While Northwest Bancshares in Warren, Pa., is a relatively fresh endeavor for its new CEO, he is very comfortable with his mission.
Ronald Seiffert was tapped last month to succeed the retiring William Wagner, less than a year after joining the $9.6 billion-asset company as its president and chief operating officer.
Seiffert, who spent two decades at Huntington Bancshares before leading DCB Financial in Lewis Center, Ohio, is overseeing a strategic planning process to find ways to spur organic growth. The plan, which he expects to present to Northwest's board in October, will address challenges ranging from artificial intelligence and big data to improving products and cutting costs.
A greater emphasis on organic growth would be a shift for Northwest, a former mutual that used M&A to pack on nearly $3 billion in assets after the financial crisis. Its pending purchase of Donegal Financial Services in Marietta, Pa., will push its assets past the $10 billion threshold that will lead to increased regulatory scrutiny.
Striking a better balance between acquisitions and internal improvement sits well with those who follow the bank.
“One of the challenges with Northwest is looking at the region they're in — it’s a slow-growth region,” said Collyn Gilbert, an analyst at Keefe, Bruyette & Woods. “How do you manage the expense structure and branch structure in regions of the country that are slower growth and less densely populated?”
Seiffert said in a recent interview that an inquisitive approach would be a hallmark of his leadership.
Here is an edited transcript of that discussion.
Why did you decide to join Northwest?
RONALD SEIFFERT: No. 1 was the fact that it was a community bank. Having worked in larger and smaller institutions, I was really looking as my next career move to work for a community bank because of the culture. With Northwest, you get culture and size. It gave me the opportunity to come to a bank that has the size and girth to compete, but still has the community bank culture. From my very first meeting with Bill Wagner — I like to tell people he had me at hello. His high degree of character, integrity, the way he conducts business and his humble and effective leadership style — I was sold right from the beginning that this is the place that I needed to land next.
What are your top priorities?
We will continue to have a balance of organic and inorganic growth. We're in the middle of a strategic planning process to tease out a lot of initiatives that will drive organic growth. That strategy will be delivered to the board in October. We will also continue to look at opportunities in the M&A world.
Bill Wagner’s greatest legacy will be the strong community bank culture he built here. He knew that if we just focused every day on doing the right thing for our employees and customers that the numbers would take care of themselves. That has been a winning strategy for the last 34 years and has got to be one of our top priorities.
Are there lending opportunities that could spur organic growth?
I think there is still a lot of upside with respect to retail lending, primarily mortgage lending, in our newer markets, including Ohio, New York and Pittsburgh. Also commercial lending in those markets, mostly around C&I. Those are all great markets for growth for us.
Are there new markets Northwest would consider?
We will continue to focus on acquisitions in-market — those are always attractive to us in Pennsylvania and in northwest New York, up in our Buffalo and Rochester areas. Of course we would be very interested in northeast Ohio, where we made an acquisition a few years ago. We believe there are a lot of good markets in Ohio that we would like to be in. I’m particularly familiar with those markets since most of my career before coming to Northwest was in the Ohio market.
What has Northwest done to prepare for passing the $10 billion-asset mark?
Over the last several years the bank has made some material investments, particularly around compliance and internal controls. As we approach $10 billion and grow beyond that, we believe we will get more scrutiny from regulators around compliance and internal controls. I think we're in really good shape. The biggest impact of going through the $10 billion ceiling will be the Durbin amendment. We estimate that lost revenue to be between $7 million and $8 million on a pretax basis. We recently announced the acquisition of [Donegal] and we will close that in the first quarter ... so that will certainly help us offset most of that lost income from the Durbin amendment.
We anticipate we will cross that $10 billion mark sometime in 2019, so Durbin won’t kick in until probably mid-2020, so we have about two years to continue to grow organically and successfully close on the [Donegal] merger. That will provide significant momentum for us to move successfully through the $10 billion ceiling.
How will you leverage technology and automation to become more efficient?
This is a very critical question facing the banking industry. At Northwest, we believe we currently have a comprehensive and sophisticated electronic banking platform to serve the needs of our customer base. We also believe that we have a very sophisticated technology platform that we have developed over the years to provide efficient and redundant operational and data capabilities. Having said that, we also recognize that having these current capabilities are only table stakes in our industry as it relates to the ever-changing world of technology and serving our customers.
To answer this question, the bank has launched a comprehensive strategic planning process to specifically address this issue to include the development of specific actionable initiatives. We're confident that we will identify specific actions to lower the cost of delivering sophisticated products and services while, at the same time, providing an exceptional customer experience.
What role will branches play as Northwest incorporates more technology and automation?
As we all know, transaction volumes in branches have been declining at an increased rate over the last five to 10 years as customers have moved to electronic delivery channels. In the short run, this has resulted in many banks, including ours, optimizing their footprints through the closure of underperforming branches. It also has resulted in the repurposing of branches to become more proactive providing customers with financial advice and delivering products and services to support [the role of becoming] trusted advisers.
This trend will continue. Branches will become centers or touch-points to access all products and services through technologically advanced electronic delivery.