Tennessee Bank Finds a "Better Way"

Scenario:

In the 1990s, Chattanooga, Tennessee based First Volunteer Bank was six independent community banks in seven counties. Each had its own board of directors, management structure, and way of doing business. All that they shared was a common holding company.

To take advantage of competitive technologies they needed a single system. By 2000, the six banks had been merged into one entity with a common, newly purchased technology base.

Culturally, however, things hadn't really changed. The bank was now managed geographically with six regional presidents presiding over their same turf as branches. Rather than finding economies of scale from the merger, this approach was keeping costs high - as much as 1-1/2 times their competitions' costs. It was not the best way to serve their customers.

Solution

A Different Approach Holds the Key

Patti Steele, President of First Volunteer attended the SC+T Academy of Professional Banking where she discussed her bank's situation with some of the other attendees. One of them told her how SC+T had helped his bank improve its business processes.

"I went to lunch with some SC+T personnel and got to walk through their process," says Steele. "We had already paid another company to do an opportunity assessment for us, and we had not been at all satisfied with the results. I could tell just from what I learned at that lunch meeting that SC+T had a different way of doing things."

Within a short time, the bank had received a package of materials designed to help them gather the information SC+T would need for the first stage of the OA process. "Their assessment was very thorough," says Steele. " The materials they sent us were organized and helped us pull together the information they requested. Then they brought a whole team of people in for the on-site stage. It was very different from the other firm we had worked with."

A few weeks later they had a detailed report identifying weak areas, highlighting areas where they could improve their processes to better serve their customers, and showing how making changes could impact the bottom line - and by how much. This gave the executive officers and the Board something to work with. "We weren't sure how we were going to arrive at the numbers they gave us, but they knew, and that was all we needed," says Chairman Robert Anderson.

A Team Effort

The SC+T team came in March and helped organize internal teams to focus on lending, retail, deposits, and administration. The make-up of the teams was critical. They needed to include staff members, not just management, and each team member had to agree to attend every meeting.

A coordinating person was also selected for each branch. This person was in charge of implementing the teams' instructions at the branch and carrying the branch staff's questions back to the team, so the team could respond and make sure the instructions were appropriate and well implemented.

The teams met every few weeks, and SC+T facilitated each meeting. "Typically, when you work with consultants, they give you their recommendations and then they leave, " says Steele. "SC+T was different. They stayed and held our hand through the process, and they're still coming back to check on things."

Results:

Commitment to Change, Commitment to Grow

Communication was the first step in getting everyone in the bank, from the board room to the back room, to commit to the plan, so the bank held "town meetings" and set up a site on the company's intranet. Next, every employee had to sign a "Service Level Agreement" and a "Customer Pledge" that they placed on their desk. This promise to give superior service could be seen by customers, and served as a constant reminder that everything the bank (and the employee) did was about helping the customer. Both Anderson and Steele feel that this pledge played a large part in the success they are already seeing.

Executive Management signed their own pledge to employees, committing to giving them the training they would need. This helped the bank grow more expertise, making it possible to hit higher and higher benchmarks, and it continued to foster a team effort. "We've built expertise in areas we didn't even have in place before we started this process with SC+T," says Anderson.

"This engagement turned out very differently from what I was expecting," says Steele. "In addition to changing many processes, we're changing our culture."

This shift is helping the bank become more focused on building relationships, so they can compete on service, not price. As a result they are replacing low-end customers with better, more profitable customers. "We grew 5% while we were focused on implementing our changes," says Anderson. "We weren't even trying. We expect to see good growth mode in the second half of the year, and great growth the following year. Plus, now things are more manageable. It doesn't take as much to expand in terms of expense, and we have a string on everything going on in our bank. Our bank is the way it would be if you could dream it. Had we not improved our earnings at all, the SC+T engagement would still have been worth every penny."