Bank uses retail-store philosophy to get, retain customers
Unconventional. Usually a word not associated with a business operating in a highly conservative, highly regulated industry.
But a closer look at Racine-based Bank of Elmwood reveals that moves along its 40-plus years of business could incorporate the word unconventional, starting with the bank’s inception.
Harold Levin founded the bank in 1960. He had always been interested in the financial industry and read as much as he could on the subject. He left the family business, Levin Brothers — a men’s retail clothing store, citing a need for a bank in the community. Levin Brothers was a fixture in the Racine community at 511 Sixth St., Racine, from 1913-1979.
There were cynics in the community asking what business a haberdasher had in starting a bank.
"A bank is nothing but a retail store with a vault," Harold Levin was known to say.
"He brought a retail philosophy to the business that hasn’t been lost," says son, Jess, the bank’s current president and CEO. "Our bank was open on Saturdays before anybody else was. At one point in time, our bank was open until 8 p.m. every night, at least Mondays through Fridays. [We are] just trying to make it as easy as possible for people to do business with us."
It’s the retail philosophy that has been the cornerstone of the bank’s growth over the years, too. The bank had $30 million in assets in 1974 when Jess took over after Harold passed away; it now has assets in excess of $230 million.
The Bank of Elmwood holds the No. 4 position in market share in Racine County, according to the Federal Deposit Insurance Corp.’s most recent figures, as of June 30, 2001. With a 7.68% market share, the FDIC said the bank was just behind North Shore Bank, at 8.57% of market share. The other Racine-based bank, Johnson Bank, holds a commanding lead of market share in Racine County, at 23.69%, according to the FDIC records, with M&I Marshall & Ilsley Bank second at 14.86%.
Johnson Bank also holds the greatest percentage of market share in Kenosha County, at 19.04%, while the Bank of Elmwood sits at seventh at 5.01% — in a market more fractured than that of Racine County.
Merchant approach remains
In keeping with the bank’s unconventional operating philosophy, the younger Levin had only a few years of experience working in the bank before he took over as president at the age of 28. He graduated from the University of Wisconsin with a degree in history with a minor in political science.
"My family had a reputation as merchants, and I’m a merchant, too," Jess says. "I look at selling financial services. My mind might work a little differently than some of my competitors because of my educational background. And I certainly wouldn’t be called a banking technician — that’s not me, and I don’t do that. … What really matters to me is taking care of the customer and the communities we serve."
The bank’s strength lies in its broad base of customers. Seventy percent of its assets are from retail customers. Levin has also made servicing the not-for-profit sector a priority at the bank. He estimates 40% of the churches and over 50% of the non-profit organizations in Racine are the bank’s customers.
"One of the reasons I happen to like the church and the non-profit communities is that these are the core centers of influence in the community," Levin says. "And since we’re not the largest institution in our marketplace, we like the fact that we can try to build our business from the ground floor, at the grass-roots level."
The Bank of Elmwood currently has two full-service sites in Racine and one in Kenosha, along with a Racine drive-in facility and an in-store location in a Racine Piggly Wiggly supermarket.
The bank continues to branch out in its grass-roots appeal with the impending March opening of a new full-service Kenosha branch at highways 142 and 31. Again, the bank made the unconventional move of forming an advisory board of community leaders in Kenosha, many of them coming from the nonprofit sector.
One of the advisory board members, Paula Williams, became familiar with the bank after Levin made a presentation at a United Way community agency meeting in Kenosha. Williams is the executive director of the Kenosha Achievement Center, a rehabilitation agency that develops greater economic independence and community integration for people with disabilities.
Williams was not only impressed with the fact that Levin — not one of his vice presidents — gave the presentation, but also with his depth of understanding of the disabled.
"We were discussing people with disabilities, what do they really need?" Williams recalled. "What they really need is to be treated like any other customer, and Jess articulated that so positively and understood it so positively. And when the leader understands that, the staff, in order to work in that atmosphere, have to understand that, too. And that’s an extremely powerful offering from the Bank of Elmwood."
She also noted that the Bank of Elmwood’s entry into the Kenosha market would diversify the priorities of the other banks in the Kenosha area, ensuring better customer service for all. The fact that the bank asked her to be on the advisory board appealed to her as well.
"I think [the advisory board] demonstrates a very powerful commitment," Williams said. "It’s not just lip service. … And I’m not saying that the other banks have ever treated me bad as a customer or the Kenosha Achievement Center or persons with disabilities badly, but we’ve never been asked to sit at the table before either."
Groundbreaking moves
Throughout the years under Jess Levin’s guidance, the bank has made some groundbreaking moves, too. The bank managed to stay independent by executing a reverse stock split that, in essence, pared the number of shareholders from 263 to 11. At the time, Levin wasn’t aware of any other community bank in Wisconsin that had done a reverse split. (Ownership has since expanded with the implementation of an employee stock option plan at the bank.)
In 1982, when the prime interest rate was around 20%, President Reagan went on TV and asked banks to do something to assist a drop in rates. The bank set aside $1 million and lent it out at under 12%. And in Kenosha, 17 years before a branch was established there, the bank gave an extra half-point off for anyone buying a locally-made AMC car. The move garnered national attention, and President Reagan sent a letter of gratitude to the bank.
The bank stood to lose $50,000 if the rates didn’t drop.
"But we looked at the fact that, is the community we serve worth it?" Levin said. "And if you’re going to be here forever, if you can take a stance that it’s going to help the community’s economy, then it was worth it. And it was worth it. We knew what the downside was. Fortunately, rates broke and the loans became profitable."
Levin is heavily involved in community service as well as his promotional efforts for the bank, yet he remains available to all of his customers.
"I think the biggest thing is the personal feeling, everyone is friendly" said Mark Patzke, president of Multi Products, Inc., a Racine company that manufactures small motors used in products like pinball machines and food service equipment. "And at just about any time, I can access Jess or one of his right-hand people who handle our account. They have the big-bank feel with a small-bank atmosphere."
As Levin describes it, customer service is something instilled him as he watched his father go the extra mile for his clothing-store customers. He recalled that Johnny Carson wore Hart Schaffner and Marx’s clothing line when he hosted the Tonight Show, a line of clothing Levin Brothers also carried. Inevitably, a customer would call Harold Levin saying he wanted the same suit or sport coat the affable host was wearing that night. More often then not, Harold would be on the North Shore of Chicago the next day looking for the article at the Hart Schaffner and Marx factory.
"As far as I’m concerned, the way the financial services industry has developed now with mergers and acquisitions, whether we win or lose as a company is going to be based on the quality of service we give," Levin says. "Most banks look the same, so it’s a matter of how you handle your customer that’s going to determine whether you’re successful or not. And I guess that’s where we feel we have to win the battle for our niche in the marketplace."
February 15, 2002 Small Business Times, Milwaukee
