Michael Mahoney has passed the torch on to David Werner at Milwaukee-based Park Bank, where Werner took on the chief executive officer role in January. Werner, who will retain the president position he assumed from Mahoney in 2010, and Mahoney, who has worked in banking for 49 years and will continue to serve as chairman, were recently interviewed by BizTimes Milwaukee associate editor Molly Dill to discuss the banking industry’s past and future. The following are excerpts from that interview.
BizTimes: How has banking changed during your time in the field?
Mahoney: “When I started at Park Bank (in 1983), we were approximately $80 million in size, and had one location at Sixth (Street) and Capitol (Drive). We were more a real estate and retail bank. We began the transition to become a more business focused bank. In 1986, we got a charter for this location, and now we’re at $870 million.
“I think the attitude toward banking was I think you could be proud to be a banker. I think that what’s happened since the recession…everyone’s been lumped together. All the things that occurred, the mortgage debacle, we weren’t part of. I think the administration has made banks in total kind of the whipping boys in their communities.
“As soon as you email something, people expect a response bank immediately. (When I started) you had more time to gather things to help customers, but there was less convenience. I think it’s much more competitive. I think with the focus in more and more banks on business lending, that’s viewed as a sweet spot and an area for growth.”
BizTimes: How do you set yourself apart from those competitors?
Mahoney: “It’s really a relationship business. You know the customers, and the least disruption you have in that, the better your retention. We spend an awful lot of time with the customers. We spend 90 percent of our time in the community. If you’ve got somebody who runs into difficult times, you’ll stick by them and work with them. No one needs or wants financial surprises on their horizon, so by being predictable—in a good way—you end up developing long-term loyalty.”
Werner: “It’s building a relationship that matters, and that institutional relationship that goes back two or three generations is important. We haven’t just done it by knowing the customer and having a rapport with them, we’ve also developed products to make their lives easier. We were one of the early adopters of mobile banking. Remote deposit capture—we were an early adopter of that because that’s what customers were demanding.”
BizTimes: How have recent regulations impacted the banking industry?
Werner: “There’s less banks in Wisconsin and in the country as a whole. The number of competitors and the face of competitors have changed. I think you’re going to see further consolidation in the industry. I don’t think banks of our size…can compete with the larger banks on some consumer transactions. If you just want payment processing and then stay out of the way, we’re not going to control the market there. You can’t be all things to all people as a community bank, so we want to do the things we’re good at.”
Mahoney: “With the level of regulation, it’s harder and harder for a small bank to keep up. You have a lot more reporting. As important as compliance is, you don’t make any money being compliant.”
Werner: “Compliance is now one of the hottest jobs in banking, and if you had asked about that 10 years ago, you would have never guessed that would be the case.”
BizTimes: How have you adapted to the shift toward online banking?
Werner: “A lot of it has to do with what (customers are) demanding. They’re having to compete and innovate with their own businesses to remain relevant. Between those two, listening to customers and working with customers, it’s ‘What can we do that’s most relevant to our customers?’
“We’re seeing a decrease in demand for face-to-face service. It’s more of a self-serve, on demand approach. The outsourcing that’s going on is affecting our industry as well. How do we offer the best products and the best services? We’re seeing different approaches from different banks out there. Some are opening branches, while some are not. For other banks to enter our market without any brick and mortar, how do we remain competitive in that regard?”
Mahoney: “To say that we have a long-term relationship with our customers doesn’t mean that we own their business—we’ve got to earn it every day. You’ve got to stay ahead of the game.”
BizTimes: Have the industries you serve changed over time?
Mahoney: “There was a lot more distribution, a lot more manufacturing. Communication businesses were mailing, not electronic. We were never a high retail business, like cafes or drug stores. We’ve always tried to have a nice mix, not overly concentrated, but the manufacturing is definitely less available for us.”
Werner: “We’re fortunate in Milwaukee that we still have a strong manufacturing sector that serves major OEMs. It’s not typewriters, but 3-D printing. Milwaukee’s very strong in the investment management side and that’s continuing to flourish. It used to be in the day you could go out and look at something on the shop floor and say, ‘I know what that’s worth.’ You can’t do that with technology.”
Mahoney: “I think the collateral analysis in early years was really important and now you have to look more at earnings and cash flow.”
Werner: “And character still pays it off in the end.”
BizTimes: Michael, what kind of changes did you make in your time as CEO?
“There were probably 40 to 50 employees when I came on. There are now about 135 full-time employees. It was more a change of culture when I took over. We were able to add people gradually. People like David could buy into a culture and help the bank grow.”
BizTimes: Dave, what do you plan to accomplish going forward?
Werner: “Adding relationship managers is truly the way that you handle growth. Community bankers, private bankers, people that will go out and develop their book of business. We’re going to continue to focus on what we can do technology-wise to serve our customers, but technology should run alongside your strategy. It shouldn’t be your strategy.”