Overcoming Cultural Challenges In M&A

Culture is fundamental to the success of the deal, so it’s top of mind for bank leadership teams working with Richard Hall, managing director for banking and financial services at BKM Marketing. In this video, he explains why transparent, candid communication is key to retaining customers and employees, and shares his advice for post-pandemic strategic planning.

  • Ensuring a Successful Integration
  • Retaining Customers and Employees
  • Formulating a Strategy for 2021

Digital Transformation Defined

Many banks know they need to undergo a digital transformation to set their institution up for future success. But what do most bankers mean when they talk about digital transformation?

“If you look at the technical definition of digital, it means using a computer. Congratulations, we can all go home because we all use computers to do everything in banking today,” jokes Nathan Snell, chief innovation officer at nCino during a presentation at Bank Director’s BankBEYOND 2020 experience.

Of course, a digital transformation requires technology, Snell says, but he argues that the integration or adoption of this technology should change how a bank operates and delivers value. Going beyond that, it should be accompanied by a cultural shift to continually challenge the status quo — otherwise this attempt at change may fall short of innovation and transformation.

You can access Snell’s complete presentation and all of the BankBEYOND 2020 sessions by registering here.

Strategic Insights From Leading Bankers: First Financial Bankshares

Few banks have built value for their shareholders like Abilene, Texas-based First Financial Bankshares.

Over the 20-year period ending June 30, 2020 — the cut-off date for institutions featured in Bank Director’s 2021 RankingBanking study, sponsored by Crowe LLP — the $10.6 billion bank generated a 2,074% total shareholder return. That figure is second only to Bank OZK in Little Rock, Arkansas, for the entire banking industry. First Financial placed sixth overall in the study and earned top honors in the Best Bank for Creating Value category. It also rated highly for its retail strategy.

“They’re one of the best banks out there,” says Brett Rabatin, head of equity research at Hovde Group. First Financial’s culture, M&A track record and competitive strategy — delivering a high level of service in small-town markets — set it apart. “A lot of banks like to say, ‘we’re relationship lenders,’ [but] this is one of the few banks where it shows up. It shows up in their loan yield, it shows up in the profitability.”

To delve further into First Financial’s performance for the RankingBanking study, Bank Director Vice President of Research Emily McCormick interviewed First Financial Chairman and CEO Scott Dueser about the bank’s customer-centric philosophy, prospective M&A opportunities and how he leverages his Texas connections. The interview was conducted on Oct. 14, 2020, and has been edited for brevity, clarity and flow.

BD: Based on my earlier reporting on First Financial and its culture, I know you have placed a strong cultural emphasis on building excellence and serving the customer. How does that differentiate First Financial from other institutions in its markets?

SD: I like to think of us as the Ritz-Carlton of banks because of what [Ritz-Carlton Hotel Co. co-founder] Horst Schulze has done for us. Horst has been outstanding, not only [in] training us [on] customer service, but also as a mentor on business and dealing with people. Horst doesn’t call it hiring people; you select people and that changes your whole attitude about it. We have a very strong team of people that work together extremely well.

I’m disappointed if somebody leaves our bank and is not extremely happy. That’s what we want to accomplish every time somebody walks in.

Our philosophy of how we do business is very important to us, and adds to the bottom line and the value of our stock. That’s the fact that we’re not in the big city, we’re in the small towns around the big city, where we can be the big fish in the little pond and be the No. 1 bank. We’re not in the big cities fighting the big boys; that takes a lot of money and a lot of time, and it’s a battle that frankly, I don’t think we can win. Why not stay in the areas [where] we do well and focus on that? That’s been our focus, along with credit quality and going after the better customers in our markets. 

BD: Covid-19 has impacted how banks serve the customer. Has anything really shifted for your bank in that regard, or do you feel like the situation is proving your strategy out in a way?

