Changing Fortune on the Main Line
Big changes are coming to Bryn Mawr Trust. Yet, at its core, everything’s staying the same.
Despite a whirlwind of “go-big” advancements over the past decade, and more changes on the horizon, the bank’s small-town focus has endured, never succumbing to big-bank inflexibility, impersonality, or improbable risk-taking.
But change is inevitable. It is good. It is a sign that the seeds planted by both bankers and customers have fallen on fertile soil. The 125-year-old community bank will soon welcome a new President and CEO; the bank has moved into a new building near its former home; and bank leaders have successfully completed an impressive six acquisitions in six years. And that’s just a sampler of the changes logged, lauded or looming as Bryn Mawr races along an upward trajectory of growth and expansion.
Yet, Bryn Mawr’s commitment to the customer, especially the business lender, and to the community as a whole is as rock-solid as the exquisite stone mansions that rise up in splendor like architectural jewels embedded in the emerald-green landscape of the affluent Main Line. Serving the upscale estate-lined suburbs outside the City of Brotherly Love, the bank’s staff has helped to create, manage, preserve and transfer wealth in one of the richest zip codes in the nation.
The bank’s namesake, the region of Bryn Mawr, spans Radnor Township in Delaware County, Haverford Township in Delaware County, and Lower Merion Township in Montgomery County, west of Philadelphia. “Bryn Mawr,” Welsh for “big hill,” is an understated moniker for a bank that has scaled mountains with expeditionary zeal, while keeping their feet on the ground and their eyes on the prize.
Frederick C. “Ted” Peters has been at the helm for 14 years, masterminding a four-fold growth in bank assets during his tenure. As he and his board power through the formal transition plan that will pass the baton to Francis “Frank” J. Leto, who now leads the Wealth Management Division, Peters has vowed to “go out on a high note.”
Indeed, he has hit high note after high note in 14 years, even during a time of economic lethargy that continues to hang on like an immutable virus.
When Peters came to Bryn Mawr Trust, the bank reported a healthy $412 million in assets and five branches. They soon acquired three banks and three wealth businesses, including Lau Associates, LLC in the state of Delaware, and their full-service branches leapt to 19.
“We have been very fortunate,” said Peters with characteristic modesty. Bank leaders have steered the ship to record earnings and “got through the 2008 crisis unscathed.”
They have withstood the many pressures that are part and parcel of a public company, including shareholder demands and regulatory angst.
“I think our mantra as a board is to stay independent,” Peters said. “Sometimes that’s easier said than done.” He jokes that they are 125 years old, and still single.
He envisions the formal transition process, from the Peters period to the Leto age, in terms of an organic growth process.
“Stewardship doesn’t mean being a mere caretaker. It makes taking it, making it grow, and then handing it over to a guy or gal—in this case, a guy—who will take it to the next level.”
Peters predicts that when he leaves, they will reach $3 billion in assets, which is a “pretty good size.” His sights are set on $5 billion in assets and $15 billion in wealth assets “at a certain point in time.”
“We feel we need to grow the bank in a measured way, organically,” Peters said, “to spread out our overhead over a larger base.” He cites the bank’s spending of $1 million a year alone on direct cyber-security that go far beyond standard IT services.
“Fortunately, we got out in front of the curve,” he said, “with our technology upgrades.”
Their wealth business has expanded its geographic footprint beyond the leafy elms of Bryn Mawr to the cocoa-scented cottages of Hershey, the historic streets of Boston, and to a myriad of points across the United States as their customers move and grow alongside them—and often, thanks to them.
Their focus, though, despite this remarkable evolution and ascent, remains permanently on the little details that matter most.
“We see ourselves as a regional community bank. We do all the things a regional community bank does,” such as mortgages, a title company, a leasing company, insurance, Peters said.
They may soon have 29 or 30 branches, but magnitude does not mean a change in attitude.
Two-thirds of their loans are business loans. “We’re very good at that,” said Peters.
Like spokes around a wheel, they have four loan centers—in Delaware, West Chester, Media, and Bryn Mawr.
