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Susquehanna Bancshares, Inc. (SUSQ) |
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CEOCFO Current
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This is a printer friendly page! Susquehanna Bancshares – with a
solid history of earnings and dividend growth in one of the top market areas in the United
States BIO: William J. Reuter William J. Reuter is Chairman, President & Chief Executive Officer of Susquehanna Bancshares, Inc. He also serves as Chairman of the Board for Susquehanna Bancshares, Inc.’s wholly-owned subsidiary Farmers First Bank and serves as a director for Farmers & Merchants Bank and Trust, Hagerstown, Md., and Susquehanna Bank, Baltimore. Mr. Reuter was Chairman, President & CEO of
Farmers & Merchants Bank and Trust when Susquehanna Bancshares, Inc. acquired it from
Equitable Bank, Baltimore, in 1989. In 1997, he also assumed the positions of Chairman
& President of Susquehanna Bank. He was promoted to President of Susquehanna
Bancshares, Inc. in January 2000. In May 2001, he assumed the title and duties of
President & Chief Executive Officer. In May 2002, he was appointed to his current
position of Chairman, President & CEO. He is a graduate of the University of Maryland
Banking School and received his bachelor’s degree from the University of Baltimore.
He also served in the United States Air Force and is a retired master sergeant with the
Maryland Air National Guard. Mr. Reuter has contributed his time to many civic and
non-profit associations including the Pennsylvania Bankers Association, Bank
Administration Institute, Maryland Symphony Orchestra, Maryland Chamber of Commerce,
Special Olympics, United Way of Lancaster County, and the United Way of Washington County.
He has received awards and recognition from the U.S. Small Business Administration,
Hagerstown Rotary Club, Hagerstown YMCA, and was named the 1995 Business Person of the
Year by the Hagerstown-Washington County Chamber of Commerce. Company Profile: CEOCFOinterviews: Mr.
Reuter, where was Susquehanna Bancshares, Inc., when you became its CEO and what changes
did you orchestrate? Mr. Reuter: “When I became CEO, we went through a sophisticated and detailed strategic planning process to develop a thorough plan and a clear vision statement for the company. That plan is at the core of everything we’ve accomplished in the last two-and-a-half years and it centers around the creation of shareholder value.” CEOCFOinterviews: How have you been implementing that? Mr. Reuter: “The plan to create shareholder value centered around three components; growing our business profitably, developing our sales culture and managing our risk. With respect to growing our business profitably, we set benchmark figures for all of our affiliates in terms of what we expect from an EPS growth and an ROE standpoint. We looked at the markets that lie within a 150-mile radius of Lancaster, Pa. and targeted the markets that would give us the best opportunities for growth both from an internal and M&A standpoint. We then looked at how we could further accelerate our sales culture. Our approach was two-pronged. One issue was to develop our retail franchise to better meet the needs of our customers, and the other was to do a better job of calling on small businesses and the middle-market commercial customers that lie within our footprint. Last year, Susquehanna’s internal growth rate was above its peers. We grew $500 million last year in assets, all from internal growth. This is directly attributable to the success of our sales culture and our employees’ ability to adapt to that culture. The third component to creating shareholder value was how to manage the holding company from a risk management standpoint. To do that, we named a senior officer of the company as our full-time Chief Risk Officer. We looked at where risks existed and discovered that they were in a number of areas outside of credit. In fact, our risks run the gamut from credit risks, interest rate risks to technology and Internet risks. We developed a committee to manage all those risks. I am confident that the model we have in place will work well into the future.” CEOCFOinterviews: Wealth management is an important area for Susquehanna. How are you are growing that side of the company? Mr. Reuter:
“We’ve had all the various pieces in place for the last few years, and we have
upgraded the staff in that area. The strategy represents an evolution that our
organization is undergoing, as we have rounded out our full-service wealth management
offerings, which include expertise in the areas of asset management services, trust and
investment services, and at the branch level, the purchase of annuities, mutual funds,
insurance, stocks and bonds, and retirement and college planning. We are using Susquehanna
Wealth Management as the marketing umbrella under which all of our wealth management
companies currently operate. It is our branding strategy. We believe that a single brand
