyond the traditional media, which can start to create a change in how they think about the brand,” says Christine DiLandro, Citi’s director of media and integrated marketing. Citi Bike has helped “enable an improvement in trust.” The company has been so pleased with the results in New York that it is eyeing expansion in other cities. Next up is Miami, where Citi will take over sponsorship of the three-year-old bike-sharing

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program in November. “We now have a lot of experience under our belts,” DiLandro said at American Banker’s Financial Services Marketing and Innovation Symposium in New York City in September, before the Miami sponsorship was announced. The New York program is far from perfect, as operational problems like broken docks, empty bike racks and malfunctioning card readers have frustrated users. Alta Bicycle Share, which operates the 16-month-old Citi Bike program, has taken most of the blame for these problems, though it’s possible that Citi, as the sponsor, could suffer a public relations hit if the problems linger. The program, despite its popularity, also has serious financial problems. It was designed to run without public funds, but it has cost more than expected, and now city officials are looking for additional sponsors to help keep it afloat.

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Still, as a pure marketing initiative, Citi Bike been a home run for the company, as ridership and media exposure have far exceeded expectations. Roughly 100,000 New Yorkers have bought annual memberships, 200,000 people have downloaded the app, and riders have taken some 13 million Citi Bike trips totaling more than 23 million miles. Local newspapers ran more than 1,100 articles on Citi Bike in its first three months and the program has received substantial national coverage, DiLandro says. More important for the company has been the effect on public opinion. In polls of New Yorkers three months after the launch, Citi found improvements of 25% in brand preference, 41% in brand consideration and 17% in positive impressions of the company, Citi says. Citi’s brand also improved on a national level, according to BAV Consulting. Its “brand esteem,” a metric created by the

consultancy to assess overall brand health, rose by 5% in the two quarters after Citi Bike was introduced. There was also an increase in the number of people who associate the brand with attributes like progressivism and environmental consciousness, says BAV analyst Claire Repp. Of course, judging from the return on investment for a single marketing campaign is notoriously difficult, especially for a company like Citi that advertises through multiple channels. It is possible, though, to estimate the value of Citi Bike as outdoor advertising — and that estimate suggests that, even apart from the polling numbers and all the good press, Citi got a good deal. Citi’s five-year sponsorship of the program cost $41 million, or $8.2 million a year. To put that in perspective, Citi is paying $400 million — $20 million a year for 20 years — for naming rights to Citi Field, the New York Mets’ baseball stadium. Citi spends around $2 billion a year on advertising and marketing worldwide. And outdoor advertising in New York City is expensive. It can cost several million dollars a year to rent a single billboard in a commercial center. There are now 5,400 bikes, each with five Citi logos, and 330 docking stations bearing the company’s name spread throughout the most densely populated neighborhoods of New York. This lets the company cut down its outdoor advertising in the city, DiLandro says. She compared the docking kiosks to bus shelters, where it can be expensive to advertise. A bus shelter ad in Manhattan costs between $1,300 and $6,500 for four weeks, depending on the location, according to Blue Line Media, which sells the ad space. Plus, the 5,400 bikes themselves function as rolling Citi advertisements. Quantifying the value of these is tough, but Jason Shen of the marketing-technology company Percolate took a stab at it using a metric called cost-per-mille, or CPM, that is widely used in the marketing field. This metric gives the cost of each form of advertisement per 1,000 consumer

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REGULATION & REFORM impressions, or viewings of the ad. Costs typically range from around $2.50 for Internet banner ads to $6 for national magazines and as much as $35 for television advertising. Shen estimates that, if Citi’s $41 million bought nothing more than the bicycles, it would still be at the relatively low CPM of $3.62. Perhaps the clearest indicator that Citi Bike has been a worthwhile investment for the company was the decision by Citi officials to replicate the strategy in Florida. Miami’s bike-sharing program began in 2011 with 1,000 bikes and 100 stations, and was named DecoBike after the local company that runs it. Until now it has operated only in Miami Beach, but with Citi’s sponsorship, it is being expanded to mainland Miami. Roughly 750 bikes and 75 docking stations will be added in Miami, and the city’s mayor said in October that if the program — to be re-branded as Citi Bike, but still run by DecoBike — is successful downtown it could expand into other neighborhoods. Citi’s sponsorship agreement runs for five years. The company did not disclose the financial terms.

The History of Capitalism Rare books recall when the Clearing House Association ran the banking system The Clearing House Association was famous for its accuracy and diligence in tracking the country’s payments system when it functioned as the central bank of the United States in the mid-19th and early 20th centuries. In fact, the organization was so confident in the integrity of its numbers that scribes tallied their calculations in pen and ink. Now 42 ledgers tracing the banking system’s response to crises like the financial panic of 1907 are available for all to

see — and double-check — at Columbia University’s Rare Book & Manuscript Library. The Clearing House’s 20-pound tomes are on permanent loan, along with meeting minutes and correspondence between Clearing House trustees and bank heads. These documents, which cover the period between the Clearing House’s founding in 1853 and 1984, show “moments when the Clearing House really rose to the occasion and became the last line of defense before economic collapse,” says Thai Jones, who serves as the American history curator at the Columbia library. “It’s a behind-the-scenes record of some of the most dramatic moments in the history of American finance and capitalism,” Jones says, citing the “crucial heroics” of 1907 in which J.P. Morgan, “a major Clearing House figure,” rallied his fellow bankers to step in and lend money to troubled institutions in order to avert a market collapse. “That experience was important in creating the drive for the Federal Reserve” in 1913, he explains. The records will undoubtedly be of interest to economic researchers who need access to historic Clearing House data, according to Paul Saltzman, president of The Clearing House Association (now an advocacy group representing 23 of the largest U.S. banks) and executive vice president and general counsel of The Clearing House Payments Co. Saltzman adds that those with an interest in the workings of private central banking will also find plenty of interest. “At a time when people are reevaluating the appropriate role of the Fed, it will be interesting for historians and policymakers today to see that time period when the Clearing House served as a central bank,” Saltzman says. Meanwhile, Columbia’s library was eager to get its hands on the archives as a way to flesh out its historical collections on three of New York’s major industries: publishing, philanthropy and finance. “The history of capitalism is one of the most important new trending fields

The N.Y. Clearinghouse Association in 1913

in historical study,” Jones says. “In the last few years since the financial crisis, there’s been a remarkable turn by historians to try to really understand what capitalists were doing, with a new sensitivity toward working people, women and people of color.” And while Jones admits that the handwritten ledgers are, to his eye, “utterly inscrutable,” he says they’re easily devoured by the number-crunching set. “We had the Clearing House [staff] over to celebrate and reconnect with the materials, and we opened up the ledgers to certain key dates” including Black Tuesday in 1929, Jones recalls. “Everyone was gathered around this 100-year-old book and began searching through the numbers and doing their own calculations,” he says. “They were immediately able to make sense of the statistics.” —Sarah Todd

FSOC Seeks Better Data The proposals are wonky, but they just may prevent the next crisis financial services regulators agree that they need better data in order to predict and prevent the next crisis. At an open meeting of the Financial Stability Oversight Council in October, policymakers unveiled two plans to enhance data collection. One is to further the use of a so-called “Legal Entity Identifier,” aptly described by one official as

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REGULATION & REFORM a “barcode for precisely identifying parties in financial transactions.” The other is to launch a voluntary pilot program so regulators can obtain more and better information about bilateral repurchase agreements to gauge the threat they may pose to stability of the system. It “sounds very technical in a lot of ways, but it’s nothing short of having visibility into the risks we face in the future,” says Treasury Secretary Jack Lew, the chairman of FSOC. “It’s very important we pay attention.” Both plans originate from the Office of Financial Research, an agency within Treasury formed by the Dodd-Frank Act to ensure regulators have better information about systemic risks. Richard Berner, the head of OFR, says that policymakers need to make more consistent use of LEIs, which are designed to help regulators keep track of parties in a transaction. He argues that

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the fallout from the collapse of Lehman Brothers in 2008 could have been different had such identifiers been in use. “Had LEI been in place in 2008, the industry, policymakers and regulators would have been better able to trace Lehman’s exposures across the system,” he said at the meeting. Broader use of LEI would also theoretically reduce industry burden, making it easier for institutions to report information. Berner pushed during the meeting for “ubiquitous” use of LEI in all relevant rulemaking by U.S. financial regulators. There are 300,000 LEIs already in use, covering institutions operating in 180 countries, Berner says. Other FSOC members broadly support the adoption of LEI systemwide. Comptroller of the Currency Thomas Curry says that an interagency working group has already been set up to “better utilize that information in our data ana-

lytics and supervision efforts.” During the meeting, Berner also talked about regulatory efforts to better understand repurchase agreements. The Federal Reserve Board has raised repeated concerns about repos, warning that institutions that rely on them too heavily for funding can be subject to rapid and debilitating runs. The OFR and the Fed have launched a pilot program to gather more information on the bilateral repo market, with the two agencies to begin data collection next year. Berner says that regulators have a better understanding of the tri-party repo markets, in which a settlement is assisted by a clearing bank, such as the Bank of New York Mellon. But information about bilateral repos, which occur without a third party, is “scant,” he says. “We do know that that part of the market is important,” Berner says. — Rob Blackwell

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METRICS & MEASURES LOAN TRENDS

