Integra Bank Corporation: Integrated Integrity

Financial
Written by Eric Slack
Thursday, 31 January 2008
Martin Zorn describes this community bank’s effort to provide big bank resources with a small bank feel. When its new identity was launched at the turn of the century, Integra Bank immediately set some ambitious goals. By integrating its regional network with a focus on people, products, and processes, Integra improved efficiency and customer satisfaction. The result has been more than a dozen new branches since 2000. But with national economic indicators pointing toward tough times ahead, the bank’s leadership is putting renewed emphasis on staying close to its markets. Martin Zorn, CEO “We are focused on being convenient for the customer,” said CFO Martin Zorn. “We know we don’t have as many branches as some of the competition, so if we’re going to attract people to us, we have to be more convenient and give better service.” Trust issues Integra is headquartered in Evansville, Ind., with four commercial lending offices, 80 full-service banking centers, and 134 ATMs located in Indiana, Illinois, Kentucky, and Ohio. Although Integra isn’t one of the big banks, it is large enough to offer big bank capabilities. The key to success, according to Zorn, is to provide those capabilities without losing the customer service focus smaller institutions are known for. One way Integra does this is through its leadership hiring practices. As the bank expanded, it brought in teams of experienced bankers with proven track records in areas like commercial lending or wealth management. Many of these bankers were already familiar to Integra’s upper management or came through internal referrals. The bankers also tended to have experience with other regional banks. Zorn, for instance, was with Wachovia before moving to Integra. These hires created an immediate connection with potential customers by bringing in senior people familiar with market conditions and well known in local circles. Customer growth is also central to Integra’s operating strategy. The bank operates in a highly competitive region and is confronted by an inverted yield curve, with long-term yields below short-term yields. While this may signal a coming downturn in the economy, Integra believes the solution lies in increasing its customer base. Integra first looked to improve its products. The bank sees the checking account as the cornerstone of the relationship with its customers. To solidify this foundation, the bank sought to capture direct deposits, provide the convenience of debit cards, and offer home banking with online bill payment. The idea is to keep the bank stocked with a strong nucleus of checking customers who appreciate flexibility and view their checking account as the beginning of a relationship with the bank. With other products, such as credit cards, merchant processing, and mortgage lending, the bank outsourced operations to improve the service. “When we outsource, we private label the product, so it still says Integra Bank on it even though someone else is involved in the operation,” said Zorn. “We’ve looked for partners who share the same standards of quality as us and are willing to operate in a business model that allows us to private label those products.” Integra also maintains a high level of customer satisfaction through its “I Care” program. Through initiatives including daily employee huddles, a customer service follow-up calling program, and a Web-based tool for resolving customer service issues, the bank makes sure every aspect of operations are in line with customer expectations. Rather than engage in pressuring sales tactics to get customers into new programs and services, Integra’s goal is to satisfy the customer with the services they have chosen. Through this method, customers are more likely to forge a long-term personal connection with the bank. Prepared for growth As Integra plans for the future, the bank’s strategy is tailored toward the best opportunities for growth. Along with the success of its high-performance checking program, Integra’s customer expansion plans are based on creating a mix between community and metropolitan markets. As a result, new branches are mostly centered in Evansville, Bowling Green, Ky., and the Cincinnati-Northern Kentucky markets. “Historically, our bank has been in community markets. They are very stable, but they also have relatively slow growth,” said Zorn. “We have focused our branch expansion on those higher growth markets.” The bank also looks to mergers and acquisitions as another avenue for growth. For example, in early 2007, Integra completed a merger with Prairie Financial Corporation, a community bank located in the Chicago metropolitan area. Another definitive merger agreement was reached last September with Peoples Com-munity Bank, expanding Integra’s presence in the Greater Cincinnati region. These acquisitions secured Integra’s position in larger markets and opened up the opportunity for increases in personal checking and loan growth. Integra is also experimenting with different methods of branch operation. Last July in Union, Ky., the bank opened its 80th branch. But once the ribbon was cut, it was clear this opening was different. The Union branch was an “open space” prototype, complete with a full view drive-through, digital merchandising, and a customer-friendly service center. Integra extended banking hours from 7 a.m. until 7 p.m. during the week, while the branch is staffed entirely with universal bankers capable of performing a wider array of transactions for the customer. “If you think about traditional banks, you have teller windows, payment and receiving windows, and you have bankers and lenders. It is not a very inviting layout from a retail standpoint,” Zorn said. “We’ve tried to incorporate some of the best practices we see high service retailers employ so anyone can do anything the customer needs.” Zorn also thinks improvements in image technology and data transmission will help the bank as it solidifies market share in its four current states. Rather than physically transporting checks from branches to the home office, Integra personnel can transmit images electronically. One step further, the concept allows Integra’s commercial customers to make deposits from their own offices through the bank’s EasyScan remote deposit capture service. These customer-centered initiatives will benefit the organization as it looks to expand in its current markets, and potentially into Tennessee as well. “We see our markets stretching from Nashville to Chicago, and Cincinnati to St. Louis,” Zorn said. “As we look down the road, our challenge is to continue to provide the high touch community bank service even as we grow.”

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