Believe In Banking Podcast: Episode #36

In Believe in Banking’s first podcast of the new year, Sean and Gina welcome David Trautman, chairman and CEO of Park National Bank. Their rich conversation covers Park’s unique origin story and how the bank’s efforts at unifying under one umbrella yielded some significant advantages for their growing brand as they expanded into new communities. Building consensus to shift how the bank was doing business – moving from a more autonomous model to a more unified one – was a fundamental change, but it didn’t alter the heart of service at the core of the brand. In part one of their discussion, David addresses how Park captured and unified the bank’s independent spirit and how they continue to foster that beating heart of service as they help people and their communities.

Text Transcript

Intro: This is Believe in Banking, a podcast series for decision-makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.

Sean Keathley: Welcome, this is our podcast for Believe in Banking. I am Sean Keathley, President and CEO of Adrenaline.

Gina Bleedorn: And I’m Gina Bleedorn, Chief Experience Officer at Adrenaline.

Sean Keathley: Well, Gina, we’re kicking off the new year and we’ve got a special guest. I am really excited about this episode. Why don’t you give us a little back story on our guest and his bank, and we’ll be welcoming him for an exciting conversation.

Gina Bleedorn: I am personally extra excited today to introduce a special guest that we have with us. He and his bank have meant a lot to me personally, in our relationship with them. David Trautman, Chairman and CEO of Park National Bank has agreed to join us today. And we have worked with David and his bank over the past couple of years and gotten to know what is a really different and special organization. And the more we know, the more we love about David and the bank that he leads. Park has become a regional banking leader that is deeply connected in their communities. And they have a unique story. David has been there since, well, the beginning of time, or actually, 1983. David, please welcome, first of all, and second of all, tell us about your story and the Park story.

David Trautman: Oh, thanks so much, Gina and Sean. Appreciate that kind introduction. I would say the dawn of time is probably closer to when I started, although 1983 is numerically accurate. Park National Bank started in the early 1900s. We were granted a national bank charter in 1908 and we’ve been fortunate since then. We’ve had, I would say, four giants run the bank and then one former caddy, which is me. Everett Reese joined the bank in 1921. He was named president in 1927. At the time, the youngest bank president in the country. And he ended up serving 74 years with Park National Bank just about a week before he passed.

David Trautman: At the time Mr. Reese joined, we were the smallest bank in the community and Mr. Reese took it upon himself. He was a consummate salesman. He said, “The world is conveniently divided into two categories, customers and prospects.” When he was a teller before he became president, he was well known for being very quick with his transactions. And what he would do instead of balancing each one, he would just pile them up. And then at 3:00, when the bank closed, he would hand them to the person next to him and said, “Hey, finish these up.” And then he went out into the community, largely farmers at the time, to invite them to consider Park National Bank.

David Trautman: He also had a flair for marketing. May not resonate in today’s world, but he would send letter to newborn babies’ parents. And he would ask the newborn to tell their parents, if they wanted to get started in the right way with a good financial foundation that they ought to ask their parents to open an account at Park National Bank. I still have copies of those letters, they’re treasures.

David Trautman: The second giant, John Alford, joined the bank in 1935. And Mr. Alford was well known for reminding us that if we take care of the community, the community will take care of us, for the community prospers, the bank should prosper. Bill McConnell joined the bank in 1960. He was effortlessly brilliant. He was the second American Bankers Association president from Ohio. The first one was Mr. Reese. So, of the two Ohio ABA presidents, they both came from Parks. We had a history of tremendous, not only community, but national trade leadership.

David Trautman: Daniel DeLawder is the fourth giant, he joined in 1971. Dan was an education major, had no designs on being a banker, but he brought a thirst for lifelong learning and teaching and a sense of honor and duty that I think emanated from his… He received his Eagle Scout when he was only 14. So, he’s brought that sense of wonder and lifelong learning to all of us here at Park. Mr. Reese, Mr. Alford, Mr. McConnell, and Dan were all Ohio Banker League chairs as well. And for the longest time, the bank grew within Licking County, which is a community about 30 miles east of Columbus, Ohio.

David Trautman: In 1978, we’d opened an office in Columbus. The banking laws had changed so that you could expand into adjacent counties without forming a holding company. And for a good period of time, we had people coming to do business with us on Saturdays, because we had Saturday hours. The banks in Columbus did not. And the common theme was we’ve lost the community bank feel. We don’t know who our banker is anymore. And consequently, we’re not quite sure who our bank is, but you all are here. So, we had a number of people coming to do business with us on Saturdays and we said, “Well, what if we go off the deep end and actually open an office?”

