J. Roger Moyer Jr., the president and chief executive officer of Sterling Financial Corp. in Lancaster, Pa., recognizes the power of words.
So when he created a position with the aim of getting Sterling's multiple business units to work better together, he gave it an uncommon title - chief revenue officer. In a business as commoditized as banking, he said, "you need to find ways to distinguish yourself."
"People say, 'Is that like a chief operating officer? Or is that a chief administrative officer?' " Mr. Moyer said. "Well, no, because the focus here is around execution and alignment on the revenue side of the company."
Brad Scovill, who formerly headed Sterling's nonbank financial services group, was named chief revenue officer in February. His mission is to maximize revenue at a company with seven banks in three states and 10 other financial services companies that range from insurance to leasing to specialty financing for forestry equipment.
Of course, all banking companies want to increase revenue, but some put more emphasis on things like controlling expenses or improving net interest margins.
At the $3 billion-asset Sterling, Mr. Scovill said, "We really see ourselves as more of a growth company as opposed to just a community bank. Our premise is you have to grow to be successful long-term, and the real driver of growth is revenue."
The ultimate goal is 10% growth a year in earnings per share, a target that Sterling has achieved every year since 2001 but that is not easy to maintain.
Mr. Scovill's task is one many banking companies face: streamlining communication among a variety of units to increase referrals and, ultimately, sell more products to each customer.
Mr. Scovill is overseeing a number of programs designed to increase referrals, including training to make employees aware of all the products available across units, revised incentive plans, and a multimillion-dollar technology investment that will be phased in over several years.
Damon DelMonte, an analyst with Keefe, Bruyette & Woods, said he had never heard of a chief revenue officer, but likes the sound of it.
"It shows they're dedicated to focusing on revenue. By actually putting that in the title, it calls attention to it," Mr. DelMonte said.
Sterling's banking services group is led by Thomas J. Sposito 2nd and the financial services group is led by Beverly Wise Hill. Both now report to Mr. Scovill.
Sterling was founded in 1987 and was a one-bank holding company until 1999. It has bought several banks, including Bank of Hanover and Trust Co. in 2000, where Mr. Scovill was president and CEO, and started several others.
It is far from done expanding. "If you go out a county or two in a couple of different directions, there are still some pretty good markets out there," Mr. Scovill said, listing as examples the Pennsylvania counties of Chester, Montgomery, Bucks, and Lehigh to Sterling's east and Franklin to its west.
Sterling will move into Harford County, Md., in October when it closes its $22.8 million deal, announced in March, to buy Bay Net Financial Inc. in Bel Air. Now the neighboring Maryland counties of Baltimore and Frederick beckon, Mr. Scovill said.
He said the company believes its relationship-driven strategy is suited to suburban and rural areas rather than cities, where competition is more intense and pricing more commoditized.
Richard Weiss, an analyst at Janney Montgomery Scott LLC in Philadelphia, called Sterling's second quarter "solid." He pointed to a comfortable net interest margin of 4.77%, down slightly from the previous quarter and the second quarter of 2005. In a June 15 research note that reiterated his "buy" rating on the company, Mr. Weiss said Sterling has the ability to build revenue faster than its peers.
Sterling's net income in the second quarter was $10.3 million, 6.2% more than a year earlier, and earnings per share rose 6.1%, to 35 cents.
Mr. Moyer said at an investor conference in Hershey, Pa., last week that Sterling's most profitable subsidiary is Equipment Finance LLC, a Lititz, Pa., specialty lender that finances machinery for small logging companies in the Southeast.
Equipment Finance has tripled in size since Sterling bought it in 2002, largely benefiting from the access to capital Sterling offered, Mr. Scovill said. He said the unit helps Sterling in one of its chief goals: revenue diversification.
Mr. Weiss said Sterling's income is much more diverse than its peers'. About 53% of its first-quarter revenue came from the banks; the rest came from leasing, specialty finance, trust and investment, and insurance. (The second-quarter breakdown will not be available until Aug. 8.)
For the first six months, fee income revenue was 27.7% of the total revenue. (The fee-income figure is adjusted to account for depreciation related to leases.)
Sterling owns a trust company, an investment adviser, and a brokerage. The brokerage focuses on large-cap value, but Mr. Scovill sees opportunity to expand into small-cap.
In insurance, "we're not full-service yet in commercial property and casualty," Mr. Scovill said. "Insurance is probably the youngest of the business lines we have right now, and we're still building that out."
Mr. DelMonte, who has a "market perform" rating on Sterling, said it is less interest rate-sensitive than most community banks because of its revenue mix.
He said he thinks Mr. Scovill will succeed in his new role. "I think Brad has proven himself to be an efficient manager and a strong leader in the past," he said.
The employee training efforts Mr. Scovill is overseeing include what he calls "product symposiums," which are like in-house trade shows where the different business lines set up booths and demonstrate what they do.
Under the incentive plan, which has been evolving over the past few years, employees cannot max out unless they are referring or closing business with another affiliate, he said.
The technology Sterling is implementing will offer a single view of the customer across the company. The first phase, scheduled to begin this winter, will provide a home page customized to each employee with access to customer information and a common referral platform. The computerized referrals will help Sterling respond to customers faster by eliminating e-mails and voice mails, Mr. Scovill said.
Though Sterling wants better coordination among its businesses, it does not want the units to lose their individuality.
"That's one of the challenges," Mr. Scovill said. "If we're going to serve our customers really well - and we've done research on this - those individual units have to retain their personalities and their expertise. What we've heard loud and clear from customers is: We don't believe that bankers can be experts at everything."
He said his assignment is to get the units more in sync so they can make better use of Sterling's larger customer base.
"Can we do it? We're doing it to some extent now," he said. "But we're not as good at it as we're going to get. We're going to practice every day and get better at it as time progresses."
As Sterling's cross-selling and earnings improve, it will probably become more attractive to buyers. Asked about the prospect of Sterling's selling itself, Mr. Scovill said, "We're putting ourselves in a position where we don't have a time line to make that decision."