SD: It’s proven the strategy out. I will tell you the best thing that we did was we never closed our doors. We stayed open, and we came to work every day, and we learned how to work through Covid and how to serve the customer [in that environment]. We got a lot of business from it, because when customers went to their bank and found it locked, they didn’t like it. Those banks that locked their doors lost a lot of business, because 33% of the [Paycheck Protection Program] loans that we made were somebody else’s customers. To do that, we asked [those customers] for all their business, and they moved all their business. We grew about a billion dollars through the pandemic.

We made the decision not to cut hours and not to lock our doors, but to be here. We split big departments [where] half the people went home, half the people stayed here, but everybody that was customer facing had to come to work. Our goal was to make the workplace the safest place our people could be. Frankly, today we still feel like the safest place to be is here at work. We’ve kind of managed Covid, not that we haven’t gotten it. We manage it by masking and social distancing, and don’t come to work if you feel bad. We don’t want you to work [then]. That’s kind of the main rules.

I have been on the governor’s task force to reopen Texas. That has helped me tremendously, because I knew the inside scoop of how the state was fighting Covid.

BD: You also had a hand in the Texas Tech Excellence in Banking program that opened in 2020. I assume you see some indirect benefits to keeping those types of networks and communication lines open.

SD: No question. The Excellence of Banking Program was something that I took to Tech and said, “We really need to do this. It will be great for Tech. It’ll be great for the banking industry.” We were able to raise $12 million to endow that program; that’s from foundations and banks. There were about 50 banks involved in that program that gave $1,000 and above.

What’s neat about this program is it is focused [on] bringing minorities and women into banking. That’s something that we really need. We had interns from that program here this summer, and I’m very impressed with the high level of students that we have. I think all the banks that have participated are impressed with the interns that they got out of it. We are hiring people out of that program as we speak. It’s a direct benefit to the bank, but also a direct benefit to my alma mater.

BD: Looking at your past few M&A deals, First Financial does an excellent job of keeping costs down. With pricing coming down, do you see some opportunities on the horizon?

SD: I think there’ll be lots of opportunities next year. I do think Covid has made a lot of people think about whether they want to stay in the industry or not, and whether they want to keep their bank. If they don’t have people lined up to run their bank, they probably need to put it on the market. I think we’ll see a lot of banks go on the market, especially from the fact that a lot of banks missed their heyday when they could have gotten a premier price a year ago. That’s not going to happen today. Pricing is down. They’re going to say, “Hey, I’d rather take today’s price and see what happens next.”

With our price and our premium on the price, even in today’s market, we can go buy some banks that other people probably can’t, because they can’t make the deal work. With our stock price, we can make the deal work.

RankingBanking will be examined further as part of Bank Director’s Inspired By Acquire or Be Acquired virtual platform. Click here to access the agenda.

nCino IPO

nCino, a cloud-based technology and lending platform for banks, navigated the challenges of going public while working remotely. The firm’s success story speaks to the critical importance of digital transformations to the survival of any company, especially as the pandemic has changed consumer mindsets about delivery and the way banks approach their business.

nCino CEO Pierre Naudé virtually sat down with Bank Director CEO Al Dominick to share the lessons he took from the IPO experience and maintains the company culture now that it’s public. Banks can also hear about how nCino strengthened its board, and managed communications in the remote environment.

What is Your Bank Measuring?

Recent comments around diversity from Wells Fargo & Co.’s CEO brought renewed attention and focus on a problem that continues to plague corporations, including banks.

In a video call with staff over the summer, Charles Scharf pointed to a “limited pool of Black talent” as the reason why the bank missed its diversity and inclusion (D&I) targets. 

Scharf has since walked back those comments. “There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry, and I never meant to imply otherwise,” he told employees. “I’ve worked in the financial services industry for many years, and it’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels.” 

Wells Fargo, it should be noted, has established clear D&I goals. It expands on these in a recent press release: Diverse candidates must be considered for key roles, and the bank plans to integrate D&I into business plans and reviews. An anti-racism training course is under development. And the achievement of D&I goals will directly impact executive compensation decisions.

