You’ve been a banker your entire career but only four years at Bremer. What initially attracted you to Bremer, and how do you think that outside experience has sharpened your managerial attitude at the bank?
I love this industry and have enjoyed a long and rewarding career as a banker. Through a variety of transitions I’ve personally experienced due to mergers and acquisitions, I gained valuable insight regarding the significant differences in which banks go to market, make decisions and define a path to success. Initially, I was attracted to Bremer because of its strong reputation within the financial services industry. Once on board, it became abundantly clear to me why the organization was so well regarded. Bremer is a top performer amongst our peer group as measured by a number of metrics, including being highly profitable and well capitalized which is important for driving our future growth. Most importantly, we excel at what we do and it makes me proud that the solutions we provide to our customers make an important impact in our communities and our industry. I understood that about Bremer before I joined the company, and my experience with Bremer has validated those perceptions. I frequently tell people that Bremer fits like a glove in terms of what’s important to me as a banker working alongside a team to deliver a quality experience to a customer.
I believe Bremer has the right approach to meeting client needs through experienced and committed professionals. We have a powerful culture that is focused on developing relationships based on trust, transparency and partnership. Our relationship management strategy has served our clients and our organization well for over seven decades, and I see it serving us well into the future.
The various experiences I have had throughout my career have repeatedly reinforced the importance of determining and communicating differentiators in order to define the company’s brand. My tenure in this industry has given me a deeper appreciation for Bremer’s potential as our team works together to provide solutions for our clients. At Bremer, it starts with our people. We have talented, empowered professionals who care deeply about one another, our clients, and our communities.
We’re very purposeful about the work we do to help businesses and individuals succeed. The end result is a strengthened community and that’s our “why.” We’re committed to building strong communities where we do business.
Banking is a topic that comes up frequently in the focus groups in Enterprise Minnesota’s annual State of Manufacturing® survey. I’m struck by the way Bremer is described variously as a community bank but also as having the clout of an $11 billion regional powerhouse. How would you describe Bremer’s market niche?
I love the space we’re in because we are large enough to offer significant lending capacity, that being a primary need of clients, and we have the interest and ability to invest in expertise, technology, and tools, all of increasing importance to our customers. When it comes to execution, we are a community bank focused on building long-term relationships with businesses and agribusiness, their owners and employees, along with individuals in the geographies we serve. That absolutely defines our strategy and how we want to be positioned for the long-term in this industry.
It’s important to claim your space in banking these days as there are significant forces reshaping the industry every day. Again, our size not only provides us with great capacity to take care of clients’ credit needs, it critically provides us with the ability to invest in resources to meet clients’ changing needs and expectations. Our growth has also driven us to become an employer of choice. We attract talented people because of our commitment to employees, our focus on growth, and our broader mission of how we culturally define our success. Our size is important as it allows us to attract expertise and make the necessary investments to stay relevant in the industry, while at the same time our size allows strong execution of our relationship management strategy as a steadfast community bank.
Banking is an industry that always seems to be evolving on a lot of fronts. What are the challenges that you face as a new CEO? What’s going to require some attention?
When I think about our challenges and opportunities, I focus on four key areas: customers, growth, talent, and innovation around customer needs. Let’s start with the last item on the list. There is exciting and continual innovation in our industry. The very robust advancement on the mobile and digital front is something we have to pay attention to so that we can respond to what customers want and need. Finding innovative solutions for clients has always been a priority, but we have to accelerate our efforts around innovation to stay relevant. We need to adopt new technologies and seek a seamless experience across our various delivery platforms. We’ll continue to advance our growth and drive our success by understanding the shifts in client behavior and preferences. This takes me back to the first item on my list – our customers. Simply said, we have to make sure that our customers are at the center of our decision-making. Understanding how we best help our customers succeed creates the ability for us to make good decisions both strategically and in terms of the investments in our business. If we stay focused on helping our customers be more successful in what they’re trying to achieve, we will remain a valued financial partner and that will drive our growth. As I said previously, growth is important in order for us to attract talent and make the investments needed to provide our customers with the best solutions. The external pressures financial institutions are facing are real, and they are forcing banks to evaluate their operating models to find growth and stay relevant. As we invest in talent and technology, we are focused on our commercial and agribusinesses, and the manufacturing industry is of significant interest to us. Our path to growth in this increasingly competitive environment starts by focusing on our areas of strength as a commercial and ag bank. And where does that strength lie within our organization? It always starts with having the right people. We have a great team of people who are knowledgeable and passionate about our clients and who provide advice and financial tools to help them succeed. Investing in talent is truly how we achieve growth and succeed in our mission as a community bank focused on delivering meaningful relationships. It’s been gratifying for me to visit our various markets and talk with our highly engaged employees. We want to be an employer that draws the very best talent by clearly articulating our mission and vision and the opportunities we offer our employees.
How does Bremer’s brand relate to manufacturing? Is that role evolving?
