Taking Credit
How local community banks spur profitability and growth
by Bill Donahue

Most large banks use data-rich line graphs, pie charts and other indices to determine whether or not they have had a successful quarter. Not First Federal of Bucks County, which has more than 10 locations throughout Bucks County. Sure, the bank’s leaders pay plenty of attention to daily deposits and other vitally important transactions, but its most important metric cannot be found on a spreadsheet, according to bank president and CEO Jeane M. Coyle.

“For us, it’s become a simple formula,” says Coyle, who took the reins as the bank’s chief executive on July 1. “You could really boil it down to one question: Would you recommend us to someone else? That’s pretty much how we operate here. We generate most of our business from referrals, so we’ll have people come in and say, ‘So and so banked with you, so I’m reaching out to you for this purpose.’”

This is perhaps the key differentiator between the big, nationally or regionally focused “mega-banks” and the community banks whose leaders live and work in the communities their institutions serve. This, of course, is not to say that larger banks either don’t care or are not successful in satisfying the needs of their customers, but community banks tend to take a more personal, pull-up-your-bootstraps approach to meeting customers’ needs. Community banks tend to be more inclined to be more in tune with their surrounding homeowners and businesses because they are, in a way, intertwined; healthy communities equal healthy community banks.

“People like the convenience of going to a branch and getting good customer service from friendly employees; you will never replace the employee contact you get in a community bank,” says Joseph J. Tryon Jr., president and CEO of Hatboro Federal Savings. “My employees are people who live in the community, go out in the community and spend money in the community. Our people will be friendly with customers here in our office so that when they see them out on the street, they’re friendly with them there, too.”

Hatboro Federal Savings, which is headquartered in Hatboro and has branch offices in Warminster, Warrington and Jamison, takes a grassroots approach to determining if it is meeting customers’ needs, with physical surveys distributed by tellers. Often, these yield accolades for specific employees or benign comments that might not lead to anything substantial, but sometimes customers chime in with something significant.

“It’s a changing world out there, and we want to know how our customers feel about the changing world,” says Tryon. “Our no-fee checking account, that came from a customer survey. Online banking, that came about through a customer survey. Debit cards came through customer surveys. The opening of our branches on Saturdays (Jamison and Warminster only, from 9 a.m. to 12 noon) came through the surveys.”

Hatboro Federal is also a strong supporter of community groups and organizations, from local Rotary groups to Little League teams to local schools. In fact, the organization recently donated $222,222 to eight Bucks County and eastern Montgomery County educational foundations and community groups, including the Centennial Education Foundation, Hatboro-Horsham Educational Foundation, Mercer Museum, Upper Moreland Education Foundation, Outdoor School in Horsham/College Settlement Camp and Union Library of Hatboro.

For First Federal’s part, most of its senior team has experience working for larger, publicly traded banks. What is perhaps most unique in a community bank is the access customers have in an institution of First Federal’s size. For example, the bank hosts two CEO breakfasts each year, where customers have the chance to interact with and ask questions of members from the bank’s brain trust.

“There’s a definite benefit for business customers, because community banks are looking at longer-term planning; they’re not making decisions in some other city that are based on a quarterly number,” Coyle says. “There’s also the ability to tell your business story to the president of the bank and have that person sitting in front of you, being interested.”

Keeping Up
Results from an April 2013 Cisco Customer Experience Report suggest Coyle may be right. Consumers identified the most important attributes when interacting with their financial institution or financial advisor as availability (63 percent), competence (65 percent) and efficiency (68 percent). Consumers also indicated a willingness to exchange more details about their financial habits and having banks be more active advisors in exchange for greater protection from identity theft (83 percent), increased savings (80 percent) and personalized service (78 percent).

“In some ways things have stayed the same in terms of the things that are important to customers,” says Coyle, whose bank has its expansion sights set on Doylestown. “For consumers and small businesses, convenience still comes out in research as No. 1, so having a physical presence is still important. What has changed is that people are coming in less frequently, but they will come in with questions about credit and about the technology services we provide.”

Mobile banking has evolved from simple online banking to enabling customers to conduct business through their mobile phones or tablet devices, thereby pushing smaller banks to keep pace with not only their customers but also their larger competitors. For its part, First Federal plans to roll out a mobile banking product through a third-party vendor in the first quarter of 2014, proving that technology “is not a hurdle,” according to Coyle.

Likewise, Hatboro Federal has also made strides to upgrade its financial services to keep up with what Tryon calls “technology-astute individuals.” The bank already offers online banking, and Tryon suggests the bank is continually looking to improve its model and make it more customer friendly, adding, “Our board is very interested in anything to do with technology.”

Technology aside, the ever-so-slowly improving economy has created opportunity, as well as struggle, for community banks and their customers. “There is money to be leant” for homeowners looking to move into a better home, according to Tryon, but many of the homeowners Hatboro Federal calls customers are standing pat, at least for the immediate future.

“We’re going to keep going slowly up the steps,” says Tryon, now in his 44th year with Hatboro Federal, 27 of which he has spent as its president. “We were at the bottom in 2008, and we’ve made some positive steps to go higher. The recovery is not happening as quickly as anticipated, so I think we’re looking at another few years of slow recovery.”

Since 2008, the bank has “basically not grown,” according to Tryon, though it has worked to become one of the most profitable institutions in the region, in terms of net worth, and make sure it is properly serving the needs of its customers. “You can grow and grow faster than you can afford to grow,” he says. “We look at the five- to 10-year scope of the institution and make decisions that will make us be profitable on a regular basis but also on a future basis.

“I like to be optimistic about it, and optimistically, it’s a good time for banking,” he continues. “I think the sun rises and sets on community banks. We are the lifeblood of the communities we serve.”

Financial Resource Guide
The following banking institutions and financial planners excel at helping their clients achieve their goals, financially speaking, whether it’s to save for a new home, plot out a retirement or otherwise plan for the future.

Fairman Family Group Office
899 Cassatt Road, Suite, 115, Berwyn
610-889-7300 | fairmangroup.com

First Federal of Bucks County
Visit firstfedbucks.com for more information on locations throughout Bucks County.

Fulton Bank
Visit fultonbank.com for more information on locations throughout the Philadelphia suburbs,

Hatboro Federal Savings
Visit hatborofed.com for more information on locations in Bucks and Montgomery counties.