Case Study: Libertyville Savings Bank
Interview of Jill Burnett, CEO, Libertyville Savings Bank
How This Seemingly “Normal” Mutual Bank is Quietly Winning Customers at a 50-Basis Point Premium Against a Market Rife with “Low-Rate” Commodity Competitors
Come on a journey with me; I’m going to introduce you to something that most bankers will tell you isn’t possible. You, too, may think it impossible…
I invite you to suspend your disbelief and, for the next five minutes as you read what I will share, entertain the idea that maybe, just maybe, what I put before you could also happen for you.
In this issue of Extraordinary Banker, we’re all about accountability—what it is, why you want it, and how to get it. I knew right away that I wanted to interview you for this issue because you’ve done a spectacular job of getting your employees to a place of extreme efficiency. I know you’ve also really worked on the culture, which is always at the center of our message. So I’d like to start by asking this: There was a time that your bank’s ROA was down for the count. You took control of the situation by getting your team focused on those few things that matter most, and now your ROA is just monumental. How did you achieve that focus to get such an incredible result?
Well, thank you for those words of praise! With your help, we’ve tied the strategic planning process to activities at every level of the bank. We use our one-page strategic plan constantly. We are pulling it out at our monthly exec team meetings. We are reporting it to our board—all our results as the year goes along. We are reporting it to our employees at quarterly meetings. They are tying it down into their quarterly plans. That is the biggest thing that has helped us focus on the most important thing to get done next. We follow it and we follow up on it, and we are tracking it all the time.
That’s a great approach. Of course you can have a really great plan and still not have any execution. We all know how that works. Many businesses including banks have perfected the technique of creating a great plan that nobody completes—a world of excuses, excuses, and more excuses. But you made it happen by doing a really good job in two particular areas. One is building the system to make sure that things happen. The other is making sure there’s no space for the excuses. Let’s start with the system first. You already mentioned that you are doing the quarterly meetings and that all the employees are seeing the quarterly plan in those meetings. I know your employees have MTOs (“Minimum, Target, Optimal” goals). Have you found that to be a good system for keeping people focused?
Absolutely. The MTOs have been huge. We’ve found that when you start tracking people on those critical drivers and tie them to an incentive plan, people really pay attention. That has been a big gain for us.
Great! Tell me your numbers. You’ve done amazing things with your efficiency ratios and ROA. You’re really a community banking rock star in those areas.
The numbers tell the story. We’ve always had a very aggressive efficiency ratio and a fairly high asset-to-employee ratio, and that’s been a part of our culture for years and years. It started with my father, and it’s moved on to the next generation. There isn’t an employee working here who isn’t willing to do whatever it takes to get through a day efficiently and effectively. So if I’m walking across the lobby and I see people waiting in the teller line, I’ll jump to a window to help. If the loan officers are busy and the loan documents are ready, the loan clerks will help that customer get quick service. So there’s a huge teamworking relationship. It’s all about giving the customer service. Whatever needs to be done, do it. No one is limited by their job description.
Great. So what is your efficiency ratio now?
Our efficiency ratio is about 54%.
Nice! And what else is looking good?
Asset-to-employee is a little over six million. The net interest margin is 4.15 as of the end of March.
So we’re hanging above 4, which is pretty amazing considering the current experience of a lot of banks. Our ROA was 1.32 at the end of last year (we did a conversion and expensed a number of things last year that pushed ROA lower than it otherwise would have been).
Jill, those are such excellent numbers. So, how do you get your team understanding the game? A lot of people who work in banks don’t understand the product of the product. They’re just saying, “I’m taking in sheets of paper and I give sheets of paper back.” They don’t understand that the goal is to own the entire relationship with every customer so that price becomes irrelevant. You’re bringing wisdom to that customer and making them feel like they can’t live without you. Clearly you’re doing a far better job of that than most banks. How are you doing it?
First of all, hiring well so you have the right people in the right positions is huge. I think we’ve done an excellent job at getting a really great team together. Second is our Hoopla Team® and our culture and our constant communication with our staff on the importance of the numbers. We’ve got the weekly CEO message. Who’s rocking it out on cross sales? Who’s rocking it out on existing cross sales? Who’s landed new customers that week, and how many? So they’re seeing, “Oh, wow, look at Jane. She really rocks those cross sales. I’m gonna go do the same.” And we encourage them—“Go visit with Jane to learn how she’s doing it because she’s got it down.” There’s a lot of training involved. Ninety percent of our staff has been through your training. Now they are also doing TGIM University™. You start getting a ship moved in the right direction, and it just really starts going.
Tell me a little about how you onboard a new employee, especially if they come from a different bank. A lot of people pick up bad habits from banks that lack your focus. When they come into a bank that has numbers like yours, they don’t understand how to be effective and efficient at the right things. How do you get into their heads and transform them so they understand they’re playing in the big leagues now?
We’ve have a trainer who spends time with new employees, and they also spend time with me. In addition, watching the other team members, whether it’s a loan officer or whether it’s a loan clerk and the speed and the efficiency of their work, eventually, they either absorb that pace or they’re going to be gone. The rest of the staff won’t stand for it any other way. If you’re not cranking it hard and doing all the right things, you’re not around here very long.
One of the things you’ve done a great job of is that not only do your employees love being there and love the bank, your people really love the customers and it shows. They understand that that’s what matters the most. How do you get your people to bring out that part of their emotional intelligence, to say, “Listen, we’re not just here for customer satisfaction. We’re here for customer success.”
Some of it’s just so natural, and some of it is about getting people in the right role. We don’t want to put them in a situation that’s a bad fit. We put the people who love people right out there where they’re in contact with the customer all the time, and the others find a place that isn’t as highly interactive with customers.
