An Interview with Robert W. Brown
Robert W. Brown has been with BankPlus since 1973. He became president and chief executive officer in 1993, having previously served as senior vice president for savings. Before joining the bank he worked in computer sales at IBM and in printing management and sales and the Howard Company.
A life-long Peoria area resident, Brown received his bachelor’s and master’s degrees in business administration from Bradley University. He is a graduate of the School for Executive Development at the University of Georgia, and holds a Degree of Distinction from the Institute of Financial Education.
Brown is president of We Care Foundation, Inc., and a board member of the Central Illinois Chapter of the American Red Cross. He’s chairman of the board and president of Morton Community Service Corporation, and is board chairman of Morton Federated Insurance Company, both of which are wholly owned subsidiaries of BankPlus.
He served on the Bertha Frank Performing Arts Center capital campaign committee, and was president of the Morton Chamber of Commerce, Morton Kiwanis, Washington Jaycees and Washington PTA. He’s been chairman of the Morton Pumpkin Festival, a Little League coach for eight years, and was a founding member of Indian Guides and Indian Princesses in Washington.
Brown lives in Morton with his wife Barb, whom he met in kindergarten. They have four grown children: Robert Jr., Martin, David, and Katherine; plus four grandchildren and two more expected in September.
Would you give us a brief history of BankPlus?
BankPlus was founded in 1919 in Morton as Morton Building and Loan. In 1955 it changed its state charter to Morton Savings and Loan to better describe its business as a home lender and depository institution.
In 1974 the bank became federally chartered and changed its name to Morton Federal Savings and Loan to take advantage of expanded services to its customers. Then in 1989 the bank converted its federal charter to a federal savings bank and the name was changed to Morton Federal Savings Bank. This change occurred during the national savings and loan crisis during which most of the Peoria area savings and loans were either taken over by the government or were purchased by institutions based in Chicago or out of state.
In 1991, the bank converted from a mutually owned institution – one owned by its depositors and borrowers – to a stock owned institution. The vast majority of the stockholders are in the tri-county area with Illinois Mutual, headquartered in Peoria, owning the majority of the stock.
In 1996, the bank amended its federal charter, changing the name to BankPlus. The name more fully describes the services offered to individuals and businesses, and provides more unity for the Peoria area communities served.
BankPlus was, and continues to be, the same locally owned and community-based institution it was back in 1919. Its financial offerings and delivery systems have changed, but it’s still the same bank.
You have offices in Delavan, Mackinaw, Washington and Metamora, and recently opened one in Willow Knolls Court. How do you decide where to open an office? What demographics do you base your opinion on?
BankPlus looks at a number of factors when determining a new office location, including diversity of potential customers, current bank customers within the area, the competitions’ approach to serving the area, and anticipated growth potential for the area.
During December 1997 the bank opened the Peoria office at Willow Knolls Court Shopping Center. The bank’s assessment is that the new Willow Knolls Court office is in the right place at the right time.
This office supports the bank’s growing customer base in Peoria and positions it to participate in the expanding Peoria economy.
You have been personally involved in community-based banking for 25 years. What do you see as the role of a community-based bank today?
When I started in banking, all financial institutions in the tri-county area were locally owned and community-based. Their board of directors, management and employees lived, worked, and were involved in their local communities. From the top of the organization on down, everyone knew the community needs as well as their customers’ – individuals and businesses – financial needs.
It is really no different now. A community-based bank’s role today is to read the needs of individuals and businesses in the community and react quickly to those changing financial needs with changing policies and new financial services and delivery systems. A community-based bank offers more insight to the individual and community needs.
BankPlus is locally owned. How can it compete with larger out-of-state banks?
The vast majority of our stockholders and all of our directors, management and staff live and work in the tri-county area. BankPlus encourages its employees to become involved in community activities and organizations. This is where we live, this is where we work and these are the people and businesses we deal with on a daily basis. If we are perceptive, and I believe we are, we have a better feel for the needs of the community.
From our experience, individuals and businesses in this area would rather sit down face to face with a decision maker if they have a problem or concern, or if they need a very personal kind of advice. We understand that, and we have some fantastic people at the bank who make it work for us. These people have a broad range of decision-making capabilities.
It goes all the way down to questions like, “Can you sponsor a little league team?” That’s a decision that local managers can and should make themselves because they know better than anyone what impact that local support can have.
Another example: BankPlus encourages local managers to contact overdrawn checking account customers to correct their account balance that day and waive charges for the overdraft. The bank also encourages managers and employees to bend policies where the situation warrants it.
For instance, account history research fees can be waived for emergency or exceptional needs. The bank does not set quotas for fee income. The goal is to encourage a long-term, comfortable relationship with the customer, none short-term income.
There are fewer businesses today that really encourage people to get involved in the community, and some actually lean toward “don’t get involved.” True, it sometimes takes time away from the bank, but it builds a better and stronger relationship, and a better understanding of the needs and concerns of people in the community. It’s a mindset, really. As a community-based bank we are more flexible and we’ll review and change policies when local needs change. We are well prepared to compete with larger institutions, in state or out of state.
What do people look for when choosing a bank today?
For many years the answer was location. People banked close to where they lived or worked. That’s still important today, but we see additional factors in choosing where to bank in the Peoria area.
More single heads of households and more two income households have increased the need for access to financial services outside of traditional banking hours. Extended weekday hours and Saturday hours are a factor.
Competitive interest rates on deposits and loans are a factor, but fees for services are very important according to surveys in the Peoria area. We’ve all heard of the Chicago bank that charges three dollars to talk to a teller – that won’t play in Peoria. But fees on checking accounts and passbooks, and surcharges on automated teller machines (ATMs) are also factors when choosing a bank.