will allow us to concentrate on building one identity for our wealth management services. Just to clarify, Susquehanna Wealth Management is not a new company, it’s a concept our banks are selling. Within Susquehanna Wealth Management are actually three wealth management companies. The first is our traditional trust company, which is Susquehanna Trust & Investment Company. It is involved in the management of fiduciary services, the management of estates, and certain types of investment accounts. Valley Forge Financial Strategies, our brokerage operation, operates throughout the branch network selling mutual funds, annuities, and financial services planning, including college and retirement planning. The third area is Valley Forge Asset Management Corporation, a high-end wealth management company with a “growth at a reasonable price” investment philosophy. It manages monies for high net-worth individuals as well as institutional holdings and defined benefit programs. We have exported Valley Forge Asset Management’s investment philosophy to our Trust Company so our investment philosophy is the same between the two companies. The beauty of the Susquehanna Wealth Management concept is that our employees do not worry about which wealth management company they refer a customer to. They simply refer the customer to Susquehanna Wealth Management and the regional wealth management executive decides where the customer’s needs are best serviced. It’s easier for the employee and less confusing for the customer.” CEOCFOinterviews: Why is this the right time to roll out your wealth management program? Mr. Reuter: “If you take a look at the demographics of the markets in which we operate, and take a look at the wealth generation transfer that is about to take place from the older generation to the baby boom generation, it is absolutely the right time. If you look at the level of wealth that the average American has at his or her disposal today, and the portability of that wealth, it couldn’t be a better time to position ourselves to meet our customers’ needs. For instance, it is not uncommon for an average customer to have significant holdings, an IRA, 401k, or pension. It is also common for that same customer to change jobs. When the customer changes jobs, many times they take that money with them. We want to be in position to not only manage those assets, but help them plan for college and retirement planning. Basically we want to help our customers manage their assets from cradle to grave and even beyond, when that wealth transfer takes place.” CEOCFOinterviews: Are most people aware that they need wealth management services? Mr. Reuter: “I think there is a growing recognition on the part of the average consumer that they need help outside of their own area of expertise with planning for wealth transfer. I think they should choose us because we are close to the markets and know the business. The way we manage assets is through a process that is devoted to the preservation of wealth, which means that we are not significant risk takers. You are probably not going to choose us if you want to roll the dice with your wealth on the equity side. Our model is centered around growth at a reasonable price and reasonable risk levels, on both the bond and the equity side. I believe for the conservative investor - one that is looking for conservation of principal and growth at the same time, capital appreciation, and better performance than a down market would dictate - then we should absolutely be high on their list.” CEOCFOinterviews: Who is coming to your banks and why, and how are you attracting new customers? Mr. Reuter: “Convenience and service are the main reasons retail customers chose to bank with us. On top of that, one of the reasons for the success of our internal growth rates at the retail level is an active sales program that allows branch managers to get out with commercial lenders and actively call on targeted companies in the marketplace. Understanding your customer base is a key component of growing internally. That is why we are embarking on a major, company-wide implementation of customer relationship software. Without the right technology, it is amazing how much you can be in the dark about your own customer base. You may not see a customer in the bank because they are using an ATM system or a night depository, or an Internet-based corporate cash management product. There are many ways a customer can bank with us and it is our responsibility to make sure we clearly understand who banks with us, why we should be calling on them and what products and services will meet their current and future needs. To follow up your question on a commercial banking side, we have been successful in attracting new relationships to the bank through our Internet-based corporate cash management program and a robust commercial calling officer program within our targeted marketplaces. We have developed significant areas of commercial banking expertise over time, and they determine the types of customers we go after.” CEOCFOinterviews: You seem to incorporate some of the personal features that the smaller banks have, within