Most banks lack that level of commitment: 42% don’t have a formal D&I program, according to Bank Director’s 2020 Compensation Survey.

Rockland, Massachusetts-based Independent Bank Corp. details its “Inclusion Journey” for 2020 through a nine-page document that’s posted on its website. For the $13 billion holding company, which operates Rockland Trust Co., this includes conducting an assessment to identify strengths and weaknesses throughout the organization, and establishing a D&I council co-chaired by senior vice president and Director of Human Resources Maria Harris.  

“We have a responsibility to create an environment where respect, understanding and innovation are at our core,” says Harris. “Every colleague is critical to our growth as a company, and we are committed to a culture of teamwork, inclusion and employee engagement.”

Resource groups build awareness and address the needs of female and LGBTQ employees. In response to current events, the bank has offered webinars on self-care during the Covid-19 pandemic and conducting open discussions on racism. “These have been very beneficial for folks to better understand systemic racism and how to become an ally,” explains Harris. All new employees receive D&I training, which focuses on unconscious bias and related behaviors. 

Just 22% of survey respondents say their bank tracks participation in D&I focused training; even fewer — 10% — measure employee resource group participation and formation.  

Rockland Trust tracks applicants, hires, transfers, promotions and terminations, says Harris. It also measures employee tenure, participation in professional development programs and conducts exit interviews. All of this data informs the bank’s D&I goals. 

“Our current initiative to advance front-line professionals of color was created to address findings from our data, which demonstrated that although minorities were participating in our internal career pathing program, they were not advancing at the same rate,” she explains. “We wanted to proactively change that within our organization.”

For many companies, focusing on D&I helps strengthen the culture, while attracting talented employees who will ensure its success. 

That requires leadership.

 “Trying to lead an organization without taking measurements is like trying to coach a football game without yard markers,” wrote Ritz-Carlton founder Horst Schulze in his book “Excellence Wins: A No-Nonsense Guide to Becoming the Best in a World of Compromise.” 

Bank Director’s 2020 Governance Best Practices Survey reveals that too many directors — 48% — don’t fully buy into the idea that diversity on the board has a positive effect on corporate performance. Connecting the dots, one can assume that they don’t place a lot of value on building an effective D&I program within their bank, either.

Level 5 Banking

Over the past six months, nCino has partnered with the team at Bank Director on a unique and immersive study of banking. It was originally intended to peer into the future of the industry, but the more we looked ahead, the more we realized that the future of banking is not a revolution, but an evolution. 

Banking is undergoing a vast and vital transformation. The distribution channels of today may soon be obsolete, and technology and innovation are moving ever faster. But this doesn’t mean that the traditional tenets of prudent and profitable banking are outdated. If anything, we found that technology accentuates their importance.

Leadership. Leadership is the most important tenet in banking, but what is leadership? Interviews with dozens of bankers across the country suggest that one keystone character trait is more important than any other: an insatiable curiosity and indomitable will to never stop learning. Best-selling business author Jim Collins refers to this in his book “Good to Great: Why Some Companies Make the Leap and Others Don’t” as Level 5 leadership.

One industry leader who displays this trait is Brian Moynihan, chairman and CEO of Bank of America Corp. “Brian has a deep knowledge because he wants to learn about different things, not just about banking,” says Dean Athanasia, president of consumer and small business at Bank of America. “He looks across every single industry. He’s looking at Amazon, Walmart, the brokerage firms. He’s looking at all these companies and breaking them down.”

Growth. The second tenet we examined is growth. Mergers and acquisitions have been the principal vehicle for growth in the banking industry since the mid-1980s. But as the consolidation cycle has seasoned and digital distribution channels offer alternative ways to acquire new customers and enter new markets organically, we must accept that there are many avenues to growth. 

