TUPELO — When E. Robinson McGraw was named president and chief executive officer last fall of The Peoples Holding Company following a national search, most regional banking observers weren’t really surprised.
After all, McGraw was a 27-year veteran of the $ 1.2-billion-asset Tupelo-based company. With previous president and CEO John Smith’s retirement, EVP and in-house counselor McGraw seemed a likely choice.
But maybe what wasn’t expected by industry pundits was the emphasis on change that McGraw would make.
Serving in his new role for over six months now, McGraw has focused his energies on broadening Peoples’ financial services scope. While the banking industry has matured and diversified, the company said it has too.
In its annual report, annual meeting and marketing efforts, Peoples — under McGraw’s leadership — has underscored its ability to provide financial solutions beyond traditional checking, savings, CD and mortgage products. McGraw is also placing greater focus on sales and service as well as technology and metrics that enable the company to better track its progress toward goals.
“Financial clients today have more choices than ever before,” McGraw said in a recent interview. “Our vision moving forward isn’t to compete as an alternative provider of financial services, but to become the preferred provider in the markets we serve. “
While the concept of being a comprehensive financial services provider versus a bank isn’t revolutionary to the industry, observers say it’s a big step for Peoples, which has tended to be more traditional in its offerings and conservatively low-key in its communications.
Joseph Roberto, a Keefe, Bruyette & Woods analyst in New York who covers the company, said he has noticed a sense of strategic change within the company and that McGraw appears to have a good grasp of critical issues facing Peoples in what has become a highly competitive financial services environment.
“He’s (McGraw) certainly saying all of the right things and appears to be moving the company in the right direction,” Roberto said. “But execution of these strategies is obviously the key. Ultimately, success will depend on how well McGraw and his team can implement the vision he has articulated.”
Roberto points to several positives that have and continue to take place at Peoples. First, he said that top management was reorganized, which has helped break down silos between business units within the company. McGraw reiterates the point, noting that these new assignments play to executives’ strengths, enabling them to best utilize their talents in areas where they can have the strongest impact on the company.
Roberto said another facet of Peoples’ strategy includes making itself more attractive and relevant to the younger affluents in its markets. “The company is using customer segmentation to target customers and is trying to improve customer profitability as well,” Roberto stated. “The more affluent market is being targeted through advertising with Peoples showing it can handle more complex financial transactions.”
Concurrent with its “franchise concept,” community banks within the system have a mission to perform and are incented to do so, according to Roberto, and the banks are empowered to make decisions within centrally set parameters.
“Tupelo does not just dictate to the field,” Roberto said.
Notes McGraw, “Our job is to help our community financial professionals succeed in making it easy for local clients to do business with us,” McGraw noted.
While various insurance acquisitions as well as many smaller branches in the company’s network have impacted the company’s efficiency ratio, Roberto said the company continues to focus on ways to centralize or outsource various back office functions.
Roberto added that management is also making investments in technology in an effort to improve the efficiency ratio, and that alternative delivery is also being used to trim costs.
On the asset quality front, Roberto said that management has implemented several safeguards, notably credit scoring on the retail side, an experienced senior lender for more complex credits and centralized collections.
While no one can predict the future of any financial services provider, McGraw has delineated several strategic initiatives with the support of his board. Those who follow Peoples will continue to watch with interest to see how these efforts shape the company’s direction.
As analyst Roberto said, effective execution will be critical to the process.
MBJ columnist Karen Kahler Holliday is a contributing editor with ABA Banking Journal magazine. Send comments about her column to firstname.lastname@example.org.