Bryn Mawr Trust Company Leads the Way With Local Baking

Inside the latest leadership shift at Bryn Mawr Trust Company.

Aside from Jimmy Stewart in It’s a Wonderful Life, bankers almost never appear on anyone’s “most beloved” list. And their prospects for adoration hardly improved when the federal government bailed out the likes of Citigroup and JPMorgan Chase a
half-dozen years ago. 
But while megabanks mixed bundled mortgages and international exposure for a toxic brew, community institutions like Bryn Mawr Trust Company, a bastion of the Main Line, stuck to their knitting. Founded in 1889 chiefly as a repository for old-line money, BMT moved to its current headquarters four decades later. In the years that followed, it reshaped its profile to attract those other than corporate titans and their progeny. The pace of change has accelerated in the new millennium, as the bank has become more expansion-minded. Acquisitions of smaller banks and wealth-management groups have boosted BMT’s assets to more than $10 billion, and the number of full-service branches to 29. Its footprint now extends beyond Philadelphia’s three western suburban counties to the city itself, and even Delaware. Ted Peters took the helm at BMT in January 2001 and has presided over its considerable growth. His work history reflects a bygone era in Philadelphia-area banking. Names like Philadelphia National Bank and Industrial Valley Bank prompt memories of passbooks and long lines at the teller windows. “Nobody saves more than Bernie Parent,” went the classic IVB ad. Some erstwhile depositors still have the orange Flyers warm-up jackets they received when they opened their accounts. Now, after 14 years, Peters has yielded control to his chief operating officer, Frank Leto, who broke new ground for the bank’s wealth-management division.    We met with BMT’s incoming and outgoing CEOs at the familiar stone fortress on Lancaster Avenue, across from Bryn Mawr train station. While Peters is rather dynamic, Leto tends to be laid-back. But each imparts a sense of enthusiasm over retail banking’s role in a fast-changing financial world. Their thoughts have implications that go well beyond the Main Line.MLT: Do you feel any particular pressure in succeeding Ted, given his leadership during the past dozen-plus years?FL: I’ve been with him almost since he came on board. Over the years, we’ve been able to develop our strategic plan from a position of strength—in many ways, due to his leadership. That makes my stewardship a little easier. Sure, I feel the pressure in running an organization, but I know the institution well, and our seasoned management team and employee base make the pressure less than it would be otherwise.  MLT: Ever since the financial crisis of 2008, we’ve heard the persistent charge that banks are far too stingy in approving loans to individuals and businesses. Is this fact or perception?TP: There’s absolutely no doubt that, during the initial years of the crisis, many—if not most—banks did tighten up on their credit culture. Most have changed credit standards since the crisis. A lot of the lending had gotten very loose and should already have been reined in. Things have eased up now. All banks are out looking aggressively for good loans right now. We’ve had a consistent lending policy, good times or bad. We got through the credit crisis unscathed—one of the few banks in Pennsylvania and in the country with almost no problems at all. We had no security write-downs, which almost all other banks did. MLT: You didn’t have the exposure to the kinds of “troublesome” loans that most banks did?FL: By design.TP: Our construction portfolio is five percent of our loans. For many banks, it was 20 percent. If you were in the construction-loan business, you had some issues.  