By Yimian Wu<\/p>\n
How does a small, privately-owned community bank compete against the dominant banking giants?<\/p>\n
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\u00a0painful Recession-bred crisis and resumed profitable growth.<\/p>\n
\u201cOnce when we were in Paris,” recalled Chicago customer Karen Fort, “we tried to use our debit cards and the machine wouldn\u2019t take it. So Keith called the bank\u00a0and they said \u2018Hello, Mr. Fort! Sure.\u2019 and they punched the numbers in the computer and they said, \u2018Now try it again.\u2019 In Paris, it worked.”<\/p>\n
The\u00a0Forts live across the street\u00a0from Countryside Bank\u2019s\u00a0branch on\u00a0Belmont Avenue on Chicago’s North Side. Keith said, \u201cThis is the only bank where when I walk in the door, the teller looks up and calls me by name.\u201d<\/p>\n
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Seeking to break out of the pack, the bank undertook a rebranding campaign that\u00a0included shortening its name from State Bank of Countryside, the southwest suburb where it was founded in 1975,\u00a0making its website more user-friendly, and renovating its\u00a0five locations with a modern appearance.<\/p>\n
Once elaborately ornamented with marble desks and floral wallpaper,\u00a0the main bank’s\u00a0interiors now look modern and fun. Two teller pods replaced the eight teller windows, and waiting lines vanished\u00a0because\u00a0of new\u00a0lounge\u00a0areas where clients wait and\u00a0enjoy refreshments. Instead of brochures,\u00a0the bank provided\u00a0tech bars with touch screens allowing clients to learn about its products.<\/p>\n
\u201cBrochures are very old school,” said Senior Marketing Assistant\u00a0\u00a0 Erica\u00a0McKee. “People just don\u2019t like to have lots of stuff. They\u2019d rather either look at it, or e-mail it\u00a0to themselves, or if they do want the sheets, they have the ability to print them.\u201d<\/p>\n
\u201cI hate to say it,” admitted Co-president John Wheeler after the bank\u2019s rebranding campaign launched\u00a0in February, “but it is a commodity business to a certain extent. So you do have to differentiate to show why you are different.”<\/p>\n
The other co-president is John’s brother Bill; they’re sons of the bank’s founder, Jack Wheeler.<\/p>\n
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\u00a0forced a great contraction.<\/p>\n
In 2006 the bank\u2019s 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\u00a0assets shrank to $568.9 million in 2013.<\/p>\n
At the end of 2008, according to John Wheeler,\u00a0the bank started to take aggressive actions, from auctioning properties to raising capital to save the bank. In 2013 the bank had a major turnaround\u00a0 with net income of $8.4 million.<\/p>\n
Last year Countryside\u00a0increased 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.<\/p>\n
Coming out of the crisis, Wheeler said, he would not forget the lesson learned. He also said, \u201chaving the same ownership group for 40 years has allowed us to really take a long-term view.\u201d The Wheeler family owns the holding company of the bank.<\/p>\n
He said that every year the bank holds celebrations for five-year, 10-year and 15-year employees. \u201cEven when we were losing tens of million dollars a year, we did not lay off employees,\u201d he added. Currently, the bank has around 80 employees.<\/p>\n
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.<\/p>\n
\u201cSub-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,\u201d said\u00a0McKee, the marketing assistant.<\/p>\n
Construction payout loans represent over half\u00a0 the bank\u2019s total loans.<\/p>\n
In fact, the bank’s rebranding centered on the concept of \u201cbuilder.” John\u00a0Wheeler said, \u201cA brand isn\u2019t what you think you are. It is what customers think you are.<\/p>\n