David Trautman: It wasn’t what you would consider a normal retail office who was on the eighth floor of a downtown building with no signage, slow elevators, and limited parking. And we opened it with the idea that we would go out and invite people, much as Mr. Reese did so many years before, to consider Park as an alternative to the current banking arrangements. And for the longest time, people had no idea who we were. Are you a credit union? What are you, savings alone? No, we’re going to offer you personal service. We’re going to offer you predictability and consistency. We’re not going to be the cheapest, we’re not going to be the most liberal lenders, but from that day in 1978, the Columbus office is flourished because we’ve never really sold. We’ve always invited and that’s been a difference.

David Trautman: And then in 85, we began expanding outside of the county and we did a number of acquisitions throughout Ohio. We did one in Florida that turned out to be a train wreck. And more about that later, if you want. And then we opened Louisville and Charlotte and the Carolinas. And so, that’s where we are today. But really, if you were to stitch it together, the whole story of our growth has been a product of serving customers in communities and inviting people to join the Park family, either as colleagues or customers.

Gina Bleedorn: Well, it’s clear why Forbes named you one of Ohio’s best banks. That’s on a list of 135 banks out of about 5,000 in the country. So, that’s an incredible honor. Talk a little more about the operating model. You started to hint at it with the autonomous presidents in your local communities and how that worked. We had the honor, of course, of knowing the fourth giant, Dan. And when we met Park, there was and still is a tremendous amount of pride in the way that you grew to how you are today. But as many things go sometimes, what got us here won’t get us where we want to go. So, how do we embrace the past and the future at the same time? Tell us a little bit about that structure and what the bank went to in coming to the decision to change the brand architecture of the multiple names and autonomies with local banks. 12 of them, I believe we had at time of brand change. Can you talk a little bit about that?

David Trautman: Yes. And you all know the story well, but for those who may listen to this who don’t know it so well. We engaged Adrenaline really to help us research why customers bank with us and why prospects didn’t. And we began with the assumption that we’re going to start with a clean sheet, a blank slate. We’re going to let the evidence guide our decision-making, which is something we’ve tried to do over the years. We want the then current evidence to inform our current decision-making. So, we started clean.

David Trautman: We had always thought that our different names were of some value to our customers and prospects, and the research proved that assumption completely wrong. What we learned was that it was more important that customers and prospects know their banker as Gina or Sean. We also found that they wanted to deal with a regional or national bank. And although we were certainly a regional player, because we had multiple names that did not convey the breadth and depth of our capabilities, nor the magnitude of what we were as a unified institution.

David Trautman: It was a perfect example of Mark Twain’s observation that, “It ain’t what you don’t know that gets you into trouble, it’s what you know for sure that just ain’t so.” And we knew our name surely must mean something to our customers. And what we discovered is that it meant at best an incomplete picture of who and what we were, and at worst, a confusing array of unnecessary complications and difficulties for our customers and colleagues. So, yikes. It was an epiphany for sure. Well, you all helped us get there. And to your credit, you never presented a conclusion and then went out and found evidence for it. We report that, we don’t want to prejudge. We let the evidence dictate and you helped us assemble it and put it into a digestible form. For that, we are grateful.

Sean Keathley: David, in terms of thinking about the time to make a transition, Gina made a great point about, it’s difficult to change what has worked so well. But as the bank started to think about at least looking for some evidence, there had to be some thoughts creeping in your mind that you should at least look into it. How much of that was around some of your expansion efforts that were starting to expand outside of Ohio? I’m not sure I’ve heard this Florida story. We know well your current footprint, but we know you’ve expanded outside of the state and that’s part of your growth. How much did that play into starting to think about the small community acquisitions in the Ohio footprint were working well and not unleashing all the potential? But as you started to think about beyond the state borders for the opportunity, how did that play into your decision-making?

David Trautman: That’s a great question, Sean. I don’t know if there was any cogent line of thinking. But our sense was when we had the multiple names and the somewhat fractured or fragmented brand story, we leaned on the autonomy. We said, “Hey, if you make good decisions, you get to make more good decisions. You don’t make good decisions, you don’t get to make decisions.” And we thought that was exportable regardless the geography. And for a long time, it worked in Ohio. And what we found when we went to Florida was we spent a lot of time on the credit, we spent a lot of time on the culture, we thought both passed the test, and at the end of the day, it wasn’t as close, it wasn’t as tight. The loans and the loan book was subject to economic swings that we sensed may be possible, but didn’t realize until hurricanes and oil spills dried up the economic health of the panhandle where we were. We were in Alabama and the panhandle in Florida.

