The three veteran bankers who formed First Bank & Trust, left to right, Robert Yohanan, Howard Kain and Jay Lytle.

In a time when much of the country is angry at the banking industry and customer service seems to be pressing a series of buttons for more options, Evanston’s local bank is thriving – without bailouts and with plenty of personal service.

“Community,” says long-time Evanstonian Howard Kain, one of the founders and a managing director of the bank.

The bank’s home is still 820 Church St., but there are Evanston branches on Central Street and Main Street and a drive-through on Benson Avenue, as well as branches in Winnetka and Skokie.

Celebrating 15 years in 2010, First Bank & Trust is number two in market share. Robert Yohanan, CEO and managing director, told the RoundTable, “When we started, what is now Chase had 90 percent of the market share; we had zero. Now we’re #2 with 26 percent and they have 35 percent.”

Mr. Kain, Mr. Yohanan and Jay Lytle – the third managing director – attribute their success to staying true to their mission of being a community bank. They all say they are “having fun” operating this bank, because of their ties to their customers, the Evanston community itself and the bank’s close-knit employee “family.”

Beginnings

Some called it “Howard’s bank”; others called it “Jay’s bank”; and still others, “Bob’s bank,” when the three veteran bankers first formed First Bank & Trust.

The three had years of banking experience. “All of us had reached the point in our careers where we had some success. [We wanted to] take the experience that we had and see if we could do something on our own without the reliance on ‘Mother Bank,’” says Mr. Yohanan.

Mr. Kain had lived and worked in Evanston for many years, and served as president of First Illinois bank. Mr. Lytle, an Evanston alderman from 1973 to 1975 and the City’s mayor from 1977 to 1985, was “working for a community bank in Chicago, and that was acquired by a larger bank. When the opportunity arose, I came back to my beloved Evanston,” he said.

“Bob [Yohanan] sought us out,” says Mr. Kain. “Evanston was the area that Jay and I knew – Bob did his homework, and he came to Jay and me and [said] that Evanston was a proper place because the community banks had been ‘mega-ed’ into larger banks. People were not happy.”

Mr. Yohanan adds, “Evanston had some scale to it. It had people, depositors, diversity and economy. … The two local banks had been taken over by outsiders – we felt, based on our knowledge –there would be a chance to get a piece of [the $2 million in bank deposits here].”

Mission and Focus

Community has always been the heart of First Bank & Trust, says Mr. Kain. “My wife, Carol, came up with our slogan ‘We put Evanston first,’ – which we used until we expanded. Now it’s ‘We put community first.’”

First Bank & Trust is “for the consumer who wants a little more personal service,” says Mr. Lytle: “When you call us, a person will be at the other end of the phone line.”

Typical business customers, he adds, are the “owner-managed businesses, such as Tag’s and Vogue Fabrics. … They all bank with us because we treat them how they treat their customers.”

Aaron Sussman of Vogue Fabrics on Main Street says, “First Bank & Trust is our bank,” and has offered services to help their business thrive.

Gail Jones, one of the third-generation owners of Saville Flowers on Sherman Avenue, says when she heard there was going to be a community bank in Evanston, “I called and said, ‘I’m calling from Saville Flowers and I’m so unhappy [with my present bank] and would like to be one of your customers.” The personal service, she says, is genuine. “When you go there, everybody knows your name. And they never act like they’re too busy to talk with you.”

Early on, says Ms. Jones, First Bank & Trust was the only bank that did not charge for out-of-town checks – something that is important to merchants who deal daily with college students, she adds.

The bank’s customers also include small and medium-sized businesses, says Mr. Yohanan, and “for the larger businesses we do pieces of [banking] business that require hand-holding.”

Many of Evanston’s not-for-profits – including its 90-some churches – bank with First Bank & Trust, says Mr. Yohanan, adding, “Jay had been involved in a lot of not-for-profits. [Yet] despite all our research, we greatly underestimated them …We provide not-for-profits with safety nets – for example when [as now] the state of Illinois is behind in payments [for purchased services].”

Sara Schastok, executive director of Evanston Community Foundation, says First Bank & Trust has helped ECF “like leavening raises bread. … They have helped us over the years not so much with money but with important things just at the right time.

“This is really a bank that’s about community. They have extended themselves in ways to help organizations build their resources. They are very connected to Evanston’s values.”

Mr. Lytle, says Ms. Schastok, “has been incredibly generous with his time. The bank was one of the first businesses to make a gift to the Foundation, she said, and has sponsored many events. “They validate our work,” she adds.

