How can a bank provide real value to local businesses? Endeavor is a community bank in San Diego. It is also a private networking club. The majority of its 500 shareholders are local business owners, and the bank provides business consultation and networking events side by side; it’s banking services.
Dan Yates has been in the banking industry for over four decades. He has founded two banks, sold, acquired, merged, and turned around banks. He doesn’t believe in attracting new clients just by proving robust banking services. He believes the key is to provide real value to business owners through consultation and connections. Dan talks about what makes Endeavor different and how to create a culture focused on adding value to clients.
In the early 2000’s Dan started Regent’s bank with seven co-founders. It was privately held, and after 12 years, the most significant shareholders were looking to exit. When it came to starting Endeavor, Dan and his team wanted to learn from their experience with Regent. They wanted to go to the business community and attract the very people they wanted as clients to become owners of the bank. They ended up with 500 people and raised almost $25 million. Their growth is on target, and most of that growth comes from their shareholder base.
Shareholders eventually want liquidity on their investment. You either sell the bank or continue to increase shareholder value. With Endeavor, they are publicly listed so that individuals can exit and realize a reasonable return without the only option being to sell the bank. They also want the bank to be a part of the community and be there longer than most banks in San Diego. Dan believes that if they manage the bank correctly, opportunities will naturally present themselves. Banks tend to last around 12 years because they are looking for a chance to exit. There has been a consolidation of banks in the industry, and the rate of replacing exiting backs has slowed.
Business owners can find that being a shareholder of a community bank can be like joining a secret club. The bank is a CEO peer group and provides networking opportunities through events. Dan and his colleagues build relationships with local businesses and go deep into understanding their business and their goals. This enables them to add value and make connections to help them on their journey.
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How do you persuade a business owner to move banks? Dan looks at it as a courtship. They start with building a relationship and look at how to add value to their business. Banks try to tie people in through the product side and not on the consultative side. It is often the advisory side, which can drop more meaningful dollars to take businesses bottom line. If Dan introduces them to a client, who does business with them that creates real financial value for them, a competing bank may be competing on the interest rate on loan. This is comparing pennies to dollars. They are not just a bank they are a resource to solve problems.
It can take 2-3 years to train and mentor people in this culture of adding value. It’s a muscle that needs to be prepared. At Endeavor, the culture is starting with Dan, and the President of Endeavor, Steve, and they are bringing other bankers into the culture. The mantle is being passed on. It can take time to build the culture and doesn’t work with a large institution.
They’re 500 active shareholder group means they have 500 lead generators. They bring everyone together throughout the year for events. These events are designed to allow the shareholders to network and get to know each other, one on one. They are reminded that their referrals to the bank will help drive their investment return and build the bank.
They can get eight leads a day from their 500 shareholders. They will take a relationship manager, who has expertise in the industry or is geographically close to the client, who will sit in on the first call to introduce the bank. They will then collect financial statements and prepare the proposal. Dan and Steve will get on the final call to present the plan to the company.
Their goal to create the most extensive private networking club in San Diego. With the next round of investment, they are hoping to increase the number of shareholders. Some clients have gone to a bank event, connected with a client that has gained them more business than the cost of their investment.
Become an expert in a niche area and go to association events. Understand your clients’ needs beyond what most bankers do and become known as the banker for that area.