What’s Driving the Recent Surge in Loan Demand? Bankers feel overwhelmed by new regulations and are frustrated that interest rates have stayed near zero for six years now, but at least one thing has them smiling: customers are borrowing again. In nearly every category — the exception being home equity lending — banks reported modest to strong loan growth through the first half of this year as consumer spending increased and businesses accelerated expansion plans. There are pockets of distress but, overall, senior bank executives are optimistic that the momentum will continue through the remainder of 2014 and into 2015. Dennis Klaeser, the chief financial officer at Talmer Bancorp in Troy, Mich., says that loan demand in the company’s Midwestern markets is “as strong as it’s ever been,” thanks primarily to a rebounding manufacturing sector. Talmer, founded in 2010 to roll up troubled banks, has seen demand pick up noticeably in such Rust Belt cities as Cleveland and Youngstown, Ohio, and it’s even hiring lenders in Detroit, Klaeser said at RBC Capital Markets’ financial institutions conference in Boston this fall. Lending is strong enough in some areas that regulators are raising concerns about concentration risk. Oil and gas exploration is booming right now, but in its most recent quarterly report on lending trends, the Office of the Comptroller of the Currency cautioned banks against loading up on loans in the energy sector. Another worry is that there are still too many lenders chasing too few quality loans, resulting in some banks loosening loan terms to win business. And there are some high-quality business borrowers that simply don’t need loans. Scott Kisting, the chairman and chief executive of AmericanWest Bank in Spokane, Wash., said he knows of one company that recently built a $54 million factory without borrowing a penny. “A lot of people aren’t borrowing money because they hoarded cash” in the years following the financial crisis, Kisting said at the RBC conference.

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Still, loan data from the Federal Deposit Insurance Corp. shows good reason for optimism. In recent years, much of the loan growth banks were reporting came from stealing market share from competitors that had scaled back lending or exited certain sectors entirely. This year may well go down as the turning point when total loan demand finally rebounded. Between June 30, 2010 and June 30, 2013, banks’ net loans increased by an average of just 2% a year, according to the FDIC data. Between June 30, 2013 and June 30, 2014, net loans climbed 5.3%, to $8 trillion — the largest year-over-year increase since 2007. Commercial and industrial lending has been a bright spot for banks in recent years and continues to drive overall loan growth. In the second quarter, C&I loans on banks’ books increased 10% year over year, to $1.66 trillion, in part because of increased demand in such industries as energy and health care. Dan Rollins, the CEO at BancorpSouth in Gulfport, Miss., said his company posted the strongest loan growth numbers in its history during the second quarter. Small-business lending accelerated noticeably in the second quarter. According to FDIC data, total small-business loans increased by 3.4% year over year, to $298 billion — the highest total in four years. But even though the dollar volume is up, smallbusiness loans — defined as those under $1 million — as a percentage of total loans has been shrinking. Since mid-2010, the percentage of small-business loans to total domestic commercial and industrial loans has fallen from 31% to 21% at June 30, according to FDIC data. This suggests that banks are focusing on larger credits. In commercial real estate, multifamily lending continues to be the key driver of growth, but construction lending is making a modest comeback. Total construction and development loans for the second quarter increased 10% from a year earlier, to $223 billion, marking the first year-over-year increase since 2008. — Alan Kline

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10/6/2014 10:44:00 AM

METRICS & MEASURES LOAN TRENDS

SMALLER SHARE Small-business loans as a percentage of domestic commercial and industrial loans is shrinking.

2Q 2010

2Q 2014

$1T Domestic C&I loans

31%

$310B Small-business loans

% of Small-business loans

$1.4T Domestic C&I loans

21%

$298B Small-business loans

LOAN DEMAND ON THE RISE Trillions $10 $9 $8.0

$8 $7.1

$7

$7.6

$7.3

$7.1

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$5 $4.3

$4.1

$4.1

$4

Net loans and leases Loans secured by real estate All commercial and industrial loans $4.1

$4.0

$3 $2 $1 $0

$1.7

$1.5

$1.4

$

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Q2 2014

*Defined as loans of less than $1 million Source: FDIC

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NOVEMBER 2014

10/10/14 4:02 PM

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Untitled-1 1

10/6/2014 11:42:21 AM

JOB NUMBER: 14-FMAC-0177

PROJECT NAME: TOAST AD - AMERICAN BANKER

Bryan Jordan, First Horizon’s chairman and CEO, started its Employee Leadership Program in 2010.

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THE CASE FOR CULTIVATING

CAREERS A leadership development program – described as “life-changing” by one of its graduates – helps First Horizon rate as one the industry’s most employee-friendly companies. BY ALAN KLINE PHOTOGRAPHY BY JASON MYERS

NOVEMBER 2014

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W

hen Bryan Jordan took over as chief executive of First Horizon National Corp. in 2008, he found much to appreciate about its culture. He liked that the workplace was collegial and family friendly, that the workforce was diverse and that management had a long history of encouraging — and acting on — employee feedback.

But one area where he believed the Memphis company could do better was in grooming talent. Though it was common for senior executives to mentor junior-level employees, he felt that First Horizon needed a more formal training program to build a stable of potential leaders who could think strategically about changes facing the company and the industry. So, at Jordan’s urging, the company launched its Employee Leadership Program, a 10-month course designed for mid-level managers who are seen as having senior-executive potential. The roughly 25 employees selected for the program each year take part in webinars, classroom instruction and executive coaching sessions. They also have reading assignments on roughly a dozen topics, including personal branding, leading for innovation, shaping organizational culture and understanding profitability. Getting into the program is competitive, with the final selections based on applications and interviews.

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“For us to build the organization over the long term, we need to have capable leaders who can not only get their people to follow them into tough situations, but who can think expansively about how the banking business is changing,” Jordan says. Though the program just started in 2010, it is already helping the $24 billionasset First Horizon and its First Tennessee Bank unit build bench strength, according to Jordan. Many of its graduates have moved on to more senior roles. Ben Hopper called his participation “life changing,” saying the skills he acquired and contacts he made through the program helped to earn him a promotion to his current role as vice president of retail strategy. Joy Bowen’s career trajectory also changed because of the program. She was a private client relationship manager at the time she participated, and though she wasn’t looking to switch roles, her thinking changed after she graduated. The program “enhanced my leadership skills, my cognitive thinking, my per-

sonal skills,” she says. “It really gave me the power to think about career advancement.” Bowen is now a vice president in Treasury management. It’s initiatives like the Employee Leadership Program that help make First Horizon such a desirable place to work. Attractive pay and benefits are a plus, but what employees want, above all, is to feel valued, to feel empowered to make decisions and to be given ample opportunity to better themselves professionally and personally, says Hopper. The company has been scoring high marks for employee satisfaction for decades, dating back to the tenure of Ron Terry, its chairman and CEO from 1973 to 1995. Its own research found that its best customers tended to want to do business with longer-tenured employees, so, under Terry, the company implemented programs aimed at improving job satisfaction and reducing turnover. A key initiative is what is now known as Firstpower, a rigorous quality control program that instills in employees how things should be done and empowers them to make decisions. Terry was also a strong advocate of encouraging employee feedback and an early champion of flexible hours — a big reason why Working Mother magazine has named the company a top place to work for 20 years running. But, Jordan says, while the workplace culture is “extraordinarily strong,” it can always use tweaking. Jordan, who was promoted to CEO of First Horizon and its bank unit after serving as chief financial officer for a year, is a strong proponent of communication, so he put in place a program that helps encourage more constructive feedback between managers and their employees through role paying and other techniques. Jordan himself routinely meets with employees across the company through informal “brown bag” lunches. “I always say he could never do ‘Undercover Boss’ because he knows every employee,”

NOVEMBER 2014

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jokes Kim Cherry, the head of corporate communications, referring to the popular reality television show. Cherry joined the company 28 years ago, when Terry was CEO. While that may seem like a long time to stay in one place, Cherry says that’s not unusual at First Horizon. Hopper is a relative newcomer. He joined from a much larger bank about five years ago and says that the cultural differences between the two institutions were noticeable within the first few days. He saw it as such a refreshing change from the more corporate culture to which he was accustomed that he even recruited one of his former colleagues to join him at First Horizon. “It’s a very different working environment — more like a family atmosphere,” Hopper says. “You get the feeling that everyone here cares about each other’s family life and personal and professional success.” That environment fosters loyalty in employees that might be hard to imagine at less-enlightened companies. Hopper says he is “working three times as hard” in his new role just as a way to thank the bosses who took a chance on him. Jonathan Lewis, a retiree relationship manager, says he is grateful the bank let him work remotely from New York City for a time, while his partner, a doctor, did his residency at Memorial Sloan Kettering Cancer Center. “I’m devoted to First Tennessee for allowing me to do that,” says Lewis, who has been with the bank for a decade. For his part, Jordan says that treating employees fairly and providing them with opportunities to stretch themselves is not only the right thing to do, it’s good business. “Having strong employee engagement and enthusiasm is vital because that’s what shows up to your customers and, ultimately, drives shareholder returns,” he says. □

