Community Advocate Spotlight: Edward H. Schaefer, First Federal Bank of Wisconsin

The following is a brief interview between WBA President and CEO Rose Oswald Poels and First Federal Bank of Wisconsin CEO Edward H. Schaefer.

Rose: How did you first get into the banking industry?
Ed: My first banking job was interning during the summers in college at First Wisconsin Bank. One summer I worked as a teller at Capitol Drive and Teutonia Avenue in Milwaukee. I loved working the hectic paydays before ACH Payroll existed where we verified identities via signature cards. Another summer I worked in the international department doing workout support on troubled loans in Central America. Very interesting! I never saw myself making a career out of community/commercial banking, but a bank recruited me out of business school and now I have been directly or indirectly involved in the industry for over 40 years.

What is your favorite aspect of your role at the bank?
I enjoy the mentoring and team development aspect of running a business. I had a few mentors along the way that believed in me and provided me the skills to be successful. They were tough but fair and I have followed in their footsteps where I can look back and see the many executives who I mentored as junior bankers that are now very successful running numerous banks throughout Wisconsin.

What do you wish the general public understood about the banking industry?
I wish the public understood the many types of financial services companies and their differences. Although money is the commodity we use in banking, we all serve different niches. Community banks provide value-added service and they support their communities, while providing quick local decision making. We call that “The Community Bank Difference” at First Federal. Too often we are treated just like a number at larger financial institutions. Not at a community bank, we believe every business/individual should have a great attorney, a great accountant, a great insurance agent and a great banker to give them the advice and feedback to be successful.

Where do you believe the industry’s greatest challenges are in the next three to five years?
Our industry’s biggest challenges can be our biggest opportunities.

1. People/Staffing: How are we going to fill our people/staffing needs in the future? The big banks used to have training programs, but now they train bankers to only do specific tasks.
The generalist bankers who understand the many facets of a bank are hard to find. It is ironic that we used to get that talent from the larger banks, now they are hiring our people. It is also amazing how many community bankers are now in roles at the numerous credit unions, regional banks, and national banks in Wisconsin. The opportunity for us is that we must continue to mentor and train to develop the team that best serves our customers’ needs, lives within our value system, and wants to be a well-rounded banker in a community bank setting.
2. FinTechs/Credit Unions/Consolidation: FinTechs are going to serve niches more efficiently than we are able. Credit unions are going to continue to grow until there is a severe credit event. Consolidation is only going to accelerate. Fourteen out of the top 20 financial institutions in the state are credit unions. Banking charters have declined by half as well as credit union charters. The public does not care because there are so many more bank and credit union branches than there were 30 years ago (five times as many). The opportunity is to profitably grow your bank utilizing technology to be the bank of choice and provide the value-added service your customers want and deserve.
3. Size: Even with technology, the cost of running our businesses must be paid for over more earning assets. The $50-$100M banks and credit unions are almost all gone. The $100-$250M banks are quickly consolidating, and I believe if you are not a $500M bank (unless family owned) in the next five years you will not be able to make a proper  return for your shareholders/ investors.

Please describe your current role at your bank and share with us one of your more rewarding experiences.
I am currently CEO of First Federal Bank of Wisconsin and president and CEO of our holding company, FFBW Bancorp. I have been a part of helping turn around five struggling/failing banks in my career. It has been truly rewarding watching bankers that I have challenged exceed my expectations, realize their potential, and become exceptional bankers. In one case a banker told me she was going to show me that she could do the job I challenged her to do. She is now a senior executive at a $1 billion+ bank. That is very rewarding to me.

You could probably call me a turnaround specialist or a profit enhancer. Putting out fires, putting a platform and team in place, developing the necessary cultures that lead to success is very demanding work. However, as the end of my career nears, providing the value-added service to our customers/prospects and running a bank to me is easy, it is the successful businesses and bankers that I have had a small part in mentoring that makes me most proud. Well, maybe second to my wonderful family.