Wisconsin banker leading acuity through unique growth strategy

Northwestern Financial Review, Jul 15, 2001 by Bengtson, Tom

Acuity Bank of Tomah, Wis., has found a unique commercial lending niche that Kevin McCoy hopes will fuel 15 percent annual asset growth for years to come. McCoy is president of the $163 million savings bank that is leveraging its inroads in the insurance industry to expand its lending base.

Tomah, a community of 8,000 people located 100 miles northwest of Madison, might seem over-banked with four banks and two credit unions but McCoy, North*Western Financial Review's Rising Star for the Badger State, sees it as the perfect place for growth. Acuity Bank, which prior to this year has been known as Westland Savings Bank, is the lone bank subsidiary of Sheboygan-based Acuity Financial, Inc. An insurance company that markets insurance in 11 Upper Midwest states, Acuity Financial uses the bank to complement an array of services it offers to independent insurance agents. The bank's recently developed strategic plan calls for the bank to finance the acquisition of independent insurance agencies. McCoy said the bank has a leg up on the competition for such business because its parent company often hears about possible deals before other banks. The home office passes on the lead to McCoy and his team of lenders goes after the business.

"Because our parent is a property and casualty insurer, we know the insurance agency business," McCoy explained. "We know the value of their book of business. It is not a niche that banks serve very well because there are no hard assets there to value. But we can serve that niche well." The bank plans to pursue business in all 11 states where its parent company is active.

Acuity Bank, however, is growing even without the niche strategy. The bank has doubled in size since 1995, the year McCoy joined the S&L after 11 years with cross-town rival F&M Bank Tomah. With five branches in central Wisconsin, Acuity Bank is serving the traditional small business market much more aggressively than most savings and loans. The financial institution's loan portfolio is made up 35 percent of commercial loan business, mostly to farmers and small business owners. A good chunk of that business comes through Small Business Administration loan guarantees and loans made through the Farm Services Administration.

"We have had to hit the pavement, prospecting for small business loans," said McCoy. "People don't typically think of a savings bank first when they need a business loan."

The bank changed its name earlier this year when its parent dropped its Heritage Mutual name and adopted Acuity. The new name is a word generally associated with the optometrist's office and means "coming into focus." The unique word has given the bank marketing opportunities, such as slogans that say "Our focus is on you," and "We have the sharpness to see what you want and need."

"I am glad we have a new name that means something," noted McCoy. "So often a name is just an acronym which doesn't mean anything to anyone."

With interest rates low, the bank maintains a strong business in an S&L mainstay - residential mortgages. Such loans make up 65 percent of its portfolio.

McCoy is a farm-boy at heart who returned to the family dairy operation in 1978 after graduating from the University of Wisconsin. A former basketball player, McCoy said his knees began to trouble him after a couple of years of twice-a-day milkings on the farm that maintained 75 dairy cows. When he asked a friend about career options, banking came up. McCoy's father had a good relationship with F&M Tomah (The bank is not part of the F&M organization based in Kaukauna, Wis.) and asked bank president Don Kortbein about a job for Kevin. Although he lacked industry experience, McCoy impressed Kortbein so much that he hired him to be an ag loan officer. McCoy eventually became a vice president and head of the bank's loan department.

In 1995, a seasoned McCoy joined Westland Savings Bank. The environment at his new employer was significantly different than at the commercial bank he had left. The S&L had a major focus on mortgage business. When Robert Holmes retired as the organization's president and CEO in 1999, McCoy took over. Holmes already had implemented a strategy of focusing on commercial lending business and McCoy kept it going. McCoy said commercial lending will remain the bank's focus - a focus that will be bolstered by its expertise in the insurance agency niche.

McCoy said the ethic he developed while working on a farm has gone a long way toward helping him in his banking career. To be successful in banking, McCoy said, a person "has to want to help people."

"If you don't have people skills, you won't succeed," he summarized. "My advice to others looking to develop a banking career is to have an open mind and learn everything you can about the business."