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AMERICAN BANKER MAGAZINE

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CITIZENS BANK

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TO YOUR HEALTH

BANKS ARE COMING UP WITH CREATIVE STRATEGIES TO DEAL WITH THE RISING COST OF HEALTH CARE, FROM ON-SITE CLINICS TO FULL-TIME WELLNESS COORDINATORS THE BEST BANKS TO WORK FOR shower employees with profit-sharing bonuses, funnel them into leadership training programs and otherwise keep them happy. But like all banks, they are hard-pressed to shield employees from the expense of health coverage. “The cost of health care, the cost of benefits in general, is probably one of our biggest challenges,” says Marie Reed, human resources director at Veritex Community Bank in Dallas. Even after passage of the Affordable Care Act, that cost continues to climb. Though most banks are unlikely to scratch health insurance from the benefits menu, some are bound to begin talking about it, especially smaller ones that might have trouble managing the price tag, says Karen J. Hartnett, a human resources consultant in Houston who previously worked for regional banks in Texas. “I fear it’s going to come down to some very hard dollarsand-cents calculation, and the arithmetic is not necessarily our friend,” Hartnett says. “I just don’t know how we’re all going to deal with it.” For now, more banks are dealing with it by adopting high-deductible health plans. The plans — which promise lower premiums but shift more of the cost of routine care to employees — are offered by half the institutions on American Banker Magazine’s list of best banks to work for. In addition to slashing premiums, the plans will help banks avoid the so-called Cadillac tax, a levy expected to take effect in 2018 under the ACA. The tax will apply to plans that cost above a specific amount. “For many of the banks, their costs are expected to exceed that threshold,” says Erik Bagin, health and benefits consulting practice leader for Aon Hewitt in New York. “So they’re very focused on strategies to avoid the tax.” Banks have been equally focused on strategies to ensure employees aren’t dismayed by higher deductibles. Chesapeake Bank in Kilmarnock, Va., went slowly. The bank introduced high-deductible plans nine years ago, says Pat Lewis, its human resources director. But it continued offering traditional plans alongside them for two more years.When Chesapeake switched to high-deductible plans exclusively, it fully funded employees’ health savings accounts up to the deductibles, Lewis says. Over the ensuing years, Chesapeake slowly ratcheted down its contributions and now matches employee contri-

butions up to $500 or $1,500 annually, depending on the deductible. “We would not have been a great place to work if we had made that change abruptly,” Lewis says. Banks also are beefing up wellness programs, in the hope that healthier employees will help offset rising premiums. “You’ve got to have a good benefits package, but you can’t let the costs get out of line,” says Terry Turner, president and CEO at Pinnacle Financial Partners in Nashville. Pinnacle recently hired a full-time coordinator specifically to encourage participation in wellness activities. Among other tasks, the coordinator organizes events such as the bank’s annual 5K run, and maintains a wellness section on Pinnacle’s intranet. In another cost-saving move, some banks have opened on-site health clinics, or contracted with third parties to offer clinics in off-site locations. The clinics are designed to make routine and preventive care more accessible to employees — and less expensive. Centier Bank opened a clinic last year at its corporate headquarters in Merrillville, Ind., and has partnered with neighboring employers to offer clinics in other areas where it operates, says Chrisanne Christ, the bank’s senior vice president of human resource development. Centier foots the bill for all employees and any dependents covered under the bank’s insurance plans. BankPlus in Mississippi considered opening an on-site clinic, but instead opted to work with the University of Mississippi Medical Center to create a telehealth option. Starting this fall, employees can use an office webcam to see doctors for ailments such as the flu, ear infections and poison ivy. Visits, as well as certain prescriptions, will be free for employees, and the option is expected to reduce time missed from work. “Education of our employees is going to be key to get them to use it,” says Dianne Pepper, its human resources director. “Hopefully, next year at this time we will have some very impressive numbers to support our decision.” Like Centier, Veritex offers a high-deductible plan alongside other options. Veritex’s health insurance costs have gone up about 5% a year since 2010, and Reed says it would be more cost-effective for Veritex to drop health insurance and pay the government penalty. But, she adds, “That’s not the right thing to do, and that’s not how we treat our employees.” — Joel Berg NOVEMBER 2014

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BEST BANKS TO WORK FOR

1 LIVE OAK BANK Wilmington, N.C. Assets: $502 million Employees: 147 Chairman and CEO: James “Chip” Mahan 3rd A meeting would have sufficed for Anne Mino, who just wanted an opportunity to discuss her heavy workload. But her manager, Micah Davis, was one step ahead of her. Davis had already been asking senior leaders about hiring someone to help out Mino, who is an event marketing manager for Live Oak Bank in Wilmington, N.C. Three weeks later, the new employee was on board, giving Mino yet another reason to celebrate the job she started

2 PINNACLE FINANCIAL PARTNERS Nashville Assets: $5.8 billion Employees: 775 President and CEO: Terry Turner Six months of meetings and phone calls finally convinced David Dooley to join Pinnacle Financial Partners in 2009. He had to wait three months longer for his orientation. The Nashville company holds sessions for new employees on a quarterly basis, and he had just missed the last one. It was worth the wait. “I remember sitting there in that

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in December. “This is truly the best opportunity I have ever had in my entire life,” says Mino, who worked as an interior designer and for an event production company before being hired by Live Oak. “I have never worked for a company that I am so excited about.” Live Oak does small-business lending nationwide, with a focus on niche industries, including veterinary practices, pharmacies, funeral homes and independent financial advisory firms. It does not operate any retail branches. But it does operate two corporate jets, which are available to employees for business travel. “Everybody would say that’s the stupidest damn thing in the world,” says James “Chip” Mahan 3rd, Live Oak’s chairman and CEO. But Mahan believes that spending above the industry average on employees brings above-average results. Perks abound on the company’s campus, which features a gym, a dog park and catered lunches every Friday. This year, the bank, which opened

orientation and thinking, ‘This place just keeps getting better and better and better,’” says Dooley, a senior vice president and financial adviser who works out of a Pinnacle office in Knoxville, Tenn. He was particularly impressed that the bank’s president and CEO, Terry Turner, spent the whole day with new employees. Dooley had not been looking for a job when Pinnacle came courting — he had been at his previous job for more than three decades. But he was the type of banker Pinnacle seeks to attract. “We are trying to hire happy and successful people, which sounds a little trite, but the truth is, that is what we are trying to do,” says Turner. The banks also tends to hire only people with at least 10 years of experience.

in 2008, awarded stock options to all employees after it decided not to go public, instead opting to accept a passive private equity investment. “I operate from the premise that to create something special, you really just have to make sure that your people understand that every single one of them is special,” Mahan says. It didn’t take long for the feeling to sink in with Mino. She jumped at the chance to work at Live Oak after meeting Micah Davis, the bank’s marketing director, at a children’s Halloween party in fall 2013. Their children were attending the same school. After Mino started, she was impressed with how the people at Live Oak kept their word. For example, managers told her the gym was open for use any time. But Mino wondered if they really meant it, especially if she left her desk in the middle of the workday. They did mean it and, when she went to the gym, she was pleasantly surprised to find senior executives sweating alongside her. “It’s not one of those, ‘Do it when you

Like Dooley, those people rarely say “yes” during the first phone call. One recruit took eight years to persuade, Turner says. “It’s a prolonged recruitment process.” But it’s a process that has helped make Pinnacle one of the best places to work among banks of its size. Since its founding in 2000, Pinnacle has grown to 775 employees. They staff more than 30 branches around Tennessee, and enjoy benefits ranging from a bankwide bonus program to an annual anniversary party at the Ryman Auditorium, a prominent country music venue in Nashville. After he was hired, Dooley wondered whether the anniversary event, held in late October, would serve primarily as a spotlight on the company’s top executives. “I kept thinking, ‘Where’s

NOVEMBER 2014

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can fit i you’re “It’s, ‘w More nomic a tendini petitive With and a tr ated he change cutting talk to h ing on t “Be c here, b Mino sa

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At left, Live Oak employees test-drive a BMW as a reward for their hard work. Above, Avenue Bank’s company band, the Hummingbirds, perform in Nashville’s corporate challenge.

can fit it in,’ or ‘Do it at 6 a.m. when you’re not on company time,’” she says. “It’s, ‘we really want you to do this.’” More recently, Mino needed ergonomic adjustments at her desk to ease tendinitis she had developed from repetitive clicking on a computer mouse. Within two days, a senior manager and a trainer from the gym had evaluated her situation and made several changes, including the installation of cutting-edge software that allows her to talk to her computer instead of punching on the keyboard. “Be careful what you wish for around here, because you’re going to get it all,” Mino says.

the hook? They got you down here. Where’s the hook?’ There was never a hook,” Dooley said. “It was a party. That’s all it was.” Over the past year, Pinnacle has focused on shining a bigger spotlight on employees. Recently, for example, it produced and distributed videos showcasing the daily work of employees, such as the IT staff, whose contributions can be hard to measure. The featured employees enjoy the attention, Turner says. So do other employees, who like seeing their colleagues recognized. “Everybody wants to feel like they’re making a difference,” Turner says. “So we are pretty intentional about trying to find ways to make sure they can feel that and understand that we do appreciate their contributions.”

3

1st National, founded in 1876, operates eight branches in east-central Wisconsin.

