With regulatory and liquidity requirements so high since the nation’s 2008 bank crisis, financial institutions continue to merge in order to pool resources for more cost-efficient compliance and accounting practices.
In March, to make it easier for financial institutions to merge, the threshold for a lengthy, more detailed review of the deal jumped from $50 billion to $100 billion in combined assets.
Through it all, Embassy Bank for the Lehigh Valley continues business as usual and independently – increasing its dividend annually for the past three years plus posting revenue and net income growth the past four years.
It’s a community bank that is thriving.
“Embassy is the only bank I will ever use,” said business client Luke Cunningham, owner of West Side Hammer Electric of Bethlehem.
Embassy uses a team approach, based on relationship banking, and offers attractive products.
But the bank’s success goes well beyond those pillars because it focuses on the long term and the reason behind its founding in 2001.
“Never forget where you came from and where you are going,” said Dave Lobach, president and CEO.
In the upstairs boardroom at Embassy Bank’s flagship office on Gateway Drive in Hanover Township, Northampton County, hangs a poster-sized “Declaration of Independence.”
It is signed by all of the bank’s original founders and employees – a reminder of its mission and plan: to remain an independent community bank serving the Lehigh Valley. Founders believe stakeholders ultimately suffer when operations are focused more on the short term rather than long-term success.
When Embassy Bank debuted 16 years ago, its front door opened into a trailer as the new, main building on Gateway Drive had not been completed.
“Bank in a box for people who don’t think in a box,” said the late Elmer Gates, Embassy co-founder and original chairman.
DOING IT DIFFERENTLY
Embassy adopted sit-down banking, as opposed to tellers who stand behind a counter.
Sean Boyle, owner of Boyle Construction of South Whitehall Township, calls it “old-school banking.”
All customers are greeted face-to-face. Staff training emphasizes this culture, while employees are not paid more for selling products.
Lobach doesn’t have an administrative assistant. His office is on the ground floor in the middle of the action on Gateway Drive.
“This is not a transactional environment,” he said. “We want customers for life.”
Initiatives by the board are taken directly to employees and their participation in planning is expected and welcome.
“It is a very employee-friendly culture run like a family business,” said Jim Bartholomew, Embassy vice president and senior loan officer.
Employees have a stock option plan because it’s important for them to have a stake.
The bank created an employee “culture club” that organizes picnics, outings and charity events. It runs new-employee orientation and encourages employees to get involved in their community and civic causes.
That helps with team building and creates loyalty. It’s no wonder Embassy’s original 12 employees are still working there.
Embassy Bank’s products are part of its out-of-the-box strategy.
The Embassy mortgage appropriately named “uncommon” has no prepayment penalty and no private mortgage insurance.
Decisions are made locally. Mortgages are funded and serviced locally.
And mortgages are never sold, so they don’t need to adhere to additional regulations.
Embassy’s business banking services, recently named VB3 (value-based business banking), include lower fees.
With financial transactions, Boyle said, “not everything fits nicely into a box.”
Embassy works with him, offering flexibility for complex transactions.
“We don’t have to call every department for answers,” Boyle said.
The organizational structure is flat as Embassy operates with fewer departments and streamlined operations.
It handles regulatory requirements with fewer people while holding assets under $1 billion that would trigger more complex Federal Reserve requirements.
The bank places a high priority on internal development and training to ensure the next generation of leaders adheres to its original “Declaration of Independence.”
“I think it is amazing how one small idea creates a rippling effect,” Lobach said. “That can impact an environment.”