A fifth will open soon in Plymouth Meeting. Most of their loans are in the $2 to $15 million range, but “We’re starting to do a lot larger transactions,” Peters said, as phones ring and church bells chime in the background.
Peters practices a “use-it, don’t-lose it” strategy. “But we don’t want to lose our roots as a community bank. We want to use our reach as a community bank. We have a high-powered board. You can’t have a strong bank unless you have a strong board.”
Peters sees the “community bank” label as a term reflective not so much of size, but of a business philosophy.
He thinks a community bank meets the textbook definition if bank executives are accessible, there is “active involvement in the community” and they are “extremely generous.”
“It’s a philosophy. It’s an idea,” Peters said.
You can set a cut-off line to delineate the size of a community bank, such as $1 billion. But numbers clearly don’t tell the whole story.
As Bryn Mawr Trust grows, Peters admits, “It’s always a challenge” to maintain flexibility and help the little guy—to achieve the seemingly paradoxical balance to be both large, but little. National, but local. But, Peters and Leto know they will not morph into the big-bank strait jacket where a computer churns through cold, hard numbers, spits out a credit score on a business loan or a consumer loan, and delivers a knee-jerk “no.”
“Relationship banking is the key to our success.”
“We know our customers. We really know our customers.”
Success underscores this assertion. Peters started two de novo banks before coming to Bryn Mawr. He has witnessed the dizzying changes in banking and the economy from both a macro and a micro point of view. He predicts that the economy is likely to limp along for some time, and the “low-rate environment” will continue to make it rocky terrain for the industry.
“It’s a lot of pressure, especially on banks that are margin-driven,” he said.
With 40 percent of Bryn Mawr’s income derived from non-interest income, regulatory pressures exacerbate the economic vise. Peters is perplexed—and vexed—by the vast number of regulators devoted to small, solid banks, when the risk of failure, and the resultant damage, are so relatively low.
He admits that the idea behind Dodd-Frank was legitimate, to punish some really “bad people” who could “care less about ethics,” people who were packaging bad loans in one office while co-workers literally across the hall were shorting them. The people who pushed “crap mortgages” and “crazy swaps”—“They’re the ones who have to be punished, not the 6,500 banks who are basically trying to do the right things.”
Peters speaks well of his neighboring community banks and their devotion to mission and morality.
He strongly believes that there should be different regulatory tracks for different asset-sized banks. Perhaps a category for banks with under $1 billion in assets, below $10 billion, above $50 billion, and so on, especially because the bigger banks have different hedging strategies, engage “in a higher level of risk,” and are driven by entirely different investment and income strategy and structure.
He recalls how years ago, compliance issues were almost non-existent. Today, “God forbid if you screw up Regulation B or Regulation Z.”
But the gentle winds of change are welcome at Bryn Mawr.
“Thankfully, it’s being turned over in great shape. The future is very bright for us.”
While they sprint toward their goals of $5 million in bank assets and $15 million in wealth, their objective is matched by their pledge to walk the Main Line: to “still maintain that community feel.”
“I am very optimistic about the future,” Peters said.
“We want to be the premier community bank in the Philadelphia area.”
He notes their commitment to the region, which is visible in the involvement of all branch managers in service organizations. The bank donates more than $1,000 per employee to worthy organizations such as the Girl Scouts, Boy Scouts, and scholarships to needy children through the state’s Educational Improvement Tax Credit (EITC). They support the fireworks in Radnor, the Halloween parade in Media “and everything in between.”
“We are very engaged in the community and will continue to be. That’s one of our strengths,” Leto said. “It’s rare to find community banks that aren’t good at that.”
When Peters’ portrait is hung along the crowded wall of honor showcasing the eight past presidents before him, his image will be placed in a spot that travels up the staircase. For a gentleman banker who has stepped up his game at every turn, taken Bryn Mawr Trust to the next level, and then elevated it that extra step more, that placement seems just right.
This article can be found featured in the August 2014 issue of Transactions. Not a subscriber? Visit the Transactions page on this website or call PACB at 717-231-7447 to start receiving the magazine.