1ST NATIONAL BANK

4

Berlin, Wis. Assets: $349 million Employees: 85 President and CEO: Tom Jensen

AVENUE BANK

The winter holidays bring deposits of cookies, candy canes and other treats to 1st National Bank. But employees have a powerful incentive to lay off the goodies. About three quarters of them team up and take part in the bank’s annual holiday weigh-in challenge, which rewards employees for maintaining their usual weight between Thanksgiving and New Year’s. Prizes have included exercise DVDs, healthy cookbooks and gift cards. The challenge is part of 1st National’s wellness program, says Jenny Johnson, the bank’s human resources leader. Employees compete in teams of four to six people, who are weighed in November and again in January. “Very rarely do we see teams that aren’t able to make that challenge,” says Johnson. “Everyone kind of holds themselves accountable during that time period.” In addition to the weigh-in challenge, employees enjoy a paid day off for birthdays, flexible work schedules, and “Beer-30s,” impromptu celebrations held toward the end of the work day to mark birthdays and anniversaries, or to relax after a busy day.

Nashville Assets: $955 million Employees: 120 Chairman and CEO: Ron Samuels It’s not called “the back office” at Avenue Bank. It’s called “the heart of the house,” and Avenue’s executives don’t let security workers, loan processors and others who toil behind the scenes forget how important they are to the bank’s success. Avenue’s operations director regularly hosts appreciation events, which include visits from a massage therapist and catered breakfasts and lunches. “The employee around here is No. 1, and we walk our talk. The executives walk our talk,” says Judith Locke, formerly Avenue’s human resources director and now its executive coach. “We believe that if we treat each other well, then our employees will treat our customers well.” The belief has guided the bank since its founding in 2007. It operates four branches around Nashville. Every Tuesday morning, employees gather for a staff meeting led by the bank’s chairman and CEO, Ron Samuels. They mark anniversaries, relate

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BEST BANKS TO WORK FOR

stories of positive interactions with customers and share whatever is on their minds. Once, an executive humorously explained how to use the bank’s unisex bathrooms, Locke says. “It’s like a family gathering,” she says. “You never know what’s going to happen in that meeting.”

5 FIRST CITIZENS NATIONAL BANK Dyersburg, Tenn. Assets: $1.2 billion Employees: 277 President and CEO: Jeff Agee When First Citizens National Bank needed a new title to match a recently revamped role for its branch employees, it didn’t turn to consultants. It asked the employees, as a way to engage them in the process of learning about changes in their responsibilities. About 75 employees submitted entries, says Kerrie Heckethorn, the human resources officer at First Citizens. The winning entry was “financial experience specialist.” “They’re the only person a lot of customers see, and their value is very high,” says Heckethorn. “We wanted them to realize how important that position is.” First Citizens has about 20 branches, serving communities in middle and western Tennessee. Founded in 1889, the bank is celebrating its 125th anniversary, a milestone it is incorporating into events and contests throughout the year. The employee who coined the “financial experience specialist” title, for example, won $125. So did the winner of the bank’s annual mutual funds contest, typically held in the spring. Employees invest play money, and the best return wins a prize.

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6 FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF PASCAGOULA-MOSS POINT Pascagoula, Miss. Assets: $275 million Employees: 54 President and CEO: Weldon Perkins As children, Richard Perkins and Sam Stauter watched the annual Mardi Gras parade in Pascagoula, Miss., from the front steps of First Federal Savings and Loan Association of PascagoulaMoss Point. First Federal allowed employees, and their families and friends, to park in the thrift’s lot and throw an informal party as the floats rolled by. The thrift, founded in 1955, has a tradition of bringing employees together around food. Mardi Gras is no exception. Perkins and Stauter, now in their mid-20s and First Federal employees, had the idea to create a more formal event to coincide with the parade, so they approached bank executives, who said yes. First Federal’s first official Mardi Gras party was held in 2013, says Stauter, a customer service representative. The thrift provided all the food and drink, while Perkins and Stauter secured a commercial smoker, which they used to cook sausage, wings, hot dogs and pork tenderloin. “When the idea was first mentioned to management, I think Richard and I both were a little surprised that they trusted two young guys to plan the event,” says Stauter. “That’s not to say they didn’t have a watchful eye on what we were planning, but they showed a lot of faith in the younger generation.” First Federal operates six branches in Jackson County, Miss.

7 BELL STATE BANK & TRUST Fargo, N.D. Assets: $3.1 billion Employees: 596 Chairman and CEO: Richard Solberg Comfortable shoes likely are near at hand for the CEO of Bell State Bank & Trust, Richard Solberg. He personally delivers all year-end bonus checks to the bank’s employees in the locations where they work. As he makes the rounds, he stops to thank employees for their hard work throughout the year. Believing happy employees result in happy customers, leaders at Bell make an effort to keep workers smiling. One way they do this is by having professional photos taken of employees with their families at Bell events like baseball games and “Kids Night with Santa.” A photo is generally on each employee’s desk by the next workday. Hiring anniversaries are treated like a major event. Employees are invited to one of 12 luncheons during the year, based on whichever month they were hired. They also get a call from Solberg, on the anniversary of the day they were hired. But the biggest smiles of all come from Bell’s “Pay It Forward” program, which distributes money to employees that they then give to individuals, fami-

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lies or organizations in need. Full-time employees receive $1,000 each year, while part-timers get $500. The program, which launched in 2008, recently expanded to allow others in the community to share the experience of paying it forward. Each Bell employee now chooses a customer, vendor or local resident, who then also receives money to donate. Bell, founded in 1966, operates 20 branches in North Dakota and Minnesota, as well as wealth management offices in Idaho.

8 REDWOOD CAPITAL BANK Eureka, Calif. Assets: $262 million Employees: 51 President and CEO: John Dalby It’s a ritual traditionally reserved for presidents, astronauts and other bigwigs. But the list of people invited to toss out the first pitch at a baseball game now includes employees of Redwood Capital Bank. The opportunity comes during the bank’s annual picnic, which takes place at a local baseball game. An employee selected in a drawing throws the opening ball for the Humboldt Crabs, a summer collegiate team based in Arcata, Calif. Employees’ children join in the

fun as bat boys and bat girls. Redwood Capital, founded in 2004, operates three branches serving communities in Humboldt County in northern California. Although the bank is small, it strives to promote from within. To help employees gain the skills needed to step up, Redwood Capital offers several training opportunities. Four employees have enrolled in the Pacific Coast Banking School. Others take advantage of the bank’s offer to pay for extended education classes at Humboldt State University. Future employees learn about the bank through an internship program operated by Humboldt State’s business school.

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Bank leaders also benefit from Capital City’s Career Camp, a program that brings together employees who demonstrate leadership potential. They spend a year in the program, wrapping up their bankwide training with the presentation of a project to executive management. Branch employees often hold client appreciation events and celebrate holidays, such as Halloween and Christmas. They also suffer through periodic bouts of bad weather, primarily from hurricanes and tropical storms. But when the rain falls and the wind blows, employee can count on Capital City. If severe weather shuts down the bank’s operations, employees get paid leave without having to use paid time off. If they can’t make it home, the bank picks up the hotel and restaurant tab. Capital City, founded in 1895, operates more than 65 branches in Alabama, Florida and Georgia.

10 CITY BANK Lubbock, Texas Assets: $2.1 billion Employees: 553 President and CEO: Cory Newsom

CAPITAL CITY BANK Tallahassee, Fla. Employees: 929 Assets: $2.5 billion Chairman, President and CEO: William G. Smith Jr. Management may come naturally to some people. But Capital City Bank doesn’t leave the task to nature. The bank offers a course to all new managers, as well as some veteran managers, to ingrain its own management style.

Lose weight, gain time off and some extra spending money. It’s proving a reliable formula for the wellness program at City Bank. In 2013, bank employees and their spouses earned incentives totaling more than $120,000 and more than 4,000 hours of paid time off for exercising, losing weight or maintaining a healthy weight. Participation is made easier for employees thanks to all of the bank’s efforts to encourage activity. A walk-

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ing track winds through the top floor of City Bank’s headquarters building, and employees can spend 30 minutes a day there while on the clock. Similar options are available for employees in branches and the bank’s call center. Wellness activities are not the only way to earn time off either. Employees can extend their weekends or vacations by volunteering. More than 150 employees, including the bank’s chairman, Curtis Griffith, take turns delivering meals on wheels in the Lubbock area. City Bank, founded in 1941 as First Bank of Morton, operates more than 20 branches in Texas and New Mexico. The name changed to City Bank in 1984.

CHESAPEAKE BANK Kilmarnock, Va. Assets: $650 million Employees: 196 Chairman, President and CEO: Jeffrey Szyperski Support for local stores is a companywide affair for Chesapeake Bank. As part of a campaign called “It’s All About Community,” the bank offers employees a variety of ways to get involved in efforts to promote their small-business neighbors. Among the most prominent effort is a semiannual Shop Local day. The bank takes out extensive advertising in support of the event, and supplies shopping bags with a Shop Local logo. Businesses offer discounts during the event, but bank employees have an extra reason to open their wallets. During the most recent Shop Local day, Chesapeake encouraged employees to take photos of themselves while shopping, post the pictures on Facebook and then tag the bank’s marketing director. The most creative selfie won a $150 Visa gift card. AMERICAN BANKER MAGAZINE

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12 VERITEX COMMUNITY BANK Dallas Assets: $710 million Employees: 122 President and CEO: C. Malcolm Holland

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Chesapeake, founded in 1900, operates 12 branches in southeastern Virginia, as well as a loan production office in Richmond. A subsidiary in Williamsburg, Va., Chesapeake Investment Group, offers wealth management services. The bank promotes an open-door atmosphere, in part by having the CEO call employees on their birthdays.