We’ve seen this firsthand at nCino, as institutions of all sizes successfully leverage our technology in the pursuit of growth and efficiency. But the day has not yet arrived that technology alone can help a bank grow. This is why the majority of banks view it as a way to supplement, not replace, their existing growth strategies.

Risk management. Another tenet we examined is risk management, a core pillar of prudent and profitable banking. Robust risk management is necessary for banks to avoid insolvency, but an equally important byproduct is consistent performance. The banks that have created the most value through the years haven’t made the most money in good times; their real strength has been avoiding losses in tough times.

Technology can help by improving credit decisions and making it easier to proactively pinpoint credit problems. But it must be paired with a culture that balances risk management and revenue generation.

“There are always going to be cycles in banking, and we think the down cycles give us an opportunity to propel ourselves forward,” says Joe Turner, CEO of Great Southern Bancorp, a Springfield, Missouri-based bank that ranks near the top of the industry in terms of total shareholder return over the past 40 years.

Culture. Culture and communication go hand-in-hand, and those financial institutions that are most successful are the ones that empower their employees with information, technology and autonomy. We learned this lesson the hard way during the financial crisis, when the banks that got into the most trouble were the ones that stifled the flow of information about unsavory business practices and questionable credit quality.

Since then, we’ve also seen a clear connection between a bank’s culture and its performance. “We’ve actually done a correlation analysis between employee engagement and client satisfaction scores in different departments,” says Kevin Riley, CEO of Billings, Montana-based First Interstate BancSystem. “It’s amazing the correlation between engaged employees and happy clients.”

Capital allocation. In an industry as competitive as banking, there aren’t many ways to produce extraordinary results. Running a prudent and efficient operation is table stakes. True differentiation comes from capital allocation — distributing an organization’s resources in a way that catalyzes operating earnings. The best capital allocators don’t view it as a mechanical process. They see it instead as a mindset that informs every decision they make, including how many employees they hire, how much capital they return or which third-party technology they choose to implement, among others.

Ultimately, navigating a bank through such a dynamic time is no easy feat. Leaders must embrace change and technology. That isn’t an option. But this doesn’t mean that the timeless tenets of banking should be discarded. The institutions that thrive in the future will be those that blend the best of the old with the new.

Realities Beyond the Balance Sheet Facing Bank Buyers

Financial leaders face new and unique challenges as the navigate the remainder of this year and well into 2021.

The early reads on credit quality, credit access, operational and execution risk, regulatory oversight impacts and dimming growth prospects paint a bleak picture. Underlying this environment is an ongoing consideration for consolidation forcing institutions to assess their long-term viability. A closer examination of tangible book values clearly demonstrates who could be the buyers and potential sellers.

So, what is so different for M&A now? I have always believed that no two deals are the same —and that remains true. In the past, we may have looked solely at regulatory good standing, loan concentration, deposit pricing and distribution like geography and branches. While these remain fundamentally most important at the core, we now fully expect to see a heightened focus in due diligence around key layers of bank leadership, corporate culture and values, ability to deliver digital offerings to key customer segments, financial literacy programs and community investment.

A recent study by Deloitte noted that more than ever, bank M&A strategies need the right tools, teams and processes — from diligence through integrations — to pull off successful mergers. Additionally, buyers need to consider the compatibility and integration of any digital tools and how they will meet customer expectations. Can your bank deliver what these customers expect?

Most institutions looking to acquire or be acquired need to address several non-financial topics when considering how to proceed. Five in particular are consistently under-communicated by acquirers and will be even more impactful moving forward. These items speak to the fit of the merger partners — the intangible elements that cause the difference between a high customer retention rate with a platform for organic growth or a tepid retention rate with little sign of future organic growth.

1. Strategic Leadership
How an institution’s leaders navigated the recent Covid-19 pandemic says a lot about what investors, employees, customers and communities can expect if it merges with another bank. For example, the Small Business Administration’s Paycheck Protection Program may have given some banks lessons and plans that may make them potential partners worth exploring. No one knows what lies ahead, but strategic leaders must be able to think, clarify and execute during these new M&A conditions.