the structure of a large entity. Mr. Reuter: “We have never marketed ourselves as a large bank. We are a financial holding company comprised of eight banks, but those eight banks have their own local autonomy within their marketplaces. That means they approve their own credits, they price the credits and set their own minimum deposit levels as well as their own rate structure. They have the resources of a larger financial holding company and the personal touch of a local community bank.” CEOCFOinterviews: You have insurance and a leasing company, are there any other components to Susquehanna Bancshares, and is there anything else on the horizon that you would like to add? Mr. Reuter: “We have done a very good job of diversifying our income stream. If you look at us today, for every dollar of revenue that we generate, about 35 cents is coming from fee income. That puts less pressure on our net interest margin. About half comes from the bank side, and half from the non-bank side. We are looking to grow the company by making other bank acquisitions within our target market and by focusing on the growth of our wealth management area. We would also like to grow in the property and casualty insurance arena, as well as in the health and life side of the insurance arena.” CEOCFOinterviews: Do you see going out of your geographic area or expanding that, or are you looking to do acquisitions within the area you serve now? Mr. Reuter: “I think if you look at the 150-mile radius in which we operate, you will see some of the best markets in the United States, both from a demographic and a population standpoint. That is the radius from which we will grow and prosper. You are not likely to see us make an acquisition on the bank side outside of that target market area - they are the areas we know and understand. They are the areas where we currently lend money and where we do the best right now. The 150-mile radius takes into consideration some of the best target markets and growth areas in the United States.” CEOCFOinterviews: I know that you raised your dividend in the 2nd Quarter of 2003, why did you decide to do that? Mr. Reuter: We have a long track-record of raising our dividends. In fact, we’ve raised our dividend every year since the holding company was founded in 1982. We decided to accelerate that by a quarter this year to take better advantage of the President’s tax cut package on dividend exclusion. We just saw fit to get some additional dividends in the hands of our shareholders earlier this year than before, and we are proud of that.” CEOCFOinterviews: What do you look for in your people, and how as CEO, do you keep in touch with the people on the frontline dealing with customers? Mr. Reuter: “We work hard every day to be sure that our employees understand the Vision of the company and that they truly are our most valuable asset. But it can’t be just words. I believe the best way to show our employees how valuable they are to us is to continue to perform and be successful as a company. I believe we have put together a series of financial incentives, fringe benefits and employee benefits that have continued to improve. Our employees can share in the wealth of the company, which can include everything from which type of incentive plan they achieve with us, to improvements in vacation and time-off policies, and benefits such as 401k and cash balance plans. We also have put into place a number of employee recognition programs including length-of-service programs and performance recognition programs. I try to periodically meet with employees in all areas to obtain feedback. I often receive phone calls, emails or letters from employees giving me feedback on a company policy or asking questions about a particular initiative. It’s great to receive honest feedback from our employees and I welcome it.” CEOCFOinterviews: In closing, why should potential investors be interested in Susquehanna Bancshares? Mr. Reuter: “We have increased dividends every year since the company’s inception in 1982. If you had invested in our holding company in 1982 and considered dividend reinvestment, through December 31, 2002, you as a shareholder would have received a 15 percent annual return. We think this is an extremely good track-record. We have a well-rounded management team that spans the bank side and the non-bank side. We have a very solid history of earnings and dividend growth. We are in one of the top market areas in the United States from a demographic and population growth standpoint. We have developed, over a long period of time, a very strong credit culture where our net charge-offs, in good and bad times, are better than our peers. We earn about 35 cents on a dollar in fee income. We have developed a passion and excitement about who we are, what we are. We have a rapidly growing sales culture. Most of all, we have a shareholder-focused strategic plan in which all the components of what we do from a strategy standpoint revolves around the creation of shareholder value.” disclaimers |
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