Online compliance classes drop to the bottom of many bankers’ to-do lists. But the sessions are quickly checked off by employees of Veritex Community Bank. If they seem eager, it’s probably because they earn an extra vacation day if they complete all their assigned classes

14 COBIZ FINANCIAL Denver Assets: $3 billion Employees: 472 CEO: Steven Bangert It seemed like a small price to pay for not getting an annual physical — $25 tacked on to an employee’s monthly health insurance premium. But CoBiz Financial announced the price in 2009, a time when employees already were on edge about the

by the end of February each year. Employees also receive time off to volunteer with community organizations. But they give on their own time as well. Once a month, for example, Veritex employees skip their lunch hour and head to Fair Park, a low-income area of Dallas, where they assist a nonprofit called SoupMobile in feeding homeless men, women and children. Personal touches grace many of the bank’s recognition efforts. On their birthdays, employees receive a handwritten note from the CEO, while the

banking industry, according to Sue Hermann, the communications director for the Denver bank. Amid the country’s wider financial crisis, they did not take kindly to the potential for higher premiums. They wondered what was next. “It was a reminder that we’re doing things that affect our employees intimately,” Hermann says. The adverse reaction prodded CoBiz’s leaders to explain the new policy in more detail, and add tweaks to make it more palatable. Employees now can use a paid day to get a physical, and the bank structured its health coverage to ensure the appointment is free. The potential morale-killer became a springboard for a wellness program enthusiastically embraced by employ-

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Chesapeake Bank CEO Jeffrey Szyperski and employees volunteering at a farmer’s market in May.

bank’s birthdays are marked by cakes delivered to branch staff. Veritex, founded in 2004, operates nine branches, primarily serving areas north of Dallas.

13 1ST SUMMIT BANK Johnstown, Pa. Assets: $874 million Employees: 176 President and CEO: Elmer Laslo Activity to relieve stress/promote fun: An upscale holiday gala includes a cocktail hour, hors d’oeuvres, dinner, dancing, and a dessert bar, as well as gifts for every employee. Community service initiative: More than 50 employees took part in a shopping event to provide winter clothing, toys and treat bags to 125 children from low-income families. The children also paid a visit to Santa Claus.

ees, says Hermann. “What started from the top down has really become a grassroots, bottom-up effort.” So-called “walking meetings” — with a path that winds through downtown Denver — have become popular at CoBiz, including some led by the bank’s CEO, Steven Bangert. Other employees are leading yoga and stretching classes, while one started a bicycling group. Some have volunteered to be wellness ambassadors; these employees ensure everyone at CoBiz, no matter which location they work from, has a voice in bank programs. Moreover, about 95% of employees now undergo a yearly physical exam, Hermann says. And CoBiz has since eliminated costs under its health plan for preventive medications.“We really

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OLD POINT NATIONAL BANK

SOMERSET TRUST CO.

Hampton, Va. Assets: $856 million Employees: 274 Chairman, President and CEO: Robert F. Shuford Sr.

Somerset, Pa. Assets: $874 million Employees: 313 Chairman, President and CEO: G. Henry Cook

Popular with employees: Career advancement opportunities include a year-long management trainee program that prepares future leaders by deepening their understanding of the banking industry. Activity to relieve stress/promote fun: Full kitchens at all bank locations encourage employees to throw parties and potlucks to celebrate personal milestones, such as birthdays and marriages. Fitness/wellness program: Old Point employees have access to free mammograms, flu shots and screenings for cholesterol and blood pressure.

Popular with employees: A caring work environment is key for Somerset Trust. Activity to relieve stress/ promote fun: Holidays in its branches are celebrated with decorations and clothes appropriate to the occasion. The bank marked National Pet Week by posting a slideshow of pet photos. Fitness/wellness program: Massage chairs have been installed in its main office and operations complex.

have some concrete ways that we’re encouraging wellness, and removing barriers to being well,” Hermann says. The bank’s flexible approach has roots in its founding 20 years ago, she says. CoBiz, which serves business customers in Arizona and Colorado, initially hired senior bankers who brought in clients, and then gave them freedom to do business as they saw fit. Although the bank has grown, it has continued to prioritize employee engagement and involvement in decisionmaking. “You can only do loans and deposits so many ways,” Hermann says. “But the people that we put in front of our customers, that’s our . And if we have engaged, passionate employees, that’s how we grow our company.”

17 CENTIER BANK Merrillville, Ind. Assets: $2.5 billion Employees: 678 President and CEO: Mike Schrage Activity to relieve stress/promote fun: Weiner Fest is a bank event that features grilled hot dogs and brats. It also includes games and the election of a Weiner King and Queen. Community service initiative: A full-time employee is focused on financial literacy and leads year-round educational efforts, including a seminar series on TV. Sustainability initiative: Centier’s fleet is made up of hybrid vehicles, and employees are encouraged to use them when traveling on bank business.

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FIRST INTERNET BANK Indianapolis Assets: $866 million Employees: 121 President and CEO: David Becker

FIRST HORIZON NATIONAL CORP.

Popular with employees: When the weather outside is bad, First Internet brings lunch to the office. Community service initiative: A bank program provides each employee with up to $300 that they can give to a nonprofit organization of their choice. Fitness/wellness program: A recent fitness campaign encouraged healthy eating and exercising during the holidays, and paid out a cash incentive to participants.

20 CHARTER BANK Eau Claire, Wis. Assets: $580 million Employees: 60 President and CEO: Paul Kohler Community service initiative: Half of Charter’s employees took part in the Eau Claire Marathon, either as runners or volunteers. The bank sponsored the event, and encouraged race participation by paying half of each employee’s registration fee. Fitness/wellness program: Employees who do not use any sick days in a year receive a recognition award. Bonus/incentive program: Monthly monetary rewards are given to employees based on whether the bank is meeting or exceeding goals for net income.

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Memphis Assets: $24 billion Employees: 2,456 Chairman, President and CEO: Bryan Jordan Jamie Herron assumed she would have a tough sell when she sought to enroll in a program designed to groom up-and-coming community leaders. After all, she was a branch-level financial services representative. Her employer, First Tennessee Bank, a unit of First Horizon National Corp., typically paid only for higher-level employees to join those kinds of programs. But the bank gave Herron a green light, and she remains grateful a year after she graduated from Leadership Donelson Hermitage. “To me, it was a game changer,” says Herron, who now is a market manager overseeing two branches in a western suburb of Nashville. “It was, ‘They’re going to invest in finding money for me. I’m going to be their representative out in this area. People are going to know where I’m from. They’re going to know that I’m proud to work there.’” Herron has her eye on other leadership programs too, including First Tennessee’s emerging leaders program. About 25 of the bank’s mid-level professionals, such as branch managers, commercial relationship managers and operational leaders are selected to participate in the program each year. Then they get to run through

what amounts to a 10-month MBA program. “It’s very competitive,” says John Daniel, the chief human resources officer at First Tennessee. The program launched in 2010 in response to employee feedback, he says. “Our employees said to us that they wanted to make sure that we were developing people from within, and that we had a robust, diverse pool of candidates.” So far, employees who have gone through the program are being promoted at a rate nearly double that of their peers, Daniel adds. The bank’s attention to the future is complemented this year by a focus on the past. Founded in 1864, First Tennessee is celebrating its 150th anniversary. The celebration has taken numerous forms throughout the year. The bank sponsored a fundraising contest to benefit 150 nonprofits. It also passed out stovepipe hats to employees, reminding them that the bank was founded when Abraham Lincoln was U.S. president. Other historical highlights include the efforts of one employee, bookkeeper Charles Q. Harris, to keep the bank open during a yellow fever epidemic in Memphis in the 1870s. “We’ve spent a lot of time this year talking about our culture in the context of 150 years of growth and support for our communities,” says Bryan Jordan, the bank’s chairman, president and CEO. “We talk about what the country has seen over that period, and what we’ve done in terms of building our business.”

Execs ringing the closing bell at the New York Stock Exchange on January 7.

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Foresight is 20/20. If you want to know what’s next in financial services technology, look to the leader in digital banking, payments, account processing and more. fiserv.com/next

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COMMUNITY TRUST BANK

FIRST GREEN BANK

BUSINESS FIRST BANK

Ruston, La. Assets: $3.4 billion Employees: 610 President and CEO: Drake Mills

Mount Dora, Fla. Assets: $288 million Employees: 68 Chairman and CEO: Kenneth LaRoe

Baton Rouge, La. Assets: $683 million Employees: 89 President and CEO: David “Jude” Melville

Popular with employees: Annual holiday parties held in each market region feature food, drinks and dancing. Community service initiative: Project Enrich provides each employee with up to 20 hours of paid time each year during work hours to volunteer with approved charitable organizations in areas served by Community Trust. Career development/training program: A website for employees illustrates potential career paths and provides articles about careers within the bank, job descriptions and a manager’s guide to career planning.