2. Bank Culture and Values
Most banks have a mission, vision and values statements. Until the current environment, how leaders must lead to make employees feel included and valued had not been challenged. But in almost every M&A engagement, there are significant segments of impacted employees and customers that experience uncertainty and fear. Demonstrated values can go a long way to secure trust and help the execution of these transactions succeed.

3. Digitization Expectations for Employees and Customers
Many institutions were not prepared for what occurred earlier this spring. Disaster recovery and business resumption plans were a solid start, but many were insufficient for this type of event, requiring operations and services to move off-site in a matter of days.

But aside from the initial challenges of the PPP, most banks appear to have done an outstanding job of helping employees work from home without too much customer disruption. This operating model will be the new way forward in banking. When banks merge, it is important to understand how each institution’s plan worked, and how much or little displacement that model could be for employees and customers going forward.

4. Financial Literacy and Inclusion
The reality of how our country has operated over decades has come into focus during the pandemic. One issue that many banks have identified is access to capital and providing banking services in a service-blind manner going forward. Financial literacy and inclusion must be a tenet in creating a more-effective banking system. Aligning how these programs can work, collaboration and inclusiveness can create a platform for capital distribution that works with any institutional strategy and grows exponentially after a merger.

5. Community Investment
Many institutions have invested significantly in community programs over the years. In a merger, these groups need to understand what the plan for that support will be going forward. The pandemic has made it even more important to discuss and support these investments in communities, given the struggle of many organizations these days. While these five items are not exhaustive, we know that they are among the top issues of executives, employees and customers at prospective selling institutions.

How Peoples Bancorp Prevailed Through PPP

“You only learn who has been swimming naked when the tide goes out,” wrote Warren Buffett in his 2004 annual letter.

He was referring to operations that trade derivatives. You don’t really know the value of what you hold in opaque markets, he explained, until it’s tested in hard times.

The same can be said about banking.

Rarely has the industry faced an environment as acute as today.

The scope and speed of this downturn are without modern precedent,” said Federal Reserve Chairman Jerome Powell earlier this week. It’s “significantly worse than any recession since World War II.”

It’s hardly an exaggeration to say that bankers bear much of the burden of saving the economy from oblivion. “If doctors and nurses are first responders to those who are sick,” says Robyn Stevens, chief credit officer at Peoples Bancorp, “bankers are the first responders for businesses, communities and economies.”

Stevens would know.

Within its three-state footprint spanning Ohio, West Virginia and Kentucky, Peoples was the top-performing bank in the first round of the Paycheck Protection Program measured by dollars of PPP loans approved per assets.

“A culture is tested when times get tough,” says Ryan Kirkham, general counsel at the $4.5 billion bank based in Marietta, Ohio. “You find out whether it is real or just lip service. We passed the test.”

The success of Peoples in the first round of PPP reveals a flaw in one of the principal narratives that has emerged from the unfolding crisis — that banks with the most advanced technology were the ones best positioned to manage the onslaught of loan applications.

It’s not that Peoples Bank hasn’t invested in technology in recent years, because it has. But the secret to its success in the first round of PPP was simple elbow grease.

Personnel from the top of the bank to the bottom volunteered to enter data into the Small Business Administration portal to process customer loan applications.

“Banks had to decide whether they were going to do it automated or whether they were going to do it manually,” says CEO Chuck Sulerzyski. “Peoples tried an automated approach but then opted for manual.”

“Many of our most senior executives have done data entry until 8, 9, 10, 11, 12 at night,” he adds. “We did over 100 of these loans on Easter Sunday. And when they shut banks over $1 billion out from 6 p.m. to midnight one evening, we had a couple dozen people volunteer to work midnight to 4 a.m. putting in the entries.”