David Trautman: And so, that thing quickly got into trouble. And then when trying to bring them into our world and fit, yet in this case, a 13th puzzle piece into what we’re trying to make as a cogent clear picture of Park, operationally, from a story standpoint. I mean, we used to spend, I don’t know, at least five or seven minutes of every conversation with someone new. This is what Park is. Well, we got this name over here. We got this name over here, but you can use their ATMs. I mean, stepping back from it and looking at it now is incredibly confusing. It was a total hairball.

David Trautman: So, we extricated ourself from Florida, sold the good part of the bank and collected the bad loans. And so, we learned a lot from that. But one of the things we learned was these things are complicated enough. M&A transactions, you can’t overly complicate them by trying to add, yet in this case, a 13th name, a 13th brand, a 13th flavor, a 13th language, if you will, nomenclature. It just became untenable. So, long-winded answer to a simple question, but that was our thinking at the time.

Sean Keathley: Well, it’s a great response. And one of the things we’re well versed in is what’s going on with the M&A world. We know that numbers are going back to maybe a post-meltdown crisis 2008 right now. So, it is certainly a huge dynamic and you make a good point. There are enough things to consider when making those successful, no reason to complicate it. Gina will lead the discussion around how we help bring the team along. But something I’ve learned from her is your brand is helping or hurting. It is not neutral. And you’re describing a hole you were digging out of for every single prospect. And so, it’s much easier to glide off of something that really resembles who you are as an organization. And that’s what you’re doing today, which is so exciting.

David Trautman: Well, you’re very kind. When we first got together… I don’t know if you can hear that, our fire alarm’s going off. Jimany Christmas. Can’t make this stuff up. Would you be kind enough to hold on just a second?

Gina Bleedorn: Yes, of course.

David Trautman: No. No, the maintenance guy just came up and said, “Hey, we’re okay.” I said, “Yeah, all the people on the podcast think we’re okay too.” If the fire alarm in the middle of a podcast isn’t emblematic of our world today, I don’t know what is.

Sean Keathley: Exactly.

David Trautman: Thanks. All right. I think we’re back in action, folks.

Gina Bleedorn: Well, David, when it comes to M&A, as Sean was talking about, there’s a lot of decision-making factors to consider. And unwinding in a way what the bank was built on, by acquiring and allowing the acquired entity to keep their name, their brand, and their local leadership. How did you build consensus to change that? That is a fundamental shift in the way you do business, and certainly, controversial to those in those autonomous leadership roles throughout the network. How did you get people across your organization on the same page to make this kind of decision?

David Trautman: It’s a great question. In a strange way, you may know Warren Buffet’s vice chairman, Charlie Munger. Charlie Munger has the saying, “Whenever you run into a problem you can’t solve, invert it.” So, what we did was, how do we take the autonomy, the spirit of autonomy and preserve it or perhaps even enhance it in a more standardized or centralized or unified world? And the example I came up with, and I think maybe you all gave it to me, is if you look at some franchises, let’s say, I don’t or know, a Subway or a McDonald’s, there’s different quality Subways and McDonald’s. And yet they all have the same stuff, the same menu items, the same footprint, the same colors, all that is completely the same. And yet, when you walk into a place that’s well run, that has a spirit to it, you know it in a heartbeat.

David Trautman: So, we said, what is it that makes that heartbeat? It’s the people with the heartbeat. It’s the warmth, it’s the affection, it’s the connection. It’s the acknowledgment of a fellow human being on this holiday we call life on earth. And recognizing that when that person crosses the door or comes through on the phone or chat or digital, anything, he or she is, well, we think of it as on a continuum from zero to 10. Zero being absolute despair, 10 being an absolute delight. Every person at any point in time is somewhere on that continuum. And it is our duty and our distinct privilege and pleasure to try and notch them up one or two or three, wherever they are.

David Trautman: Some of us have seen, well, if you’ve been around long enough, you’ve seen plenty of triumph and tragedy, and we don’t know where people are on that. So, if we can help, if we may be that one voice of reason, that one voice of compassion and empathy in an otherwise chaotic, frightening, scary world. That sounds a little dramatic, but that’s how it is. And it’s our duty to help our fellow human beings advance up that continuum. It may have nothing to do with financial stuff. We think in terms of four planes of helping people, physical, emotional, mental, and spiritual. And if we help people on along those planes, every once in a while, they’re going to have a financial need.

David Trautman: And to whom will they turn, the person who helped them when there was nothing to be gained, other than extending a common hand of friendship or someone that’s doing it because it’s a transaction? I got to need a quote or something. Our sense is people can feel the difference.