Activity to relieve stress/promote fun: First Green marks the start of summer with a week of themed days, including Thirsty Thursday, when employees bring in beverages. Sustainability initiative: A Green Commuter program reimburses employees up to $50 per month if they carpool, walk, bike or use mass transportation to get to work. Employee recognition/appreciation program: The Mission Minded award goes to an employee who has demonstrated increasing enthusiasm for the bank’s environmental focus over the previous year.

Popular with employees: Business First’s “Dollar for Dollar” program provides up to $250 in matching donations to charities supported by employees. Community service initiative: Employees at each bank location are empowered to select people or groups from their communities, whether clients or not, and reward them with thank-you gifts and donations. Bonus/incentive program: Annual bonuses based on the profitability of each location and the bank overall average 10% of salary. Spot bonuses are given to employees who go above and beyond on projects.

METHODOLOGY: AMERICAN BANKER’S BEST BANKS TO WORK FOR study is performed with the Best Companies Group, which generates the rankings based on reviews of employer reports on benefits and policies, along with extensive employee surveys. Companies must opt in to be considered; there is no fee to participate. To be eligible, applicants must be commercial or retail banks, or the commercial or retail banking units of diversified financial services companies, and they must have at least 50 employees working in the United States. The employer questionnaire captures information about workplace policies and practices. The employee survey, typically conducted online, consists of approximately 80 statements that employees respond to on a 5-point agreement scale. The survey also includes two open-ended questions and seven demographic questions. For companies with fewer than 200 employees, all employees are surveyed. At larger companies, Best Companies Group randomly selects between 250 and 400 employees to participate, depending on the company’s size. In both cases, the targeted response rate is 65 percent or more, although companies with lower response rates may still be considered. Both data sets are analyzed to determine the ranking. An Employee Feedback Report is available for purchase by participating banks. To be considered an American Banker Best Bank to Work For, an institution must meet certain criteria set by American Banker and Best Companies Group. Not all eligible applicants may qualify for the ranking. For information on applying to next year’s ranking of American Banker’s Best Banks to Work For, please visit www.bestbankstoworkfor.com. If you have further questions about the program, please send an email to American Banker Magazine Executive Editor Bonnie McGeer at [email protected].

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24 BANKPLUS Ridgeland, Miss. Assets: $2.4 billion Employees: 771 President and CEO: William A. Ray Popular with employees: BankPlus’ health insurance program offers premium discounts to employees who complete four wellness-related activities. Community service initiative: The bank’s CreditPlus program is a lowinterest, small-dollar loan alternative to payday lenders and check-cashing services. Participants are invited to attend financial literacy seminars. Fitness/wellness program: Filtered water and scales are provided at all facilities, encouraging employees to drink more water and check their weight.

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UNITED COMMUNITY BANK OF WEST KENTUCKY

AMERICAN SAVINGS BANK Honolulu Assets: $5.4 billion Employees: 1,187 President and CEO: Richard Wacker

Morganfield, Ky. Assets: $221 million Employees: 52 President and CEO: Garland Certain Activity to relieve stress/promote fun: Whenever the calendar strikes Friday the 13th, the 13th customer of each teller is showered in confetti and handed $13. Community service initiative: United Community established a community fund that allows employees to host fundraisers throughout the year and donate the proceeds to groups and organizations they choose. Fitness/wellness program: A nurse from a local hospital visits each office once a month to check employees’ blood pressure, conduct screenings, hand out educational materials and answer questions.

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CENTRAL BANK Lexington, Ky. Assets: $1.9 billion Employees: 505 Chairman, President and CEO: Luther Deaton Popular with employees: Wellness and self-help classes take place during work hours and employees are paid to attend. Sustainability initiative: Customers can choose to use biodegradable bags when leaving deposits in the night depositories. Bonus/incentive program: All Central employees who are not officers receive an annual Christmas bonus of $1,250.

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Activity to relieve stress/promote fun: Occasional contests encourage employees to work together on a project and challenge one another. A recent gingerbread house contest, for example, attracted 80 teams. Winners enjoyed a pizza party. Fitness/wellness program: American Savings’ corporate office features a dedicated “LifeBalance” room, which offers a variety of fitness classes throughout the week. The room also houses exercise equipment, a shower, and a TV and DVD player that employees can use to play fitness videos on their own. Sustainability initiative: On-site

NORTH SHORE BANK Brookfield, Wis. Assets: $1.8 billion Employees: 496 Chairman and CEO: James McKenna Margie Brusa isn’t one to scroll through Facebook. But she has warmed up to a social networking site created by her employer, North Shore Bank. The site, which launched in May, serves as a single hub for all the various ways bank employees can recognize each other, whether to celebrate a

produce delivery is offered at various bank locations to promote local farming.

29 THE MUNCY BANK AND TRUST CO. Muncy, Pa. Assets: $370 million Employees: 82 President and CEO: Daniel Berninger Activity to relieve stress/promote fun: An interior-window decorating contest held in December allowed employees to show off their creativity. Community service initiative: The bank is a sponsor of the Muncy Valley Hospital Lawn Party, an annual fundraiser for the local hospital. Many bank employees volunteer at the event, with several having served as committee chairs.

birthday, mark a work anniversary or express thanks for an extra effort. “We can’t always walk up to someone else’s desk and say, ‘Congratulations! I heard you did something good,’” says Brusa, who manages the branch at North Shore’s headquarters in Brookfield, Wis. “It’s an easier way to communicate.” It’s also an easier way to hand out incentives. When recognizing good work electronically, managers have the option to give out points, which employees can save and redeem to buy electronics, furniture and other items. “It’s basically like shopping on Amazon,” says Molly Schissler, North Shore’s vice president of human resources, who recently used the system to reward two employees for referring job candidates. “There’s quite the variety of things that people can choose from.”

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Career development/training program: Employees can job-shadow their colleagues to learn about positions that interest them so they are ready to apply when there’s an opening.

30 SQUARE 1 BANK Durham, N.C. Assets: $2.7 billion Employees: 241 President and CEO: Doug Bowers

Popular with employees: A lounge area in Square 1’s Durham office provides an opportunity for employees, known as “Squares,” to break up their day with a video game or a game of pool or ping pong. Fitness/wellness program: Employees who complete 125 credits through the online wellness portal of the bank’s health insurer receive a 25% rollback on their insurance premiums for the second half of the plan year. Career development/training program: The bank’s Every1Gets1 program supports employees in attending at least one training or career development course each year.

ber eir Employees in the Pewaukee, Wis., office of North Shore Bank help out at the Taste of Lake Country event.

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Much like Facebook, the bank’s site also allows employees to create profiles, which Schissler says is part of its appeal. “It’s been fun seeing individual photos and profiles,” she says. Another benefit of the online reward system is its visibility. With the old system, known as NSBThanks.com, praise was visible only to the givers and the recipients, Schissler says. But with the new system, dubbed Seymour Salutes, the recognition can be seen by everyone, and is open to comments, another similarity to Facebook. Seymour is the name of the bank’s mascot, a seagull.

Brittany Dahlke, a video teller supervisor, says she rarely used NSBThanks. But she is a regular visitor to Seymour Salutes. “I’m probably on the site at least once a week to recognize other employees, or just kind of look around and check up on recognitions.” Dahlke, who works in the Brookfield office, has been with the bank about three years. “What I like most about North Shore Bank is kind of the family feel,” she says. “And it’s a very community-minded bank.” North Shore, founded in 1923, has 47 branches in eastern Wisconsin and northern Illinois.

Square 1 employees prepare to serve breakfast during a volunteer shift at Urban Ministries of Durham.

31 ZIONS FIRST NATIONAL BANK Salt Lake City Assets: $17.5 billion Employees: 2,518 President and CEO: A. Scott Anderson When they want to talk with someone about advancing their careers, employees at Zions First National Bank don’t have to squeeze in yet another meeting during the workday. They have their own version of a college fair, known as a “career university night,” hosted by the bank’s human resources department. The events allow employees to discuss their career goals with senior officers and explore educational opportunities with representatives from local universities. If employees decide to head back to the classroom, they can expect some help with the cost. The amount depends on the number of applicants and the types of degrees, but Zions typically awards $2,500 per school year for employees pursuing an undergraduate degree and $6,000 for those in an MBA program. Among employees’ favorite activities is a four-week wellness competition dubbed “March Madness.” The

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employees divide into teams, and each team competes for titles based on minutes spent on financial, physical, spiritual and mental wellness activities. In this year’s four-week competition, 1,293 participating employees logged more than 3.8 million minutes. That works out to a 56% increase in the average number of minutes per employee per week compared with last year. Exercising should get more convenient for those at the corporate office in Salt Lake City, with the addition of an on-site fitness center. The bank also offers its far-flung employees discounted rates to fitness centers in their area. Zions First National Bank, founded in 1873, is the lead bank of the $54.6 billion-asset Zions Bancorporation, a multi-bank holding company that operates more than 500 offices across 10 Western states.

32 BOILING SPRINGS SAVINGS BANK Rutherford, N.J. Assets: $1.4 billion Employees: 186 President and CEO: Robert E. Stillwell Fitness/wellness program: An employee activity committee coordinates in-house workshops featuring presentations by medical professionals from Hackensack University Medical Center. Topics include nutrition, diet, stress and heart health. Employee recognition/appreciation program: During Employee Appreciation Week in October, senior officers greet employees at the door. Employees also are treated to pizza, ice cream and other goodies. Family-friendly benefit/practice: This year, Boiling Springs Savings provided identity-theft insurance to employees and qualified family members for free.