When I talk about the Bremer brand, I say it’s our people. Our people bring our brand to life. Our people deliver the client experience. We have an impressive roster of bankers and analysts and support staff who are not only familiar with manufacturers, but rally around our manufacturing clients to create value in meaningful ways. We’ve always had a large portfolio of manufacturing clients, and we have bankers who have developed deep expertise in this industry. The role of a banker has evolved during my tenure in this industry. It used to be that bankers were primarily focused on what they could do to help a client secure a loan. Today, it’s a much broader vision. Our focus is around full relationships; we know that new business opportunities don’t always start with us providing all the financial services a customer needs, however, if we’re going to be a valued business partner, we need to understand the tools the company is currently using to tackle their challenges and objectives. With comprehensive knowledge of the business, we are well equipped to offer solutions at a pace aligned in the best interest of the customer.
Manufacturers need to be light on their feet. They need to react quickly to changes in the marketplace as well as to changes with their customers and their vendors. I believe that Bremer, as a partner, is uniquely able to respond to the specific needs of the manufacturing client. We know our customers and we know the communities we serve very well. In addition, our local leaders are empowered to make decisions and that allow us to quickly respond to customer needs.
Our approach, in terms of how we operate as One Bremer, i.e. shared expertise to provide a best customer experience, works well with this sector because we encourage bankers who have deep expertise in the manufacturing industry to share their expertise. We also think it’s important that the owner and the management team of the business not only know the banker, but also know our senior management team. Those relationships are especially critical during challenging times.
The Great Recession of 2009 forced a reset for many manufacturers that is still being felt. Some manufacturers say that their banking relationships didn’t change at all; others continue to say their banking relationships changed dramatically. How do you account for that?
The recession forced manufacturers to streamline their businesses, to reevaluate the profitability of their customers, reassess their vendor relationships and reduce costs wherever they could. Banks were dealing with the same economic forces and it caused them to change how they did business as well. Clearly, banking organizations that knew their customers well and had weathered the ups and downs of business cycles with them before, were better positioned to work through issues together.
There is no question the Great Recession presented challenges to both banks and manufacturers. Again, if the business had a good, active relationship with their banker, then they probably felt like that continued during the recession. However, if they had more limited contact with a banker, they might have felt like the relationship was changing because bankers were asking more questions and requiring more from their borrowers.
We were able to approach our clients and say, “Yes, it feels different, and here’s why we’re asking these questions.” That approach allowed us to continue working with customers and present options that worked best for their business and the bank. It was that personal connection—or maybe the lack of one— that dictated the experience, which explains these conflicting reactions.
It was also a function of what was happening in the industry. The borrowers who were the most proactive in adjusting their businesses at the onset of the recession likely had better financial results, or had financial results that didn’t require additional action with banks. There’s no question that businesses who were slower to react and had less contact with their banker may have felt like a banker was pushing for more.
At Bremer, we take pride in our ability to roll up our sleeves and work through challenging times with our manufacturing customers. It’s always important for both parties to be truthful and transparent during those conversations. A communicative relationship with full disclosure by both parties provides the best opportunity to determine the right approach, especially when managing a challenging situation.
Some manufacturers say that another legacy of the Great Recession is that lending decisions are increasingly data-driven and not so much based on relationships with their local bankers. How would you react to that?
Data and ongoing metrics certainly help banks understand clients and their industries. We use data to measure performance, but honestly, the relationship is the key. At Bremer, we really believe that a company’s management team has the greatest impact on its success. All industries go through cycles. Companies with management teams that can adjust and work through those cycles are the ones that are most successful in the long run.
My advice to any manufacturer is to establish a partnership with your bank, inform them of your strategies, your key decisions, and let the bank know when circumstances are changing, either positively or negatively. The more your banker understands your business, the better position you’ll be in to work through those down cycles together.
There are certainly differences among banking organizations in how they approach the use of data to run the business. By definition, a bank holds a lot of client data, and to some extent, that can provide insight into what’s most meaningful for our customers. We use data to better understand our business and our customers, but I never see that data replacing the interpersonal relationships we have worked hard to establish. So data is just that. It represents information, factors that may be considered in decision-making, but it will never replace the relationship.
Another legacy of the Great Recession is how increasing market volatility affects forecasting. For a lot of manufacturers, the 12-month forecast is a relic of the past. Does that indicate the need for even closer interpersonal relationships between bankers and the manufacturers?
Appropriate time frames aren’t always easy to determine; however, looking forward is an important part of any business operation. We do that. We need to pay attention to what’s changing as the world changes, and we think that’s important for our customers to do as well. If a customer shares information regarding what they are forecasting for their business growth or challenges, we can be proactive in providing solutions. This can help a business manage their cash flow needs rather than being reactive when there’s a cash shortfall, for instance.
More information is always better. The earlier a manufacturer can anticipate a change or challenge in their business or industry, the more options we can explore to change course and work through potential obstacles. Again, it goes back to relationship management. Any insight we have into the manufacturer’s business operations can help us plan accordingly; everybody’s going to benefit from that.
