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Money man | Steve Closson, CEO of Androscoggin Bank in Lewiston, on how his bank stays strong
Steve Closson is busy these days. As the president and CEO of Androscoggin Bank in Lewiston, he’s well aware that a bank must keep moving to keep growing. And Androscoggin Bank has been moving.
For good reason.
The other three banks headquartered in Lewiston-Auburn have also been busy — Auburn Savings went public in August to raise more capital, gain greater flexibility and enhance its loaning abilities; Mechanics Savings Bank in May lured three top commercial loan executives from TD Banknorth to bolster its commercial loan business from 15% to 50% of its total business in five years; and Northeast Bank, already public, brought a seventh insurance firm under its corporate umbrella earlier this year as one of several strategies to oust Androscoggin as top dog in the Twin Cities.
But before any of those banks can claim the crown, they’ll have to deal with Androscoggin Bank, which continues to have the most total assets of the four — $631,024,000 and growing, according to the most recent Federal Deposit Insurance Corp. filings — and seems determined to keep it that way.
The oldest bank in the Twin Cities, established 138 years ago, Androscoggin’s longevity is, in part, a reflection of the bank’s desire to adapt the core philosophy of community banking — genuine, personal service — to a changing world, according to Closson. It has applied that community banking philosophy to new efforts in investment management, commercial banking and municipal and government services.
Mainebiz sat down with Closson recently to talk about the future of the bank, the essence of community banking and how Androscoggin Bank plans to stay on top. The following is an edited transcript.
Mainebiz: There are four banks headquartered in the Twin Cities, including yours, and your three competitors — Northeast Bank, Mechanics Savings Bank and Auburn Savings — have all launched ambitious plans to gain market share recently. With this going on, how does Androscoggin Bank plan to protect its position?
Steve Closson: We, like everyone else in our industry, have recognized for some time that the pressure on our net-interest margin, which is what we can realize in operating profit from deposits that are invested properly, has been increasing. And we’ve understood that to augment that, we needed to pursue a strategy that was going to provide us with revenue sources based on non-interest-fee income. So one of the major strategies that we adopted in the area of non-interest-fee income was in the investment management area, i.e. assets under management.
In 1993, we did start a trust and investment services department and that has enabled us to branch into investment management. We also have a relationship with a private investment management firm located in Portland.
Where do you believe Androscoggin Bank could be doing a better job?
I would point to a couple of areas that come to mind. We need to upgrade our online banking capabilities. Also, our generational marketing efforts must be stronger to attract a new base of business that will provide a source of organic growth for the future.
What are the biggest challenges the bank faces and what can be done about them?
Attracting, building and retaining a world-class team is a major challenge. Creating a positive work environment that values people and provides them with the opportunity to develop and achieve personal satisfaction will certainly help meet this challenge.
Our ability to cost-effectively fund asset growth through multiple sources will continue to be a challenge for us and the industry as well. The need to be creative and the ability to remain competitive will be key in successfully achieving this objective.
How does a bank increase its total assets in a recession, as you have? That’s certainly not what’s happened with my personal account.
Part of the answer, especially over the course of the last year and a half, is that we’ve developed a keen interest and expertise in municipal and government banking. Providing products and services to local towns and municipalities that are safe, secure, provide a good rate of return and at the end of the day make the lives of folks who are trying to manage the resources of these towns easier if we can. That specific focus has helped us grow our balance sheet.
Many people in Lewiston-Auburn know about the more public aspects of your community involvement – your long history in the area, your philanthropy, your move to the Bates Mill, your support of local hockey at the Colisee. But what does community banking look like to a customer who walks in and says “I can’t pay my mortgage” or “I can’t pay my car loan” or “I can’t pay my business loan.” Is that kind of community banking at work here on that level?
Absolutely. We’ve even talked about it at the board level to ensure that we’re doing everything we possibly can when a borrower is in distress to work with that borrower — to the extent that the borrower is willing to work with us — to ensure that that individual can stay in their home and ride out this period that we’re in. Foreclosure is the last thing we’re interested in. We’re not in the real estate business, we’re in the banking business. I want to underscore, if the borrower is willing to work with us. Because sometimes people just don’t have the desire, the ability, whatever the case may be, to work with a lender, and it doesn’t work out. But we do whatever we can to work with borrowers in that case.
You have a link on your website that says “Letter to the President.” Do you actually get notes from people?
Oh gosh, yes. I probably get several letters a week. Some are very complimentary. Some are not, but I appreciate all of them. But I think I appreciate the ones that aren’t complimentary the most, because they point out areas where we can improve, and that’s what we’re always trying to do. I’ve gotten a couple recently where people were really having a hard time with their personal financial situation, and those are important letters to get. And we make sure that someone in the organization works with them directly to see if there’s a way we can be helpful.
What’s your measure of success?
Financial success is one measure. But it’s not the only gauge we use to measure success. We measure success in a lot of different ways and some of them are qualitative and some are quantitative.
There are some fairly standard metrics that most banks are judged by. Our association puts out statistical reports that show a variety of numbers that quantify our status, that illustrate where we are in respect to our peers. How many loans, how many deposits, various profitability measures, all the things you would think about from a quantitative point of view.
When we think about [success] organizationally, we look at what we were able to do through the MainStreet Foundation. The people we helped. And we look at employee success stories.
Talk about the MainStreet Foundation a little.
The MainStreet Foundation is probably one of the things I’m most proud of. We started that at the end of 1997 and made our first award in 1998. The foundation was endowed by the bank for just over a million dollars. And within the last couple years we’ve changed our focus to concentrate particularly on youth at risk — those young people who don’t have support systems or they don’t have the environment and tools so critical to developing into productive adults. We’re looking at that segment and we’re looking at their basic needs and we’re just trying to do everything we can to help, with somewhat limited resources — a million dollars sounds like a lot of money but it’s not when you’re addressing this kind of problem.
Is there anything you want business owners or homeowners or your customers in general to know that they may not know about banking today?
In this particular cycle, it’s important for people to know that the banking system in Maine is well capitalized, has liquidity, is safe, sound and open for business. That the fear that their bank is going to be taken over on a Sunday night — like some large national banks have been — is not something they have to be concerned about. There’s money to lend. You hear “The banks aren’t lending money.” Well, the other side of that equation is that the housing market isn’t what it was, so the opportunities to lend money to purchase a house are not quite what they used to be. A lot of people are out of work. The whole economy has been turned on its head. We’re still lending as aggressively as we possibly can. We still follow the same sound underwriting principals and guidelines that we always have.
Mark Mogensen, a writer in Auburn, can be reached at editorial@mainebiz.biz.
Androscoggin Bank 30 Lisbon St., Lewiston
CEO: Steven Closson
Founded: 1870
Employees: 170-180
Product/service: Banking, investment services, financial expertise
2008 assets: $631,024,000
Contact: 784-9164
www.androscogginbank.com
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