Sean Keathley: It reminds me of one of our favorite franchises here in Atlanta, a Chick-fil-A.

David Trautman: Absolutely.

Sean Keathley: Wildly popular, really across, all types of regions and people, those chicken biscuits are great. And then I’ve even had some friends be interested in investing and let’s expand this and they say, “Yeah, sure, come get behind the teller line, get behind the register.” And that is their model. To own a store, you have to run it. You have to have worked there. And it’s because what they think is different besides their chicken biscuits is the heartbeats of the employees. And it’s interesting, their designs have rooms for the employees to plug their phones in, hang their coats, have break time. It is truly a design of a fast food place that is about making the employee happy because that’s their currency. So, it’s, it’s a wonderful analogy you make and we see it as well.

David Trautman: Yeah.

Gina Bleedorn: Through that type of thinking, which also reminds me a bit of your outward mindset, David, which I’d love for you to talk about also. Through that type of thinking, you were able to convince a dozen market presidents of their individual fiefdoms and individual bank names to change to a united name and brand under Park. That was a monumental decision, a major shift. How has that been for your people, for the leaders, for your frontline staff, for your customers? What has happened since a year and a half ago-ish you changed your brand from 12 names and brands to one name and brand?

David Trautman: Great question. And I don’t know if this is right or wrong, but this is how we approached it, Gina. Change can drain or change can invigorate. And so, this was a big change for our colleagues who had to explain and or work through the complications of our multi-name world. Unifying our brand and name was a relief, an absolute relief. You could feel this palpable sigh for, finally that old bald-headed coot figured this thing out. For those whose jobs were affected and there are many jobs who were affected, there was a range from relief to sadness.

David Trautman: If somebody identified their world, their worth with their job, and that job went away, they could have been very sad. And what we tried to say from the beginning is we uphold or waste of any type. If there’s a way to do something better in some other fashion, by some other person or by some other process, we want to be unrelenting in seeking out that way. That means jobs are going to change. Some are going to go away. Some are going to get added. That doesn’t mean the human beings in those roles are miscreants or bad people or anything, it just means we’ve been asking people to do stuff that either doesn’t need to be done or can be done better somewhere else, and that is a crime. That’s almost a moral crime to ask people to do.

David Trautman: There’s plenty of stuff in the world that says you have to do this and you can’t figure out why. Well, we’re trying to get rid of all that organizational kudzu, if you will, all these hairballs. So, from our colleague’s standpoint, I think there was an agreement after we presented the evidence that you all helped us assemble, yeah, we’ve got to go this way. Now, what’s it going to look like? We don’t know, but this is where we’re going. It’s sort of like, we’re going to LA, how are we going to get there? We’re going west.

David Trautman: A 1,000 years ago, when AAA used to do trip ticks, there was a page that would be about five or 10 miles in length, then you flip that and you go to the next five or 10 miles. So, we just said, we’re going to go to the next point we can see, and the next point we can see, and the next point we can see, but we know we’re headed west. And we will skirt around rivers, we will go over bridges, we will traverse mountaintops, but we’re getting there. And the getting there, what’s the holy grail? We want to be able to serve people more. That is the one unifying spirit.

David Trautman: And nobody says, “You know what? I don’t think I want to serve everybody today. I think I just want to serve half.” We want to serve more people more. And if we unburden people from unnecessary stuff, that frees up time. We’ve all got 168 hours in every week. If we save two or three per person to redeploy in figuring out how to serve customers more or more efficiently, that’s a great savings. We’re giving people their lives back and we’re helping more customers. So, that was on the deployment side.

David Trautman: The customer on the customer’s side, almost without exception. I want to say, I don’t remember. I don’t think I get three, two or three complaints about it, because you all informed us if the bankers stay in place and their abilities to serve are not compromised and you still retain your interest and support in the community, time will have a way of healing whatever minor scrapes might have been suffered in the transition.

David Trautman: So, for example, we have a gentleman who walked into our Easily South Carolina branch in a Park National Bank little league jacket. He’d grown up in Newark, Park had sponsored a team that he was managing. And he had moved to South Carolina 40 years ago. And his son worked at a place next to the branch. And he said, “Hey, Park National.” When we changed the sign he say, “Hey, Park National’s coming.” And the gentleman said it can’t be Park National from little Newark, Ohio. Oh, yeah. So, finding connections because unifying the brand was cool. And so, anyway.

Sean Keathley: The fact that he could use that branch, but did not recognize or know it because the name on the exact door he did not recognize. Unbelievable.

David Trautman: Absolutely.

Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision-makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.