George Hamlin describes how this community bank discovered its most effective business strategy. Liz French reports.

For Canandaigua National Bank and Trust, a $1.2 billion financial institution serving nearly 1 million people in upstate New York, the word community is less about size and more about attitude. “I often think of us as gardeners of the local economy. The idea is not to build up the farm and sell it—it is to understand your crops so you can give them the right fertilizer,” said George Hamlin, president and CEO.

Because of its size, 120-year-old Canandaigua National Bank is a public company, but it is not publicly traded. As a result, the bank attracts long-term community investors as opposed to fair-weather shareholders often found on Wall Street. “We are indeed owned by the community as 75% of our 1,200 shareholders live in a three-zip-code area,” Hamlin explained.

George Hamlin

To ensure the bank’s decisions continue to benefit the local economy, Canandaigua National engaged in process mapping about five years ago with the help of international accounting and consulting firm KPMG. “We realized that we have a lot of competition, and our Achilles heel was overhead associated with personnel and processes that were no longer efficient,” Hamlin said. KPMG suggested forming a steering committee, so the bank assembled a team of five women who spent the next nine months dissecting every process, from logging into the computer system to granting loans, an effort to eliminate duplications and identify inefficiencies.

A few years later, the consulting company followed up with Canandaigua National and was shocked to find the steering committee still in place. Typically, Hamlin learned, the steering committee disbands after the process mapping is complete. “They never told us that,” he chuckled. Thus was born one of Canandaigua National Bank’s most unique organizational assets. “It is part of the DNA of our organization and represents a continuous improvement process.”

Cultivating ideas
When Canandaigua National Bank set a second 15-year strategic plan in motion in 2005, the steering committee began soliciting ideas and opinions from the bank’s 400 employees, from the facilities maintenance crew to financial advisors. Since then, it has been busy organizing, prioritizing, and investigating more than 1,100 ideas. “It doesn’t wait for senior management to get through the pile. I want people to implement good ideas right away—they don’t need my permission to do a good job,” said Hamlin.

Instead of writing suggestions on a slip of paper and leaving them in a box placed in the lunch room, where they will be rummaged through and possibly forgotten about, all employees at Canandaigua National submit suggestions via e-mail. In many cases, the owner of the idea presents to the steering committee within a few days.

“This has a tremendous impact on employee morale because they feel empowered. They see their ideas come to life without the intervention of a senior manager,” Hamlin said. This is especially important in an era when bank consolidations make daily headlines. The larger banks get, the CEO explained, the less control employees feel they have over day-to-day operations.

Full steam ahead
Twenty-five years ago, Canandaigua National Bank had four branches, and its assets totaled $80 million. Today, the $1.2 billion bank has opened its 20th branch and shows no signs of slowing down. But by no means can the bank’s growth be considered haphazard. Hamlin explained that in the mid-1990s, all of the bank’s branches were located in Ontario County, which has a population of about 80,000. At the time, capital constituted 11.6% of the bank’s assets, nearly 50% more than it needed to be, an unhealthy balance for a growing financial institution. To increase deposits, Canandaigua National Bank needed to migrate north into Rochester, a community of about 900,000.

When First National Bank of Rochester was bought by M&T Bank in 1998, Canandaigua accelerated its growth. Instead of opening up one branch per year as planned, it decided to cut its earnings in half and open an average of four per year, all while touting commercial lending and investment services. Today, eight branches are located in Ontario County (which includes the city of Canandaigua) while 12 are located throughout Monroe County (the Rochester area).
Hamlin knew the bank couldn’t successfully enter new markets unless it could one-up the competition, so the bank started offering standard banking services for free, to customers who took out loans or allowed the bank to manage their money. “That meant money was flowing bilaterally rather than unilaterally. Mutual benefits sustain financial relationships,” he said.

Local flavor
As it grew, Canandaigua National Bank wanted to keep its community bank feel. To do so, it took a unique approach to brand identity. Instead of pushing the same color schemes and design elements on all branches, each branch takes on its own identity—one that reflects the surrounding neighborhood. “The only common element is that each branch lobby features entirely ‘sit down’ services, no lines,” Hamlin said.

“We are driven by a vision of comprehensive financial services for local individuals and their businesses, and we are quick to institute anything that supports that vision, once again using the steering committee to do the engineering work first.”