FL: One of the hallmarks of the bank has been stellar credit quality. We haven’t changed anything. From 2007 to 2014, we were doing exactly what we’ve always done. We stuck to that same philosophy and discipline, and that’s why we didn’t see the same trouble that most others did.MLT: For some people, “wealth management” suggests the rich getting richer. Explain what it entails.FL: We look at it as a much more holistic approach to the individual’s needs. We’re not just there to manage your money. We’re focused on all of your financial needs—retirement planning, gift planning, planning for college education. We look at the entire relationship with the client. MLT: As for your logo, some say they can’t figure out what it means, that it’s a tangle of letters. The bank’s future probably will not rise or fall on this, but are you comfortable with the logo as is?TP: The logo is not new—it goes back 25, 30 years, maybe longer. It’s a little dizzy, maybe, but certainly recognizable at this point. It’s on everything.MLT: Given the general concerns about online security, have you needed to reinforce it for your customers?TP: I’ve testified at a congressional hearing on this subject. This is a major threat overall to the entire nation. Organized-crime groups and nation-states, such as Korea, China and Iran, are constantly trying to break into all of our systems. Here, we’ve put a huge amount of resources into security for our clients. We can say that we’ve never had a real issue or problem. One of the big things facing the industry is account takeovers—where somebody hijacks your computer, hijacks your identity. That’s a common problem, whether you’re a bank, a CVS or a department store. We really need [to combat hackers] as a public-private partnership—the federal government, and all business and industries. FL: It’s one of the primary focuses of banking regulators today. We spend a lot of money on it, and I’ve spent more time than I ever thought I would—multiple meetings a week to determine whether we’ve got what we need.MLT: How would you characterize the role of the regional bank?FL: We still consider ourselves a large community bank. We lend money, we manage money, and we’re actually a part of our community. We give a lot back and feel we support the community just like they support us. MLT: But you do have a regional profile.FL: Certainly. We’re as far west as Hershey and almost into southern Delaware. So we’re regional in scope. We’ve always done things big banks can do, but on a much more personal level. TP: Remember, we run two businesses here: a regional/community bank and a wealth business. We try to get as much synergy as possible between the two. Before Frank became COO, he ran the wealth group for six or seven years very successfully. Our wealth business actually has a national scope. Our primary territory would be Mid-Atlantic, but we have clients in almost every state, and we have a national reputation for managing money and handling fiduciary trusts.FL: And we have clients outside the borders of the country—South America. MLT: I understand, Ted, that you’ll be running a hedge fund after you leave the bank. With talk of a bubble in the high-yield market, isn’t it a risky time for such an undertaking?TP: We’re going to be investing in micro- and small-cap community bank stocks—mostly East Coast. We’re not going to do anything esoteric.  MLT: Speaking of esoteric, what will the bank of the future look like?TP: There’s been a tremendous consolidation during the past 25 years. There were about 25,000 banks; there’s now about 6,700. And most people agree it’s going to go down to 4,000 or 4,500. The business has changed a lot, as there’s been regulation, deregulation and so forth. The biggest change I see right now is what technology is doing in the retail delivery system. The question is whether these big branches are still valuable. Should you be downsizing, consolidating, selling off? You just don’t see the traffic in the lobby that you used to see. People are banking by phone, computer, ATM, direct deposit. We have pictures from
30 years ago on Social Security Day, when you couldn’t even get into the lobby; there’d be eight tellers on one side, four or five on the other two sides, and lines all day long. You come here now on Friday afternoon, you can shoot a cannon, and you won’t hit anybody. This will change even more, and Frank has a big challenge on how he designs our delivery systems.