You’ve done a good job at making sure that your customers understand that you add more value and you’re worth the price. What are some of the best things you’ve done to make sure that your customers know that they’re not just buying a loan or a deposit, but they’re buying wisdom?
A lot of that is captured in the information we send to customers. We’re always putting together informational pieces on different types of topics. We hold annual customer meetings. We try to add value in some specialty niches. We’re in a highly agricultural area, so sometimes it’s focused on that population. We’ve recently added crop scouting to those agricultural customers. That’s an example of a special little add-on benefit. Sometimes it’s for our small business clients, so we offer your Chat with the Experts™ teleseminars to those clients, something no other bank in our market has access to.
So the present is bright. Tell me about the future. You and your team impress me as people who aren’t just here for a job. You’re really here to play the game and play it well, which means making a difference. Last week, at the Elite CEO Mastermind, I saw you light up about the idea of adopting a village in Africa and have our own “village” adopt a village eventually too. When your team gets together and says, “Boy, are we proud to be community bankers,” what are the things that drive you, and what is the difference you want to make for the businesses, the farms, and the individuals in your community?
Seeing all the customers that we work with succeed at a high level is so exciting for me. I love to see that. We’re going into a new market in the near future, and that’s exciting for us to bring our areas of expertise into that market. I am excited about all we will do for that community. And then yes, when we were at the meeting last week at High Point University and that speaker spoke about Africa, my wheels started turning. We discussed that in our marketing meeting yesterday, and my COO Lori Mitchell just can’t even sleep, thinking about how we can turn that into something that’s going to be really big for our bank.
There is something that I learned from you at Strategic Planning Think Tank™ when I looked at the values you listed for your organization. I saw that part of that values process was defining the type of customers you wanted to bring on. You were getting clear about who the right people are for you. Who is in your tribe? Because there are certain people that will resonate with your bank and say, “I can’t live without them. They’re my people. They get me. I get them. They transform my life every time I interact with them, and I can’t live without them.” And then there are other people who just want a checking account. You’re really clear about the values your customers share and the values that you share. Tell me a little bit about those values.
Those are our values—and when we look down our top customer list, it’s mindboggling how closely those values fit our top customers as well.
The values that we came up with are so “right on” with who we are. They are:
- We’re positive
- We’re mentally tough
- We’re efficient
- We’re unstoppable
- We’re driven
- We’re fun
- We do the right thing, even when no one else is looking
And that is where the connection between your approach and your tremendous success and ROA become crystal clear. There’s something about how people resonate with you when you have those values—you hire to those values and you fire to those values and you promote to those values and you incentivize to those values and you attract customers to those values. That gives a congruence to your business that is unstoppable. It takes all the struggles that other banks in communities like yours have and makes them non-issues because you know who your people are, and you know you’re joining with them to play a different game. You’re helping them thrive in their businesses, not just offering them banking services. I really love how you’ve done all that.
You are welcome, and you so deserve it. I am so impressed every day by who you are, what you’ve done, and what your team has done. It’s just amazing. I know you’ve got big plans for the future, so let’s talk about those. When you’re dreaming big about the difference you want to make by taking your bank to an even higher level and an even better culture, even better accountability, even better clientele, what’s in the dream?
We’ve already talked about the village in Africa…we’re going after that. Being able to put that together and do multiple villages gets me excited. And to have our customers involved in that gets me very excited. Some of this stuff I’ve already touched on, bringing our strong offering to the new community will be big for us. And for me as an individual to watch my staff grow has been just an amazing journey. To watch them since we started with The Emmerich Group especially—to watch them grow as individuals—that’s a lot of fun for me.
Well, I’ve got to say, one of the most deeply satisfying experiences is to have people come in under your wing and to have them go home every day better human beings who are more accountable, more mentally tough, more unstoppable, taking results seriously and themselves lightly, more outwardly focused on other people, more understanding that being positive is a choice…None of those things rely on perfect circumstances, and it’s a good thing because that perfect little world doesn’t exist. One of the best things that I think we do in business today is have the ability to transform people by the fact that they come to work every day. And for them to get better results, they’ve got to become better human beings.
And the impact goes beyond the workplace, into their marriages and children and schools and churches, because it’s a ripple effect in the community. There’s nothing more fun than that.
I couldn’t agree more.
But we always learn from our mistakes. Assuming there’s something you would have done differently over the years, what would you say to any CEO about the traps to avoid falling into?
I would have a lower tolerance for low performers and employees who do not fit our culture. When you’re running loan to assets the way we do, you can become too dependent on one individual, and you think, “I just can’t let that person go. We just can’t handle any more than what we’ve got on our plates right now.” But if they don’t fit, you’ve got to cut them loose. And the longer you wait, the more pain it will cause you. I’ve had more than one of my executive team members come up to me and say, “I don’t care what it takes, and I don’t care how long I have to work, but we’ve got to have someone in here who fits and works with us, and I don’t want to hire the wrong person and have to deal with that.” There were times when I did not act quickly enough to deal with that. That was probably my biggest mistake.
Funny you bring that up, because we just had that I.C.E. conference where banks sent their top entrepreneur clients, and we asked every entrepreneur what they considered the biggest challenge. Every one of them said, “Oh, that would be the employees.” Every one of them said the biggest mistake they’ve ever made is hanging on to somebody too long. And so it seems to be a problem for every CEO. That’s a good lesson, and you’ve learned the lesson and reaped the huge rewards for it.
Well it’s just been a wonderful experience working with your team. We wouldn’t be where we are today without that.
The Provident Bank began the transformation at Extreme Bank Makeover Summit
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It opened up a world that I knew was there but just couldn’t find. And it’s just been a whole lot of fun!