By Yimian Wu
How does a small, privately-owned community bank compete against the dominant banking giants?
Cultivating long-term personal relationships, developing niche products and embracing innovation such as a total interior redesign is how 40-year-old Countryside Bank survived a painful Recession-bred crisis and resumed profitable growth.
“Once when we were in Paris,” recalled Chicago customer Karen Fort, “we tried to use our debit cards and the machine wouldn’t take it. So Keith called the bank and they said ‘Hello, Mr. Fort! Sure.’ and they punched the numbers in the computer and they said, ‘Now try it again.’ In Paris, it worked.”
The Forts live across the street from Countryside Bank’s branch on Belmont Avenue on Chicago’s North Side. Keith said, “This is the only bank where when I walk in the door, the teller looks up and calls me by name.”
New Look and New Feature
Seeking to break out of the pack, the bank undertook a rebranding campaign that included shortening its name from State Bank of Countryside, the southwest suburb where it was founded in 1975, making its website more user-friendly, and renovating its five locations with a modern appearance.
Once elaborately ornamented with marble desks and floral wallpaper, the main bank’s interiors now look modern and fun. Two teller pods replaced the eight teller windows, and waiting lines vanished because of new lounge areas where clients wait and enjoy refreshments. Instead of brochures, the bank provided tech bars with touch screens allowing clients to learn about its products.
“Brochures are very old school,” said Senior Marketing Assistant Erica McKee. “People just don’t like to have lots of stuff. They’d rather either look at it, or e-mail it to themselves, or if they do want the sheets, they have the ability to print them.”
“I hate to say it,” admitted Co-president John Wheeler after the bank’s rebranding campaign launched in February, “but it is a commodity business to a certain extent. So you do have to differentiate to show why you are different.”
The other co-president is John’s brother Bill; they’re sons of the bank’s founder, Jack Wheeler.
Surviving the Recession
Like many U.S. banks, Countryside was hit hard in the Great Recession of 2008-2010, suffering huge losses that caused a capital inadequacy and forced a great contraction.
In 2006 the bank’s total assets were $1.1 billion and net income was $39 million. However, from 2008 to 2013, due to a heavy focus on real estate construction loans, the bank experienced four years of losses from 2009 to 2012, and its assets shrank to $568.9 million in 2013.
At the end of 2008, according to John Wheeler, the bank started to take aggressive actions, from auctioning properties to raising capital to save the bank. In 2013 the bank had a major turnaround with net income of $8.4 million.
Last year Countryside increased net income to $10.5 million and total assets to $589.8 million. The critical Tier One capital ratio increased to a comfortable 13 percent. The ratio of the loan loss provision to average assets decreased to 0.53 from 2.61 in 2009. So the bank was released from a 2012 consent order with the Federal Deposit Insurance Corp last year.
Coming out of the crisis, Wheeler said, he would not forget the lesson learned. He also said, “having the same ownership group for 40 years has allowed us to really take a long-term view.” The Wheeler family owns the holding company of the bank.
He said that every year the bank holds celebrations for five-year, 10-year and 15-year employees. “Even when we were losing tens of million dollars a year, we did not lay off employees,” he added. Currently, the bank has around 80 employees.
Construction Payout Loans
Wheeler said a niche product is critical to compete with other banks in the fragmented industry. So for many years Countryside has specialized in construction payout loans, which simplify and expedite payments to sub-contractors on construction projects.
“Sub-contractors will turn in the paper and sign off from their general contractors and give it to us and we quickly process it and they walk away with a check. If they are waiting for a title company, it takes a while,” said McKee, the marketing assistant.
Construction payout loans represent over half the bank’s total loans.
In fact, the bank’s rebranding centered on the concept of “builder.” John Wheeler said, “A brand isn’t what you think you are. It is what customers think you are.
“We have these customers who are builders,” he went on. “We start to think everybody is a builder. People build families. They build their savings. They build their future. They build their dreams. When you build, you are growing,” he added.
The bank finally came up with a one-line motto: “It’s grow time.”
“One of the great joys in banking is that it is symbiotic. When your customers are profitable, you are profitable. It’s kind of a win-win,” explained Wheeler.
The bank also encourages engagement with children. It added gaming stations for children in each location so that children can play when they are waiting for their parents.
It also urges children to open saving accounts, with a minimum of only $5. Financial literacy games, such as a cash puzzle, are also provided in its website for children. “It is part of the community and it is part of family. Even for a little kid, we want to teach them the value of savings,” said Wheeler.