This success reflects a culmination of a decade’s worth of effort, spearheaded by Sulerzyski, who joined the bank from KeyCorp in 2011.

The 62-year-old CEO spent the previous four decades working up the corporate ladder at multiple prominent banks. He worked at Citibank during the Walter Wriston era. He was at Chemical Bank when Walter Shipley was CEO. And he spent eight years at Bank One, working closely with President Don McWhorter and CEO John B. McCoy.

Sulerzyski has been there and done that, in other words. One lesson he’s learned along the way has been the importance of culture and customer relationships. It’s a lesson that has paid off in spades over the past three months.

“From a competitive standpoint, a lot of the large banks struggled with PPP,” Sulerzyski says. “One of the large regionals couldn’t do any loans the first few days. Another one started, but then had to shut down. Each of the bigger banks we compete against had their own degree of difficulties with this. Because our customers were well taken care of, CPAs and attorneys started referring business to us and it kind of snowballed on itself.”

Sulerzyski’s team speaks in single voice on this.

Our commitment to our communities and the importance that plays resonates with our employees,” says Thomas Frawley, senior vice president, consumer lending. “They start the call as a banker and end the call as a counselor, listening to the fears of our customers while assuring them that we are going to do our best to help them.”

“We have several associates who are working day and night,” says Ann Helmick, director of enterprise risk management. “They are doing this for the good of the client. For most, there will not be a personal gain.”

“It is easy to come up with a mission, vision and values. And when times are good, it can be easy to live by those values,” says Jason Phipps, regional president. “It is when a company or person faces adversity that you find out who a person or who an organization really is.”

One can argue all day long about the importance of scale and technology, and how it could soon be a principle competitive differentiator in banking. But technology is only a tool to help bankers ply their trade. The soul of any organization, and the true source of performance, lies instead in the people who run it.

“Bankers may have got a bad rap during the last crisis,” says Stevens, “but ours have been heroes during this one!”

Six Timeless Tenets of Extraordinary Banks

flywheel-image-v4.pngIf you want to understand innovation and success, a good person to ask is Jeff Bezos, the chairman and CEO of Amazon.com.

“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question,” Bezos said in 2012. “I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two, because you can build a business strategy around the things that are stable in time.”

In few industries is this truer than banking.

Much of the conversation in banking in recent years has focused on the ever-evolving technological, regulatory and operational landscapes. The vast majority of deposit transactions at large banks nowadays are made over digital channels, we’re told, as are a growing share of loan originations. As a result, banks that don’t change could soon go the way of the dinosaurs.

This argument has merit. But it also needs to be kept in perspective. Technology is not an end in itself for banks, it’s a means to an end — the end being to help people better manage their financial lives. Doing this in a sustainable way calls for a marriage of technology with the timeless tenets of banking.

It’s with this in mind that Bank Director and nCino, a provider of cloud-based services to banks, collaborated on a new report, The Flywheel of Banking: Six Timeless Tenets of Extraordinary Banks.

The report is based on interviews of more than a dozen CEOs from top-performing financial institutions, including Brian Moynihan at Bank of America Corp., Rene Jones at M&T Bank Corp. and Greg Carmichael at Fifth Third Bancorp. It offers unique and invaluable insights on leadership, growth, risk management, culture, stakeholder prioritization and capital allocation.

The future of banking is hard to predict. There is no roadmap to reveal the way. But a mastery of these tenets will help banks charge ahead with confidence and, in Bezos’ words, build business strategies around things that are stable in time.

 

The Six Tenets of Extraordinary Banks

Jonathan Rowe of nCino describes the traits that set exceptional banks — and their leaders — apart from the industry.

To download the free report, simply click here now.

How the Covid-19 Crisis Turned One CEO Into Counselor in Chief

Since taking over as CEO of Amalgamated Bank in 2014, Keith Mestrich has demonstrated his management chops by reengineering the $5.3 billion institution’s balance sheet and improving its profitability.