A reason that continues to be important is to bank with people you know and trust in the community.
What trends do you see in banking today? What is on the horizon?
There are three major changes occurring today: changes in financial delivery systems, consolidation of banking institutions (mergers and acquisitions), and combining of financial institutions.
Financial delivery system changes provide more convenience for busy people today. ATMs, so called debit cards, direct deposit, and automatic payment of certain bills are all examples of electronic assisted transactions that provide convenience
Banks buying or merging with other banks will continue, with some regional banks growing to super-regional banks. We have seen a number of the area’s banks purchased since the early 1990s and a couple have been announced for this year. I look to see this continue for several years.
The third trend is the combination of financial services into one source of delivery, offering banking, insurance and market investment services (brokerage) from one institution. This can provide some obvious conveniences for customers, but does place a greater importance of trust and knowing the customer on the institution.
What about bank mergers? We went through a rash of mergers in the past five to eight years – do you expect it to continue?
Yes, I think we will continue to see mergers and consolidation in the industry. There is a perception in much of business that bigger is better. There are economies of scale and synergies created by acquiring another company. I don’t think banking consolidation will ever get like Canada where there are only a handful of banks in the entire country. That’s just not the way our economy runs. There will always be large banks because there is a need for them, just as there is a need for smaller community based banks.
You mentioned the trend of combining financial services with insurance and market investment services. Has BankPlus gone that route yet?
During the early 1980s, BankPlus began offering brokerage services, annuities, and mortgage life insurance through Morton Community Service Corporation (M.C.S.C.), a wholly owned service corporation of the bank. Morton Federated Insurance Company is an insurance agency wholly owned by M.C.S.C.
The bank saw the need for customer convenience and confidence to combine the financial services of banking, insurance, and brokerage at one location. M.C.S.C. is the conduit for BankPlus to offer the non-deposit financial services to the bank’s customers.
Within the past several years, and particularly during the past twelve months, we have seen a dozen or do large insurance companies start up or purchase federally chartered savings banks under a holding company structure. A number of companies have also acquired brokerage firms, apparently with a similar goal of providing a broader range of financial services.
This trend for consolidation will probably continue for several years. I firmly believe the key for all of these financial services is “knowing the customer.” BankPlus as a community-based bank continues to enjoy a good position in this growing combination of services.
The largest financial institution in this area is a credit union. There is an ongoing controversy over the special tax status enjoyed by credit unions that some consider to be an unfair competitive advantage. How do you view this?
In the tri-county area we have one of the ten largest tax credit unions in the country. As a taxpayer, my attitudes have changed somewhat over the years concerning the use of tax subsidies and exemptions in order to assist in certain social programs and organizations for the good of society. Where society needs are great and resources are few, I believe the use of tax subsidies or exemptions can be good.
I do have a problem with any large organization that is exempt from federal taxation competing directly with tax paying organizations. The trend in this country has been to get away from that. Yes, provide assistance at first, assuming that they have a good reason for existing, but don’t when they have become large enough to be self-sustaining and profitable on their own.
The initial concept of credit unions is a noble cause, no question about it. But there should probably be a size limit for credit unions, where there is a drop for a phase out of the tax exemption that was needed to survive in the beginning.
Will there be immediate legislation to level the playing field? I seriously doubt it. We have over 500 elected officials in Washington D.C. and I would suspect that the vast majority of the representatives and senators are members of the federal employee’s credit union. So do I think the playing field will change quickly? No, I don’t.
Illinois Mutual is a major stockholder of BankPlus. What is the business relationship?
When BankPlus marketed its initial public offering of stock in 1991, the corporate philosophies of BankPlus and Illinois Mutual were a natural fit, and Illinois Mutual purchased a majority of the stock.
BankPlus does offer some of Illinois Mutual’s life and annuity products and I hope to see that relationship expand.
You are, and have been, involved in numerous community organizations including the We Care Foundation, Inc., of which you’re currently the president. What type of organization is this?
The We Care Foundation is affiliated with WeCare, Inc., a not-for-profit charitable corporation whose mission is to provide services that improve the quality of life for those in need.
As we enjoy longer lives than ever before, the needs in later years become more diverse. Families are not always available to fulfill those needs. Care then falls to the community through support services like We Care.
Among these support services are transportation, home delivered meals, congregate meals, a food pantry, blood pressure screening and grief recovery programs. We Care was established in 1975.
The economy seems to keep humming along. What do you see ahead?
It seems like one of the best local economies in decades, literally. I just receive a report from Bradley University that carried the headline “Local Confidence Hits New High in 4th Quarter of 1997.” There have been some ups and down in the last decade, but I would say the people in the tri-county area are considerably more confident in their own economic position, as well as that of the local economy.
I see a lot of good things going on in the area. There is growth, but not runaway growth. It is logical, well though out growth in Peoria and the surrounding communities. There are long-range, 20-year plans being formulated right now. These are good signs.
Tri-county employment is still dominated by Caterpillar, Inc., but certainly to a lesser degree than it once was. The tri-county economy has diversified considerably, due in part to the efforts of the Tri-County Regional Planning Commission and local economic development groups. Entry of new businesses into the area has been steady and prospects for attracting more businesses look good.
The national economy has shown several years of growth while containing high inflation. Interest rates are holding in a fairly reasonable range that makes restructuring of debt attractive to individuals as well as businesses.
It appears that interest rates will remain at the current level with a potential to drop about one-fourth percent to one-half percent by this fall. If you are looking to purchase a new home or to refinance your existing home, now is as good a time as any. IBI