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We interviewed Lyn Hayth, President and CEO of the Bank of Botetourt, for Community Banking Excellence this issue. Lyn has been a banker for more than 30 years. His bank, with about $312 million in assets and $248 million in loans, operates primarily in the Virginia counties of Botetourt, Roanoke, Franklin and Rockbridge. Bank of Botetourt was an early leader in online banking for community banks and was the first state bank in Virginia to take advantage of the JOBS Act changes, de-registering with the SEC and later terminating its bank holding company. This is a bank that is not afraid to try new things. It constantly and strategically looks for things that will help the bank, yet it also “sticks to its knitting.” Accordingly, we were a bit surprised that Lyn’s advice had nothing to do with new technologies or new regulations.
Q: What is the most important focus of a community banker?
A: If your community comes first, customers will follow. Yes, we need to emphasize service, because that is where we beat the larger banks time and time again. But people know when you care about what they care about, and it matters to them. Support the communities where you operate, with both dollars and time, and people will notice. If you love your community, you should be proud to be a community banker.
Q: What is the biggest threat facing community banks?
A: Remaining relevant. Many people are indifferent and do not understand the advantages of a community bank. As more people bank online, they forget how important a person is when things go haywire. There is a perception that many community banks do not have the technology or the size to meet customers’ needs. That drives me nuts. We spend so much money to provide technology, such as mobile banking and other high tech services, but many people have the impression that community banks cannot serve their needs. This just is not true. In addition, there are very few loans in our communities that we cannot make. We have to continue to get that word out.
Q: What sets a community bank apart? Will there be such thing as a “community bank” in 10 years? If so, what will it look like?
A: It is commitment to the communities the bank serves. When the bank becomes much larger than its community or communities that it serves, can one argue is it still a community bank? Are the top 10 percent of bank employees engaged in that community? If not, it’s not really a “community” bank. That is where your customers and shareholders come from. That will hold true 10 years from now. But, the market is changing. The future successful community bank must have technology, talent and training that new customers demand in order to succeed. For example, machines can now do a lot of teller transactions. Now tellers must be more, almost like financial advisors who enlighten customers to things they need as the teller learns about changes in each customer’s life. The talent in the bank needs to move from the back room to the front room. We must re-direct, train and retrain staff for the long haul. Most of the business is not even in the bank today, it is out on the street.
Q: What are the biggest opportunities for growth of community banks?
A: Again, service, training our people and a small-business market. We spend a lot of our effort focusing on small businesses and meeting their needs. Also, individual deposits are still important for us, and community banks can manage them and pay higher rates for them. We must be committed to hiring local employees so there is continuity in personnel. The larger banks move their people around and provide no continuity in personnel.
Q: Is there a scarcity of new talented young people going into community banking?
A: They are available; we just need to engage them. We have hired several recently, trained them in new skill sets, and we listen to them. Banks are not unique. Sales culture and marketing are critical, just like it is in most other industries.
Q: Would you encourage a loved one to be a community banker?
A: Absolutely! His or her community bank will look different in 20 years, but the principal qualities will be the same. It will continue to be a good profession.
Q: Consolidation is occurring again in community banking. If community banks substantially decrease in number through consolidation, failure, etc., what effect would that have on the communities they presently serve?
A: That would be devastating to many communities. Larger, out-of-market banks must “pay” for the acquisition and do not have the long-term commitment to specific communities. Consolidation typically creates losses in the community, due to lay-offs, less community involvement, and often increasing lack of knowledge about the individuals in the community. Individual communities are not critical to a big bank’s plan. Communities become mere “commodities” in the greater picture of the profitability of the larger institution.
Q: What is the best career advice that you ever received about being a banker?
A: First, build networks with other bankers at other banks to have someone to bounce ideas and problems off of. Almost equal, second is to continue to gain more education in banking. Go to the leadership institutes, banking institutes, etc. That actually helps with #1, because you meet other young bankers from other parts of the state or country. Third, build networks in the community. How? By serving the community.
Q: What is your leadership philosophy? How has your philosophy molded your bank and its corporate culture?
A: I love organizational structure and changing it to make it more efficient. I tinker with changes in our structure and processes. I believe that if your culture, structure and people are good, you can provide management a lot of autonomy, within reason. I also believe in management by walking around. When I see something interesting or see a potential bigger opportunity or problem, I become involved. I spend time almost every day talking with rank-and-file employees to see what is happening at their level. However, I strive to ensure my higher level officers are directly involved with staff regarding important issues, especially if it concerns corrective action. That allows employees to respond to me honestly. I like to be the fixer and can sometimes get bogged down in the details. I have an open door policy. Similarly, with customers, I have a “Talk with the Top” button on our website, where any customer can send an email to me. I analyze the problem, forward it to the person who most likely can help and follow up, if I cannot handle it myself. The first question was about online banking, the thing I knew the least about, but I quickly involved another person in the bank who can handle the issue, and they did immediately. It’s important to stay in personal touch with your customers.
Q: What is the “low hanging fruit” that community bankers are not taking advantage of to increase their revenue?
A: There still is revenue that has been ignored in the past, because we weren’t in the business or we just did not emphasize it. Every month senior management looks at our financials in terms of how we can make more money in specific areas. We look at what other banks are doing, especially banks out of market, and learn from that. That is where contacts developed at training institutes and meetings can help.
Q: I mentioned that nowhere in our talk did he attack regulation as a problem.
A: I specifically ignored the issue of regulation. It’s overwhelming, but whatever it is, it hits us all. It is wasteful and, in many ways, ineffective, but it’s not likely to change anytime soon. We need to focus more on finding a way to manage it. It’s like fussing about the cost of electricity. Long term, yes, educate political leaders and push for improvement, but we cannot let regulation define how we operate our bank or use it as an excuse for failure. That’s a copout. At Bank of Botetourt, we try to deal with what we actually can control