These executives are vigilant about the bank and its mission to their customers. “With Jay and me on the first floor, people feel that they are being closely watched,” says Mr. Kain – not monitored so much as looked after. He adds, “Philosophically, the way we do business is that we try to keep it small; people get personal attention – and the staff isn’t forced to sell new programs. … That is part of why we are different and exactly the reason we’ve done well.”

The bank’s top executives say they are invested in its employees. Says Mr. Lytle, “We have a very strong, stable employee base. We have Luann, Jill, Judette – we have added employees, but the core of employees remains consistent – we have not seen even a 25 percent employee turnover in a decade.”

Mr. Kain says the people who once spoke of “Howard’s or Bob’s or Jay’s bank” will now call it “Luann’s bank or Jill’s bank or Judette’s bank.”

The board of directors, all three men say, is extremely supportive of the bank’s mission.

Staying on Target with ‘Conservative’ Decisions

Mr. Lytle says, “A strong ingredient in our health and success is that we have stayed on target.”

One of the first decisions the founders had to make was to align themselves with the community and not solely with Northwestern University, says Mr. Lytle. “When we were [first] open, Northwestern University came to us and said they wanted to be supportive and asked us to take over their Wild Card program. We would have grown 20 percent overnight, but we decided, ‘This is not our mission. Northwestern is not our mission,’” he said.

Other “conservative” decisions, such as one to avoid the booming real estate market a few years ago, appear to have paid off. Mr. Kain says, “We avoided risky investment. Bob is very conservative when it comes to real estate, and we did not engage in real estate speculation.”

Mr. Yohanan appears comfortable with that decision and says, “Pretty much everyone else who did that is in trouble … we shine partly because of that.”

Says Mr. Kain, “It wasn’t necessarily easy to see others [making money in that market],” but now some of those banks have folded.”

These practices are “not necessarily ‘conservative,’” says Mr. Yohanan, “but we think about what we’re doing… We do want to do what we’re doing well – avoid craziness.”

Mr. Lytle says, “We’ve made money every year since the second year and put it back into capital …Lots of banks have closed or are tottering – we stay focused on our missions – local customers, owner-managed businesses and not-for profits. We have no credit-default swaps; we don’t take interest-rate risks. … Look at our earnings five years ago in the height of the real-estate boom – banks of our size were earning twice what we were, making it all on real estate – some of those banks are gone now. We’ve been the tortoise in the race and are near to the finish line.”

These bankers say the take extra steps to know their customers. “We don’t merely use credit scores. We do all we can up front to know what we’re dealing with people, hardworking people with finances,” says Mr. Yohanan.

Says Mr. Kain, “We … have to be prudent, because we’re lending the money of the depositors.”

The Bank, the Regulators and the Community

Such “conservative” practices kept First Bank & Trust in a position to say “no” to TARP [Troubled Asset Recovery Program, or “bailout”] money, the bankers say. Nor did this bank have to change its practices when new regulations were posted. “When the [bank] regulators came out with ‘Know Your Customer’ rules three or four years ago, we had virtually no changes to make [in our policies],” says Mr. Kain.

Bauer Financial – a company that analyzes and reports on banks and credit unions – has given five stars to First Bank & Trust, a rating well above those of other banks in the area, says Mr. Yohanan.

“Regulators are looking at tangible capital value; ours is about 10.5 percent and the next closest bank is 6.5 percent – the bank is really strong,” he adds.

The three executives say they see a value in centralized decision-making rather than the “silo” approach of the larger banks.

The majority of the deposits at First Bank & Trust are local, says Mr. Kain, not the “brokered deposits that can be bought online all over the country.”

An early decision, says Mr. Lytle, was that “we are much more relationship- and community-oriented than transactional.”

Looking to the future

All three bank executives say they enjoy their work and see the bank’s success as a reflection of the success of the community.

The national banking scene does not generate reason for optimism in Mr. Yohanan’s mind. He says he feels “great disappointment that nothing has been done to date to address the issue that caused the [massive failure of banks]. We knew by fall of 2007 what caused the problem: high leverage, lack of adequate capital VAL??? and overtrading in exotic instruments. … Having worked for large institutions, I see no corrective action and unlimited growth which will lead to another catastrophe.”

Yet these three executives still believe strongly in their bank and their mission. “Sell the bank?” responds Mr. Yohanan to an interviewer’s question. “We would never say ‘never’ but there is no intent to sell. We want to continue to grow the bank indefinitely.”

“Selling is not on the agenda of our shareholders,” says Mr. Lytle. “They bought in 15 years ago – 90 percent are still here.”

Adds Mr. Yohanan, “When we were seeking shareholders in the beginning, I would say, ‘Think of investing in First Bank & Trust as investing for your grandchildren.”