But that experience pales in comparison to the challenge of running a company headquartered in New York City, which is ground zero for the Covid-19 pandemic. Most of Amalgamated’s 400 employees have been working from home since mid-March, including Mestrich. “I never thought that I’d be in the sixth week of running a bank from the basement of my house, by myself,” he says.

The pandemic has had a devastating impact on the U.S. economy; the likelihood of a severe recession requires management teams to carefully monitor their banks’ vital signs, including loan losses, liquidity and regulatory capital levels. But most bankers are experienced at this, most recently during the Great Recession in 2008. They know how to manage balance sheets through an economic downturn.

Managing employees through a crisis of this magnitude is another matter entirely.

One obvious way in which the current situation is starkly different from the last recession is the incredible personal stress the pandemic has placed on employees. Social distancing and sheltering orders have forced most employees to work remotely, either isolating them or requiring them to juggle work and parenting if young children are in the home.

These stresses are layered on top of the fear of infection. In New York City, where most of Amalgamated’s employees work, there were more than 138,000 confirmed cases of Covid-19, with nearly 10,000 confirmed deaths and more than 5,000 probable deaths through April 22, according to the New York City Department of Health and Mental Hygiene. And of course, the news has been full of stories about the city’s overcrowded hospital emergency rooms and the desperate, daily search for ventilators and protective gear.

People are frightened, including many Amalgamated employees. One of Mestrich’s jobs now is to be counselor in chief.

“I spend a huge amount of my time just checking in with people at all levels of the bank,” Mestrich says. “People who have to come in and work have different levels of fear and … and that is calibrated by their own family situation. I talked to one woman who works in one of our branches, who has three kids, and she’s a single mom, and knows that if anything were to happen to her, [it] could be really devastating, so her fear level is very different than somebody who’s a single person and relatively young and healthy.”

He has also heard positive stories from his employees. “I got a great message from one guy – the only member of our staff who I know was actually hospitalized – [that] he was going back to work,” Mestrich says. “He’s recovered and doing well.”

The fear that some Amalgamated employees experience could magnify when they’re asked to return to their old work environment. “I think coming back is going to be really challenging, especially for organizations that are in hot spots,” he says.

Will companies be required to test their employees and verify the results, and will social distancing requirements remain in place in the office? Amalgamated will rely on guidance from the government in repatriating employees, although Mestrich notes that “guidance right now, as of today … is very all over the place.”

No matter how this normalization process is executed, Mestrich says it will have to be done with great sensitivity. “I think we’re going to have to be unbelievably empathetic to people who have any number of situations, whether they’re a little bit older worker or they have underlying medical conditions or they still have kids at home and don’t have any other childcare arrangements or they’re just fearful,” he says.

Amalgamated has its roots in the U.S. labor movement. The bank was founded in 1923 by the Amalgamated Clothing Workers of America to provide banking services to its members and is still 40% owned by the union’s modern day successor, Workers United. Mestrich says many of the private sector unions that bank with Amalgamated have “seen significant layoffs and a lot of stress, both in terms of trying to figure out how to service their members, but also concerned about revenue dropping from dues income.”

And of course, many union members lave been laid off as well. In early April, Amalgamated launched the Frontline Workers Fund to provide financial support to workers impacted by the pandemic, including health care, grocery, cleaning service, food service, domestic and retail workers. It contributed $50,000 to stand up the fund and will donate 10 cents whenever a customer opens a new account or spends over $10 using the bank’s debit card. Amalgamated will donate proceeds from the fund to other union organizations for distribution.

The Amalgamated Foundation has also joined several other large foundations to establish the Families and Workers Fund. This fund will also focus on workers, families and communities that have been impacted by the pandemic. It has an initial commitment of $7.1 million, with a goal of raising $20 million. Amalgamated will also manage the fund’s operations.

In one sense, these two initiatives are just larger examples of the empathy that Mestrich has for his own employees. After all, what is philanthropy but empathy in action.