Bankers as client partners key to Customers’ success

FACE TIME: Jay Sidhu, chairman and CEO at Customers Bank, said he feels “virtual banking is being embraced, but people still like to have the opportunity to go into a bank office.” / COURTESY CUSTOMERS BANK
FACE TIME: Jay Sidhu, chairman and CEO at Customers Bank, said he feels “virtual banking is being embraced, but people still like to have the opportunity to go into a bank office.” / COURTESY CUSTOMERS BANK

Jay Sidhu led Customers Bank to the top spot in Bank Director magazine’s 2014 Growth Leaders Ranking, announced April 29. It is the second year in a row Customers Bank earned the top rating, which is for core performance, the most comprehensive of four categories in the rankings, which also included core deposits, net loans and leases and noninterest income.
Rankings were based on the first three quarters of 2013. No Rhode Island-based banks made the lists of top 10 banks in any of the four categories.
Although Sidhu, Customers’ president and CEO, is based in Wyomissing, Pa., he has long-term relationships with former colleagues from Sovereign Bank, many of whom have been reassembled on his current team.
Sidhu says the bank is planning to open a full-service, walk-in community banking office in Providence next year.

PBN: Is there a strategy that helped Customers Bank rank first in a national performance measurement by Bank Director magazine two years in a row?
SIDHU: We have been looking at the changing face of banking, with the technology, the regulatory environment, the changing needs of the consumers and the changing needs of small and medium-sized businesses. We wanted to create a bank of the future without sacrificing the most important features of community banking, the high-touch, the personal service and having the customers say, “Wow.” That will never change, but the ways we deliver that can change.

PBN: What are the core elements that allow you to rise above the very intense competition?
SIDHU: It’s our focus on doing a few things really well, attracting and retaining top-notch talent, having a unique strategy and then being very focused on the execution of that strategy, and at the same time being superb at managing the risk.

PBN: What are some of the ways the bank is executing its strategy?
SIDHU: We identified three market niches in the business-banking side where we saw huge growth potential for us, consistent with the criteria we’ve established for our success. [First] is banking the privately held businesses with revenue below $100 million, we are that specific. Some banks call it middle market, some banks call it small-business banking, we call it banking the privately held businesses. We looked at their needs. They want bankers who really understand their business, who can be partners with them, can help them grow their business, who can guide them when they need to bounce things off partners. It became obvious to us that we have to have people who are very experienced bankers. So the average experience of bankers in Providence and in Boston is 20 years.

PBN: What is another of the bank’s three key market niches?
SIDHU: The second segment is banking the high net-worth families. We decided for us it means we do private banking for these families, as well as in the real estate portfolio they own, we provide them with financing for their real estate business. That is why we’ve seen the greatest growth in New York in multifamily real estate.

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PBN: What’s the third segment of the market that Customers Bank is focused on?
SIDHU: The segment we identified, which everybody walked away from in 2009 and 2010, is banking the mortgage companies. Mortgage companies control about 60 to 70 percent of all the home mortgages provided in the country. We have become the bankers for the mortgage companies. We provide them lines of credit, as well as private banking services for the owners and top management. That business we started from scratch and … grew to $1.5 billion in assets last year, but with the decline in the overall mortgage business, that business is down by 50 percent. To offset the loss of revenue – we didn’t miss a beat – we still saw a huge increase in earnings from the other two segments.

PBN: What’s the progress of the Customers Bank operations in New England, particularly Providence?
SIDHU: In New England, when we acquired the portfolio of commercial loans from Flagstar, led by Steve Issa, we said, at that time, we wanted to build it to be a $1 billion business in five years. So now it will be a $1 billion business in four years, because one year is already gone. How much progress have we made? As of now, within the very first year, we’ve increased that business from $145 million to over $250 million. … And we didn’t lose a single customer.

PBN: Issa has said a residential mortgage office is scheduled to open on the street level of the Textron building, where the Customers Bank offices are on upper floors. What’s the status of that?
SIDHU: The head of that residential mortgage office is already working in the existing offices and we’ve recruited a couple of other people for that office. But we’ve decided that rather than making that into a walk-in residential mortgage office, we hope to open up a full-service community banking office, including mortgage banking, in Providence in 2015. That will be the street-level location we were talking about for the residential mortgage office. … We feel virtual banking is being embraced, but people still like to have the opportunity to go into a bank office. •

INTERVIEW
Jay S. Sidhu
POSITION: Chairman and CEO of Customers Bank
BACKGROUND: Sidhu is the former chairman and CEO of Sovereign Bank, where during his 20-year career it grew from a $450 million banking institution with an IPO value of about $12 million to the 17th largest banking institution in the U.S. with a market capitalization of nearly $12 billion at the end of 2006, when he left Sovereign. In 2009, Sidhu joined New Century Bank, which became Customers Bank, as a member of the board of directors and chairman of the executive committee. The Customers Bank New England team is headquartered in the Textron building in downtown Providence.
EDUCATION: MBA from Wilkes University, 1973; graduate of Harvard Business School’s CEO leadership course
FIRST JOB: Waiter at Mr. Airy Lodge in the Poconos
RESIDENCE: Cumru Township, near Reading, Pa.
AGE: 62

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