Fulton Financial's new chairman and chief executive is hopeful that his tenure atop the Lancaster, Pa., company will be more enjoyable than that of his predecessor.
Earlier this month, Philip Wenger succeeded Scott Smith at the $16.5 billion-asset company. Smith spent much of his six years as CEO hunkering down as the recession and financial crisis rattled the entire banking industry.
Despite ongoing challenges, Wenger is eager to help Fulton (FULT) expand. "We're a little more focused on growth," he says. Compared to playing defense, "I'd say a growth focus is a lot more fun."
Wenger clearly has Smith's endorsement. "Our people have a lot of respect for his judgment," Smith says. "He understands our industry extremely well and has a good grasp for where banking is going."
Here is an edited excerpt of a recent interview with Wenger:
Are there differences in your management style compared to your predecessor?
WENGER: I think the difference is more about where we are in the economic cycle. During a large part of [Smith's] tenure, we were really internally focused because of what the crisis and regulations did to our industry. Coming out of that, I think we're a little more focused on growth. I would say the growth focus is a lot more fun.
What's your perspective of banking? How does Fulton fit into that view?
WENGER: For the most part, banks are still selling the same products and services, but technology has impacted the industry greatly. We're in a period of increased regulation.
As a company, we feel we're really positioned well in our best market segments — those that value a relationship. Over time, some of our products have become commoditized, so we have to be more focused on exactly who we can service best and who values the kind of service that we believe in.
Are there gaps in Fulton's products or services?
WENGER: I think we're pretty satisfied with where we are. We want to tailor our product lines to market segments that we can compete well in. That would be small business and consumer markets. When I say small business, I mean companies with annual sales of $1 million to $150 million.
We have a more difficult time competing against larger banks [for bigger clients] from a product and pricing standpoint. We can't compete [with big banks that] have to pay a CFO a lot of money to have the most-sophisticated products and lowest prices. I don't think we want to try and compete in that market.
How do you assess the overall economy?
WENGER: Time will tell if things get better or worse. I don't think the world is clear enough to be sure of where we are. There are a lot of things right now that can make you optimistic about the future and a number of things that can leave you with doubt about how the next five years will go. It is extremely challenging because rates are so low and the yield curve is so flat.
What makes you optimistic?
WENGER: I have a lot of optimism about what can be accomplished in our country and our fortitude to move forward and have an economy that grows and prospers. I think we've gone through some really tough times but things are improving.
What causes you to doubt?
WENGER: It has been a period of time where the country has become somewhat polarized. I'm optimistic that we'll end up somewhere in the middle but I'm not totally sure we've reached that point. We need to move in that direction.
What will happen with interest rates?
WENGER: Everything we hear from Washington is there won't be a big change in rates. Historically, we've been fooled at times about that, and I expect that will happen again. When it happens is a big question.
Early in my career, I remember really smart people telling me that the prime rate would never be under 10% again. That obviously changed. I suspect it is going to change again. It is hard as an organization not to be in a position where rising rates will help you. We like to think we're at a point where rates can't go lower.
As rates stay low, are there plans to increase fee revenue?
WENGER: There are three areas that we are investing the most resources in. The first is mortgage origination. That's a strong business for us and I think we can grow that. The second area is investment management and trust, which we also believe we can grow. The third area is our suite of corporate services such as cash management, retirement plans, merchant accounts.
What about expenses?
WENGER: Our efficiency ratio continues to be a top-quartile measurement for us. We don't think we necessarily have the ability to come out with a broad cost-cutting program, but we manage expenses every day. Certainly, there are more challenges with additional regulation, but we'll manage them as long as we can.
How are your markets holding up?
WENGER: In general, we're much more positive about the markets we're in. New Jersey is the slowest to turn around, and it is struggling more than other markets we're in.
Is there an interest in acquisitions?
WENGER: I think there will be consolidation opportunities. What we manage on a day-to-day basis is internal growth. It is a bonus if opportunities come along. If you can't grow internally, then buying someone else's assets will not help you. When we buy someone we must have the opportunity to grow them also. As a company, we're really focused on internal growth.
What are your standards for acquisitions?
WENGER: The first thing we look at is location. We have a five-state footprint in 56 counties. In eight of those counties we have a [deposit] market share position of first, second or third. We want to increase that number because we tend to make more money where we have more share.
We don't think we need to [expand outside of current markets] to grow. We'd consider institutions that look like us and believe in relationship banking. That's important to us. The ideal size is someone between $300 million and $2.5 billion [in assets], but we could look at something larger.
Fulton has a minority stake in Bryn Mawr Bank (BMTC). Why did Fulton make that investment?
WENGER: We made a passive investment and there are no long-term plans. We've owned up to 4.9% of the company from time to time, as we have in others. We have a portfolio of banks stocks. We had the opportunity to buy a little more.
Any thoughts about the group looking to form Bank of Bird-in-Hand in Lancaster to focus on Amish customers?
WENGER: We knew about it when we read the article in American Banker. This group started a similar organization that was sold to National Penn. It is a challenging time to do a start-up, but we wish them well.