Banks build relationships with networking, word-of-mouth referrals

In the world of community banking, it really is about who you know. And this can be a good thing.

“You find yourself sitting next to (customers) at a ballgame or in church,” said Dave Ryan, president and chief executive officer of Mount Vernon Bank & Trust Co. “You just seem to run into them all the time, so you end up knowing all about them and they get to know more about you.

“You develop a reputation for dependability because you don't want to let people down that you know that well.”

Such as Gwen Drahos, for example.

Although her business is located in Lisbon, Drahos has been a client of Mount Vernon Bank since she started Gwen's Restaurant in 1981.

“When I opened up, they talked with me right away and helped me get started,” Drahos recalled. “I think if I had gone to a bigger bank, I wouldn't have had that start-up.”

Drahos said she has developed a personal relationship with some of the bank employees.

“The tellers are my friends,” she said.

James Klein, senior vice president of Cedar Rapids Bank & Trust, said more than anything bankers need to be proactive to develop relationships and network with potential customers and their employees.

“A lot of times, it means becoming active in our community, such as volunteering for non-profit organizations like Junior Achievement, Rotary and United Way,” Klein said. “You need to get your name out there and make some of those business connections when they don't necessarily need a loan or banking services.

“They will remember knowing you when they do need a loan or are looking for other financial services.”

Klein said developing a relationship with a customer involves more than making a loan.

“Any bank can give someone money, but we want to give them some counsel and advice,” he said. “For us to be successful, the client has to be successful, so if we try to connect them with partners that can help them be successful, it makes the relationship better for both sides.”

Klein said new customers are asked how often they want to hear from the bank.

“Some want to hear from us more often than others,” he said. “We make sure we're meeting with them on a timeline that works for them, keeping abreast of the trends in their industry and their financials.

“We also need to sometimes ask them some tough questions that make them uncomfortable but will get them thinking.”

Klein said he spends more than half his time outside the bank, and he prefers to visit clients at their business.

“There's nothing like kicking the tires and seeing how things are going,” he said. “They're proud of their business and want to show you what they do and how they do it.”

Ryan said that's what separates being a community banker from their big city counterparts.

“I don't know that I could be a banker in Chicago,” Ryan said. “I'm so used to running into people and being out with them in the community. It ends up being something that really matters.”

“It's not an uncommon occurrence for us to be out talking with our customers and seeing how their business is going,” agreed Tim German, executive vice president of F&M Bank, with offices in Cedar Rapids, Eagle Grove, Manchester and the Twin Cities.

“We also ask them if there's anyone that they do business with that we should be talking to, which is one of our best sources of referrals.”

Jerry Waddilove, vice president and central region credit officer for MidWestOne Bank in Iowa City, said credit worthiness is important, but character also counts when banks decide whether to approve a business loan.

“I would prefer someone who understands where they stand and communicates that to the bank, and is more affected by the economy than by their own negligence,” Waddilove said. “I would prefer that over someone who is in a good industry but is not doing well because they doesn't understand their business, they don't communicate with the bank, and they lack sound character.”

In return, noted Patrick Deignan, executive vice president and senior lending officer at Bankers Trust in Cedar Rapids, business customers want stability in a banking relationship.

“They want to work with someone they believe is going to be there next year, three years or five years from now,” Deignan said. “Clients who deal with Bankers Trust in Cedar Rapids are going on a decade dealing with the same people.

“As we've grown, we've experienced competition from many banks that are smaller than we are. Iowa is still a fairly overbanked state if you look at the number of branches per housetop.

“We're not expanding our population and we still have a fair number of banks. It's always going to be fairly competitive.”