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SECURITY BANK

CITIZENS BANK

Midland, Texas Assets: $820 million Employees: 143 CEO: Jim Smitherman

Sandusky, Ohio Assets: $1.2 billion Employees: 321 Chairman and CEO: James Miller

Popular with employees: A paid day off in exchange for 100 hours of volunteer service. Community service initiative: Every year, Security’s branches sell raffle tickets to raise funds for Permian Basin Rehabilitation Center. Employees also volunteer at the center’s telethon. Bonus/incentive program: All employees are eligible to receive a year-end bonus.

Popular with employees: Citizens matches employees’ monetary pledges to United Way, and offers a day off with pay to employees who make pledges at a certain level, based on hourly pay. Communication tool/practice: When attending training sessions or a group meeting, employees are encouraged to stop by to see the bank’s president, human resources director or other members of senior management.

PLENTIFUL PEOPLE PROBLEMS WHEN THEY’RE NOT FIGURING OUT HOW to keep health insurance affordable, bankers are wrestling with a slew of other human-resources challenges. Topping the list are recruitment, leadership development and employee engagement, according to executives and consultants in human resources. Banks also face tougher competition for talent, not just from each other, but from other types of businesses. “It’s not like I’m having mass groups go out to other industries, but it’s definitely been on the rise,” says George Myers, human resources director at Zions First National Bank in Salt Lake City. “More and more companies are seeing our bankers as viable candidates.” Those companies consider bankers to be experts in helping businesses know when they need additional funding, what funding options to consider and how to maximize the return, Myers says. “They’re often a strategic partner with a business, so those businesses say, ‘Why don’t you come work for me full time?’” Bankers can return the favor by raiding other industries for talent, especially as they eye replacements for senior executives who are close to retirement, says J. Timothy O’Rourke, president and CEO of Matthews, Young Management Consulting in Hillsborough, N.C. “Even if they haven’t been able to afford to have four or five people in the wings inside the bank, at least they will know people outside,” says O’Rourke. Banks also face recruiting challenges at the entry level, driven by the switch to a universal banker model, in which branch employees are expected to work as both tellers and customer service representatives. “The goal is fewer, better-trained, cross-trained employees who can do a little bit of everything in the branch,” O’Rourke says. Banks will need to adjust their recruiting strategies to target people who have strong interpersonal and math skills, but also are good at problem-solving and sales, he says. Salaries are apt to climb as branch employees do more work requiring greater skill. “The challenge is trying to find a good mix of professionalism while also realizing that these entry banking jobs may not turn into a longer career for tellers and universal bankers,” says Molly Schissler, vice president of human resources for North Shore Bank in Brookfield, Wis. In cases where North Shore can’t find enough strong candidates in a given location, it has adapted, for example, by hiring video tellers to work out of the bank’s main office. – Joel Berg

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Employee recognition/appreciation program: Supervisors recognize retail employees for exceptional work and nominate them for paid time off as a reward.

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BANK FIRST NATIONAL Manitowoc, Wis. Assets: $1.1 billion Employees: 176 President and CEO: Michael Molepske Popular with employees: Bank First National provides opportunities for bonuses at all levels of employment, along with other financial perks like tuition reimbursement. Fitness/wellness program: Employees are reimbursed up to $25

38 ALERUS FINANCIAL Grand Forks, N.D Assets: $1.5 billion Employees: 589 President and CEO: Randy Newman Alerus Financial scooped up several failed institutions in the aftermath of the financial crisis. While the acquisitions enlarged the bank’s footprint, they also stretched its employees, who put in long hours to ensure the successful addition of new customers. So, after striking a deal with BNC National Bank in Scottsdale, Ariz., at the end of 2010, to take on some of its business in two states, Alerus execu-

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per month for fitness memberships. Sustainability initiative: The bank is rebuilding and remodeling many of its branches to be more environmentally friendly. It is using LED lights, energyefficient boilers and carpeting made from recycled rubber tires, for example.

HAPPY STATE BANK Happy, Texas Assets: $2.4 billion Employees: 578 Chairman and CEO: J. Pat Hickman Popular with employees: Happy State gives employees the freedom to act like an owner when it comes to taking care of customers. If a customer is upset, tellers also can hand out a $5 bill with a sticker

tives wondered how they could motivate and reward employees during yet another conversion. The acquisition brought loans and deposits in Arizona and Minnesota, as well as a branch in Scottsdale. “There’s a lot of stress and a lot of last-minute things to consider and take care of and act on,” says Teresa Wasvick, the human resources director at Alerus. “We wanted a way to show employees our appreciation for all that work.” The bank settled on a series of fun, stress-relieving activities dubbed “Conversion Madness.” The name reflected the event’s timing; it coincided with college basketball’s “March Madness.” Though Mallory Berdal logged extra hours during the week and over the weekend, she enjoyed the special activities. They included chair massages, meals served up by the bank and theme days. On Sports Day, Berdal wore a Chicago Bulls shirt she’s had since high school. Others wore jerseys

that reads, “We’ll make you happy.” Community service initiative: The bank teamed up with Snack Pak 4 Kids, whose goal is to end weekend hunger for school children. Employees “raised” 154,567 Pop-Tarts, a contribution valued at $26,200. Fitness/wellness program: Once a year, the bank hosts a mobile mammography coach, which offers digital mammographies to employees, saving them a trip to an imaging center.

Po cart c last d moch Fi some Em tion recog hand empl

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BRIDGE BANK

Oklah Asse Empl Presi

San Jose, Calif. Assets: $1.6 billion Employees: 237 President and CEO: Daniel Myers

Ac fun: from the University of North Dakota. “It just brings some excitement to come in that day and look around and see everybody participating,” says Berdal, who was managing the bank’s call center at the time. When the next conversion came around, this past summer, Alerus tried some new ideas based on employee feedback. Chief among them was the introduction of a cubicle stocked with treats, rewards and supplies. On Hawaiian Day, employees grabbed colorful leis. On Silly Co-Worker Day, employees walked around the office in fake mustaches and beards. The conversion — following the acquisition of Private Bank in Minneapolis — took place in mid-July. Berdal, now the bank’s deposit operations manager, is looking forward to whatever madness accompanies the next transaction. “We’re a growing bank, so I know there’s more to come in the future,” she says.

NOVEMBER 2014

10/10/14 2:51 PM

The Kids, er sed”

ce a mog-

ing

Popular with employees: A coffee cart circulates through the office on the last day of each month, bringing lattes, mocha and other specialty drinks. Fitness/wellness program: Lunch sometimes features meditation classes. Employee recognition/appreciation program: Under the bank’s spot recognition program, all managers are handed a sizable budget to reward employees at their own discretion.

39 THE BANKERS BANK Oklahoma City Assets: $243 million Employees: 64 President and CEO: Don Abernathy Activity to relieve stress/promote fun: Massages are available on staff

40 ELMIRA SAVINGS BANK Elmira, N.Y. Assets: $517 million Employees: 123 President and CEO: Tom Carr Popular with employees: Elmira Savings’ annual Halloween contest has

appreciation days. Fitness/wellness program: This year, the Bankers Bank is challenging employees to walk a distance equivalent to traveling from California to Maine

employees compete for branch and individual awards, with winners snagging a trophy and bragging rights for the year. Heavy participation in a recent contest was rewarded with an additional day of paid time off for all employees. Sustainability initiative: The bank installed solar panels at a branch in Ithaca, N.Y. Employee recognition/appreciation program: Employees receive a $2,500 award for earning a bachelor’s degree, and $1,000 for an associate’s. The bank also pays half the cost of earning the degree.

and back. Employee recognition/appreciation program: The CEO gives coin proof sets and Ghirardelli chocolates to employees every year.