FL: It applies equally to the wealth-management business. I think we’ll see smaller and fewer branches, but much more technology in the branches themselves—not just on your handheld phone and computer. People want to see what their account looks like at the end of the day … interactive financial planning, electronic files that show wills, house deeds, and things of that nature. MLT: So brick-and-mortar banking will eventually disappear?TP: Not completely. The surveys show overwhelmingly that people want a [physical] bank in their community, even though they may not go there often. So the question is: How large, how many, and what will you offer there? We’re looking now at putting in kiosks.FL: I think you’ll see the repurposing of some of the space. Some branches will start to deliver wealth-management, mortgage and insurance services. And there’s still a cash business—you can’t do that through the Internet yet. A big focus for us is to continue our personalized service.  MLT: Ted, you’re on the board of directors of the Federal Reserve Bank of Philadelphia. How does the Philly Fed figure into the national picture?TP: We’re one of 12 banks that constitute the country’s Federal Reserve System. Our president, Charles Plosser, is a voting member of the Federal Open Market Committee. Over the years, there’s been a greater concentration of power in Washington. But the Philadelphia Fed—like all the feds—is very active in determining monetary policy: interest rates, the money supply, liquidity in the market. What we’re seeing now is that some members of Congress want to have control over the Fed. Since they can’t even pass a budget, to think that they’d actually try to set monetary policy is humorous. Without the actions [in 2008-09] of the Fed, along with the Treasury, this nation would’ve plunged into a depression that would’ve made 1932 look like a cakewalk. Right now, we’re keeping an eye on inflation. [Board of governors chair] Janet Yellen will keep rates down until she sees inflation start to rear its head. MLT: One would assume you made a conscious decision to change BMT from a trust-centered institution to an investment-management firm.FL: We’re recognized as the best in the area for trust administration, and that’s always been our forte here. But a few years ago, we made a deliberate effort to be known for much more. That is, we’re very good on the investment side and the wealth management side—it’s not just an old-line trust company. We manage accounts from $2,000 to hundreds of millions of dollars. Not that we’re trying to be something to everybody, but we can handle a broad range of services in investments and wealth management.TP: We’re fairly complex. On the bank side, in addition to making loans and the normal things that branches do, we own a leasing company, we have a mortgage company, an insurance company. We’re pretty sophisticated in the type of business lending we do, anywhere from a $50,000 to $60,000 small-business loan, all the way up to $40 million. About two-thirds of our loans are business loans; the others are personal loans, home-equity lines of credit, car loans. We’re pretty well spread out and are the dominant community bank in the area. The great thing about technology is it allows us to do things the big banks can do—that sort of levels the playing field. At the same time, we deliver a lot more personal service. FL: To give you an example, a multibillion-dollar real estate company recently thanked us for making a sizable loan they couldn’t get done at a big bank in the time frame they wanted to do it.    MLT: Developing financial strategies for retirement must be a significant part of your current business.FL: It’s certainly a big part. In the wealth-management group, we have a department that’s totally dedicated to retirement services—primarily on the business side, with 401(k)s, pensions and profit sharing. We do spend a lot of time with individual retirement accounts and have a person dedicated to financial planning, which is a key in what we do. Obviously, this is a growing focus, given the number of people moving into retirement. MLT: Do you have a strategy to get a larger share of that market? FL: We’re focused on existing business relationships that have the 401(k)s and pension plans we administer. In each of those, there may be hundreds of participants, and all of those people are going to be retiring. So we can focus on the education of that group, getting them to know Bryn Mawr as much more than just the service provider for the 401(k) or pension.MLT: I wouldn’t have guessed you have so many branch locations. TP: The number will be 29, once we add Continental (this month). Plus, we have seven mini-branches in [retirement] communities. When we settle with Continental, we’ll be a little less than a $3 billion bank. (Separately, BMT’s wealth-management department handles $7.6 billion in assets.) Continental is a great footprint for us. We haven’t been in that area—the other side of the river—and it should play into our wealth business, as well. Bryn Mawr Trust Timeline1889 Bryn Mawr Trust opens for business.1928 The bank moves to its current headquarters at 801 Lancaster Ave.1952 BMT begins offering personal, auto and home-improvement loans.1954 BMT merges with Bryn Mawr National Bank, which had been a separate entity.1957 First drive-up teller window opens.1958 First branch office opens in Haverford.1973 BMT earnings surpass $1 million.2000 Website launches.2001 Ted Peters becomes CEO.2004-09 Four new branches open.2008 Bryn Mawr Trust Company of Delaware is established via the acquisition of Wilmington-based money manager Lau Associates.2009-12 BMT acquires Media’s First Keystone Bank, Hershey Trust Company’s private wealth-management group, Devon’s Davidson Trust, and select deposits and loans from First Bank of Delaware.2013 Earnings top out at $24.4 million, with total assets exceeding $9 billion.2014 BMT acquires full-service insurance agency Powers Craft Parker & Beard in Rosemont.2015 Frank Leto succeeds Peters as CEO. BMT acquires Continental Bank out of Plymouth Meeting.

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