A Banker Who Makes House Calls
Tom Broughton has a unique approach to business banking. What do you think of his small bank, ServisFirst?
From Joe Freedman Here's an email that I just sent to American Express Corporate:
"As a reward for membership you send me the Fortune Small Business magazine. In the March 2008 issue there is a glowing article reviewing a banker's illegal lending practices. Quote from page 49: "Broughton lists some of the factors involved in granting a loan:" … "and whether you go to church on Sunday." Being Jewish, neither I nor many of your other readers would fit that criteria. I think his lending practices are clearly against federal law and that American Express would not condone let alone extol them. Unless there are staffing changes perhaps you should rethink sending this magazine out to your members. I for one was not pleased and am still disturbed by the article."
It was a very disturbing article and I think you should try to write a retraction or at least forward your reporter's notes to the FDIC with a complaint.
From Alex Manahan I was flipping through your March 2008 issue, when I saw the bold text on page 48. Immediately I thought of all the ways this could be turned around…if it was directed at any other race. The quote was “ A company selling camouflage to rednecks ? You can’t miss with that idea.” – Well, should I complain about being offended ? Should I call some opportunistic “reverend” that preys on his own race ? Should I get the people responsible for writing , quoting , or printing this fired ? Should I order that the person responsible for this statement take a racial / discrimination class of some sorts ? Should I get the man named after a “single letter” ,circle up a bunch of henchmen, and protest in front of your office. If that would have said “A company selling basketballs to Darkies” or “ A company selling weed eaters to Beaners” …well, we all know what would have happened. It’s the exact same thing in this case . It is offensive, belittling, stereo typing, profiling…Get it ? But no one probably thought twice about printing that statement. Think about it. Be careful. It just eats me up.
From Ron Denver CO I wish we had something like this in CO. I know I would use it, as well as several business owners I know. How do I start a branch in CO???!!!
From Effingham, Illinois I work for a small community bank and we go out to the customers business on a regular basis, house calls if you will and we have done that for years. So to say this is a "unique approach" baffles me. In regards to posters saying they do not understand the 2 comments from bankers about "rules" these folks have obviuosly never had to go through an FDIC compliance exam. I do not like all the paperwork either, but it is a neccessary part of the process to make a legally binding loan, and to comply with all of the consumer protection laws. I and my bank strive to offer the best customer service possible while following the letter and spirit of all consumer protection laws. No subprime loans at our bank, but we serve a broad cross section of customers in our lending area with good service and fair rates and fees. I too wish him well in the next compliance exam.
From Wes White, Marshall, Texas I am a banker in East Texas and I agree with his approach. I wrote my thesis related to this at SMU's graduate school of banking. There will always be a place for a good community banker who can make a decision.
From Sean Sure wish I had a banker like Tom in my area! I think most msot employees or large corporations (e.g. BBT, etc…) do not understand that small businessmen take the time = money equation extremely seriously and literally. We are very happy to pay more for improved service,and we will back that up with our checkbook. I think this makes us a unique demographic.
Those first few posters complaining about how he is violating "rules" just crack me up…Now THESE are a couple of guys who surely do not understand entrepreneurs!!
From Banker in Illinois While I admire his entrepreneurial spirit I wish him well in a compliance or safety and soundness exam with the FDIC. If any FDIC examiners read this article I hope his bank has a good lawyer on retainer, because believe it or not, loan applications are a required part of lending whether we or our customers like it or not. Please refer to ECOA guidelines, Fair Lending laws, etc. You can not legally get a credit reort without an application (authorization) from a customer. Good luck to them in their next FDIC exam.
From Anonymous He does realize that lending decisions based on whether or not you attend church on Sunday is against lending laws based on discrimination against religon, right? Being a lender myself, going to customers offices and the same services he provides is common place. What is supposed to be special about this? Our community and large corporations have done this for years.
From Douglas Graham,Chelsea, AL Tom Broughton is a wise banker, and a rare find.
No frills, just quality personal service.
While Tom's bank is still relatively small, I suspect the risks are low! Tom and his staff are obviously there to serve the customer, and they make things simple and accessible for their customers.
I see some similarities to USAA Federal Savings Bank…where customers can deposit a check by Fax, and withdraw funds in a similar high tech manner. USAA basically serves the military…virtually all from one huge office in San Antonio; so overhead from branches in essentially non-existent.
In short, ServisFirst seems more interested in serving their customers, than putting their customers through lots of hoops only to destroy ciustomer goodwill.
There's a book that has been around for years entitled "Small Is Beautiful", and yet another book entitled "Service America!" If Tom hasn't read these books I would be surprised…for his model bank certainly draws from several passages found in both books.
No big expensive structures for ServisFirst…just good service, lower costs, and a nice stock price of $25/share…which has to be embarrassing to some of the large banks in Birmingham, and elsewhere.
Kudos to Tom, and his bankers.
From Ottawa, Canada Just Superb. I am banker and i now run my own firm, and i think this is way a bank ought to be ran.
Our customers are lenders, and in the past 5 years that we've been helping these lenders manage their credit risk, we know that the most consistently profitable lenders have been those who lend the way ServisFrist does.
Lending is all about knowing your customers, and trusting one's guts more than trusting a computer. Great job
JD Diabira, Ceo
Riskmont, Inc.
Ottawa (canada)
Joe Freedman,
I always feel badly for the people who walk around looking to be offended; their lives are wasted in that pursuit. In taking offense to the comments you cited, it is clear that you are one of those people. In that same sentence, Broughton also said he evaluated loans based on one's ex-wife's spending habits. It is obvious that he was adding some humor to his comments. You need to acquire a sense of humor, thicker skin and maybe seek a little counseling.
BTW, that was a good article on a bank with which I now do the bulk of my business. I believe that ServisFirst will be the model for business oriented banks in the future.