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MEET & GREET THE CIRCUIT

Wary of Making One False Move Regardless of whether the topic was M&A or cybersecurity, speakers at a recent regulatory symposium kept coming back to the same message: reputation is everything. Alan Kline reports. reputation theme, reminding bankers that weak Remember the days when bankers were anti-money-laundering controls will almost uneasy about buying other banks because they 4th Annual surely hinder their ability to make acquisitions. worried about what problems might be lurking American Banker Curry advised buyers to be sure that their bank in the seller’s loan portfolio? That’s so 2008. Regulatory and the banks they are planning to acquire are These days, buyers worry far less about credit Symposium in full compliance with all Bank Secrecy Act rerisk than they do about compliance risk, accordWhen: Sept. 22-23 porting requirements. ing to Richard Davis, the chairman and chief exWhere: Westin ArlingRegulators are taking an increasingly tough ecutive at U.S. Bancorp. ton Gateway, Arlington, stance on BSA enforcement and it’s a virtual Speaking at the American Banker RegulaVa. guarantee that they will delay — and delay some tory Symposium this fall, Davis said evaluating a For: Bankers, regulamore — any deals whose participants have isseller’s loan portfolio is relatively easy, because tors, legislators and sues in that area. BancorpSouth this summer bankers understand the fundamentals of credit lawyers withdrew applications for two planned acquirisk and because credit quality is generally prisAttendees: 150 sitions after drawing regulatory scrutiny of its tine nowadays. Much harder to assess is whether BSA compliance, and M&T Bank Corp. is in the any missteps occurred in, say, the filing of suspiKey themes: midst of overhauling its anti-money-laundering cious activity reports or the modifications made • Reputation risk controls as it tries to complete a deal for Hudson to home loans — violations that might not be dis• Bank Secrecy Act City Bancorp that’s been pending for two years. covered until years after the fact. And it can be enforcement Calvery refuted bankers’ frequent claims impossible to spot outright fraud. • M&A hurdles that the suspicious activity reports they file each “The public, which evaluates brand repuHost: American Banker year fall into a “black hole,” arguing that the tation, doesn’t remember who bought what,” reports are crucial to helping law enforcement Davis said in a question-and-answer session with reporters following his speech. “That’s got to weigh heavily initiate cases or expand existing cases. She said that, from March 2013 to April 2014, 34% of the because you protect your brand first and foremost.” Davis wasn’t alone in stressing the importance of protecting FBI’s investigations of organized crime and drug trafficking the brand at the two-day conference. In keynote after keynote, sprung from suspicious activity reports filed by financial instipanel after panel, speakers kept coming back to the message tutions. She added that, in the month prior to her speech, FBI investigators had come across 2,500 reports that were directly that reputation is everything. In the opening speech, Federal Deposit Insurance Corp. relevant to more than 1,000 ongoing cases. Still, filing those reports is a burden for banks, especially Chairman Martin Gruenberg urged banks’ to be vigilant about cybersecurity, suggesting that lax policies could damage their small ones. In a panel discussion, McCall Wilson, the CEO of reputations. In her speech on day two, Jennifer Shasky Calvery, the Bank of Fayette County in Moscow, Tenn., questioned why the director of the Financial Crimes Enforcement Network, or banks like his face the same reporting requirements as larger FinCEN, stressed that a strong anti-money-laundering policy ones. He said that community bankers know their customers not only helps avoid a large fine, “it saves your institution’s well enough to recognize whether a transaction looks suspicious. “It has gone so far out of whack,” said Wilson. “The pareputation, which is something you can’t put a price on.” Comptroller of the Currency Thomas Curry also hit on the perwork is not worth the effort we are putting into it.”

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Calvery, though, wants bankers to think of BSA compliance not as a nuisance, but as their civic duty. And creating a “culture of compliance,” as she put it, starts at the top. “First and foremost, leadership should be engaged,” she said. “The commitment of an organization’s leaders should be visible, as such commitment influences the attitudes of others within the organization.” She added that compliance “should not be compromised by revenue interests,” noting that some BSA enforcement actions have come as a result of top bank officials withholding information from employees whose job is to report suspicious activity to FinCEN. ”Information-sharing is important because being a good corporate citizen and complying with regulatory responsibilities is also good for a company’s bottom line,” Calvery said. The conference was a civil affair, though things did get testy during a panel discussion on a Justice Department probe known as Operation Choke Point. Choke Point’s aim is to prevent fraudulent merchants from accessing the payments system, and its mere existence has prompted many banks to stop doing business with payday lenders and other businesses that may be seen as unsavory, such as gun dealers and porn shops. Depending on who you ask, the probe is either a legitimate attempt to protect consumers from fraud or an example of egregious government overreach that has essentially spooked banks into cutting ties with perfectly legal businesses. It was the most lively panel of the conference,

especially when Kenneth Edwards, the vice president of federal affairs at the Center for Responsible Lending, and Dennis Shaul, the CEO of a trade group that represents storefront payday lenders — the Community Financial Services of America — squared off over the probe’s impact on payday lending. Shaul complained that, as a result of Choke Point, many legal, licensed payday lenders have had their accounts closed by banks and now have nowhere to keep their deposits. As Edwards sees it, that’s not a bad thing. Payday loans “lead to an evisceration of personal wealth,” he said. If banks and third-party processors do business with high-risk businesses like payday lenders, then it is appropriate for regulators to “bear down” on them, he argued. But Shaul disagreed that payday lenders pose a risk to banks. “Contrast the 20-year history of payday lending accounts and most of the banks that have discontinued this, and ask yourself: Where was the safety-and-soundness question? Where was the infamous incident that led someone to say, ‘Gee, this is a reputational risk?’ It’s nonexistent,” he said. Shaul also worries that Choke Point will wind up forcing banks to cut ties with businesses they view as morally questionable. “Everywhere I go, people come up to me and give me more examples. Last year it was career education, sometimes it’s commercials on TV, sometimes it’s ammunition sellers,” he said. Ultimately, Choke Point affects “much more” than just payday lenders. □

EVENTS For upcoming events and seminars, go to americanbanker.com/ conferences

Who’s Talking...

f the cking insti, FBI ectly

cially EO of why arger mers uspie pa-

Martin Gruenberg FDIC

Jennifer Shasky Calvery FinCEN

McCall Wilson Bank of Fayette County

NOVEMBER 2014

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BANKTHINK By Katsumi Hatao

has set a goal of filling 30% of management positions with women by 2020, I believe there should be a target of 50% of women in upper management in the Having worked with inspiring women throughout my career, I firmly believe United States. that more women should occupy senior positions and be represented at every level of This belief stems from my work at the responsibility at every business, not just in banking, but across the board. It isn’t just Bank of Tokyo, where my experiences about fairness; it’s about surviving in a global marketplace. with women in management underWhen I began my career with The Bank of Tokyo, a predecessor to the current scored the importance of gender equalMitsubishi UFJ Financial Group, there were many women in management positions, ity. And while the Bank of Tokyo was including several who were general managers. Working in that environment gave me more progressive than its competitors, a deep respect for more equal representation in the workplace. there was still work to be done. This respect was further strengthened while I was in Hong Kong overseeing banking Thus, I established a department operations throughout Southeast Asia. There, I met many female executives, governspecifically to “career path” women ment officials, and heads of state, and found that countries like Malaysia, Singapore, forward, which sent the clear message the Philippines, and others in the region were leading the world in gender diversity. that if the company needed to create Thailand currently has the highest number of female CEOs at 49%, well above the a special initiative to advance women, global rate of 24%. By contrast, the G7 economies, including the United States, have they weren’t doing enough through just 21% of senior roles filled by women; Japan is at the bottom of the list at 7%. normal channels. That department has In order to achieve real progress, more countries need to include women in every been renamed and is now the Diversity rank in business. The entire global mindset must change and environments must be and Inclusion Office at MUFG in Tokyo, established and supported to create equal opportunities for women as a matter of headed by a senior female manager. course, not as a novelty. But the financial services industry is This will be no easy task, and part of the solution is to emphasize the economic as just one piece of the global corporate well as social reasons why this kind of environment must become the norm and not puzzle. This step cannot be taken alone. the exception. We must see this through together We are seeing some progress across the United States, with a record 24 women as a company, as a nation and across helming Fortune 500 companies. But considering that women represent nearly 51% of the world. Only then the U.S. population, there is much room for improvement. can we expect more On a more encouraging note, the 7.8 million women-owned OPINION women in the upper businesses as of 2007 represent a 20% increase from 2002, acFor more viewpoints on industry echelons of leadercording to the National Women’s Business Council. issues, visit the BankThink page on AmericanBanker.com ship in every facet of As the number of women-owned firms climbs, the way we do our society — from business must reflect this emerging trend. For example, in today’s corporations to government leadership. marketplace, an exclusively male team meeting with a company headed by a woman When this happens, it will be comcan’t expect to win her banking business. Corporations — and in my case, the bank – monplace to anticipate, not hope, that must reflect modern society. our daughters, nieces and granddaughTo achieve a more equitable work environment, the first step is to set specific tarters, will not only break through the gets and be committed to reaching them. Just as Japan’s Prime Minister Shinzo Abe glass ceiling, but destroy it along with Katsumi Hatao is the president and CEO of MUFG Union Bank and CEO for the Americas the notion of any self-imposed limitaat parent company Mitsubishi UFJ Financial Group. tions. I look forward to that day. □

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MICHAEL HOEWELER

Don’t Just Count Women, Make Sure They Count

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BACKPORCH ROSS HOGAN

“People get fired over things like this, people lose sleep over things like this and organizations, from a morale perspective, sometimes never recover.”

Kaspersky Lab’s global head of fraud prevention, on the sometimes crippling emotional and human toll of data breaches

“Clearly there are some banks taking deals and doing things that they haven’t done since the crisis.” Managing partner at TCP Capital Corp., on the concessions he’s seeing in loan terms and rates for middle-market corporate borrowers

NEIL WOODFORD

“The size of any potential fine is unquantifiable, so this represents an unquantifiable risk.”

“I don’t know that I personally at least would declare ‘too big to fail’ ended. In fact, I know I would not.”

Federal Reserve Governor, speaking at an Institute of International Finance meeting in Washington

“Absolutely no one wants to create a big bank and put up with all this crap.” Smead Capital Management’s CEO, arguing that bank stocks are a good investment now because, thanks to harsh regulators, the likelihood of new competitors is low

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“I don’t run my career on karma.”

KeyCorp chairman and CEO, reacting to Microsoft CEO Satya Nadella’s comment that it is good karma for women to wait for a raise rather than ask for one

BARRY BARKER

“The threats were unreal. They said they were going to send the sheriff to my house within 24 hours.”

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