It’s important for a management team to update their forecasting when variables change. For example, a manufacturer might receive a significant order that requires the extension of a different accounts receivable term, or requires them to carry larger inventory levels in order to reduce lead times. There are all kinds of circumstances that can cause greater borrowing needs. It’s important for a banker to understand those drivers and how they relate to risk for both the manufacturer and the bank. That level of business understanding allows the banker to provide the right kind of solution.
The skills gap is a very real concern for manufacturers, particularly in Greater Minnesota. Do you have similar challenges finding bankers who can follow the increasing sophistication of manufacturing?
We are focused on identifying and developing talent as a priority at our organization. Our people are the core drivers of our brand promise. We recruit and develop bankers who are skilled at listening, problem solving, and building relationships. We start with those core attributes being aligned with financial and technical expertise, which is also critically important.
We have a variety of paths for developing and encouraging those skills. I mentioned earlier, One Bremer, a phrase we’ve developed internally that refers to leveraging expertise throughout our company. If an employee isn’t as familiar with a specific industry or a client need, he or she understands that we have a deep network of expertise within Bremer that can be leveraged to provide the perspective or expertise to help any one of our customers. That’s a very powerful quality of Bremer. We not only encourage it; frankly, we expect it.
We have developed a variety of leadership and training programs as part of our ongoing investment in talent and people. It’s also important for us to stay involved in local associations and organizations that support the industries we serve to continue to educate ourselves. We encourage all of our bankers to do that. On a personal level, my involvement with Enterprise Minnesota has provided me with continued learning and appreciation of this industry, not only in terms of the important number of manufacturers in our state but also the important economic contributions they make.
As a commercial bank, we want to have deep expertise in the primary industries that drive our core business opportunities. Manufacturing is a critical sector for us. We do have the benefit of highly experienced bankers with a particular focus in this sector. These bankers have worked successfully with a variety of clients, through good times and bad. So it’s really important for us to leverage that specialized expertise more broadly to support clients across our footprint. We have a particular focus on that approach as we grow our organization to add meaningful value to customer relationships in all the markets we serve.
Government regulations like Dodd-Frank put a particular burden on regional banks and smaller banks. Given that, how do you predict the evolution of banking? What’s it going to look like in 10 years?
That’s a tough one. The rate of change in our industry in recent years has been remarkable and it’s difficult to predict how the regulatory landscape will evolve at this juncture.
In some cases, it might be more challenging for a business owner to have a geographically close relationship with their banker. I do believe there is a need for financial institutions of all sizes, and I am a strong supporter of small community banks that are committed to their communities and doing the great work that they do to serve their niche. At Bremer, we strive to continually deepen our expertise so that we can readily support the various industries that are present in the communities we serve.
Regulatory burden is likely to change, but we don’t know how it will change. Until then, we will maintain the strong relationships we have with our regulators and remained focused on doing what we need to do to run our business well. We must continually manage our business meeting compliance requirements so that we can continue to grow. We avoid surprises and obstacles because we run our business with a focus on enterprise risk management. That takes a real commitment and investment, in terms of staffing the organization in a new way and creating new roles to best manage the threats of our changing world.
The overall approach to enterprise risk management has changed dramatically in the years I have been in this industry. We have to grow with those changing needs and requirements. We look at it as a fact of how we need to do business. That cost burden may be extremely challenging for some organizations of a certain size, but not all. There are small organizations that are able to make those investments and figure out how to support their business.
All that being said, I do believe that the industry is going to experience continued consolidation. Where it ends up in 10 years is anybody’s guess. I do think that technology advancements are going to be the most rampant changes in this industry. The reduction in transaction volumes at our branch locations over just the past few years is amazing. Customers are using mobile devices; they’re using remote deposit, they’re using tools and solutions that are, frankly, more secure and more convenient for them. We are paying attention to what our customers need and want in order to meet changing expectations.
As much as we have to pay attention to the regulatory demands and prescribed ways of doing business, those factors don’t define how we invest and move forward in growing our business. We focus on our clients, and we work to develop the tools that will help them. I really think technology, more than anything, is requiring us to take a new look at our distribution model and how we best work with our customers to take care of them.
You are a board member at Enterprise Minnesota. How has that experience affected your perceptions about manufacturing and manufacturers?
It’s been a tremendous help to me. I truly appreciate how Enterprise Minnesota CEO Bob Kill opens up every meeting by reiterating the guiding principles of the organization. The purpose of the organization is to help manufacturing enterprises grow profitably. That resonated with me and continues to provide me with information and tools to make sure that we, as a banking organization, are building our business in the right way to support this industry.
The focus of Enterprise Minnesota, to help businesses be well-positioned, to improve productivity and create efficiencies is absolutely critical to how we run our business today. It completely matches up with our goal as an organization: to build a thriving business community.
Manufacturers represent a key segment for us in terms of our growth. I couldn’t have picked a better organization to learn and develop my own understanding of this industry, and hopefully bring that back to our organization in a way that continues to reinforce our commitment and our interest in working with manufacturers in the state of Minnesota.
Jeanne Crain is the president and CEO of Bremer Financial Corporation.
Featured story in the Spring 2017 issue of Enterprise Minnesota magazine.