Star Staff Reports
When Craig Esrael was recruited to lead First South Financial in 1983, the organization was one step away from conservatorship. Six straight quarters of net losses and rising delinquencies had sunk employee morale and almost caused the organization to close its doors.
He could have declined the offer, deeming the organization was too far-gone. That liquidation was the only possible solution for the myriad issues that plagued First South Financial.
He didn’t. Instead, he accepted the challenge and immediately began to chart a course for First South Financial that has led to one of the most extraordinary transformations in Tennessee banking history.
After a complete assessment of the organization’s status, the new CEO took these steps:
Completely overhauled all financial policies, procedures and practices so the organization would stop hemorrhaging money
Redesigned lending and collection practices to start strengthening the loan portfolio and reduce the extremely high delinquencies and charge-offs
Redeployed personnel to ensure the right people were in the right positions to spur growth
Recruited companies into the organization’s field of membership to provide additional stability and growth opportunities
Developed an aggressive employee incentive program to reward great service
Flattened the organizational structure to allow communication to flow easily and quickly
Instilled a culture with an emphasis on top quality customer service
Established metrics to measure performance
Started a strategic planning process which included the board of directors and the entire staff
Developed an asset and liability management program that was extremely innovative
Years of a deeply set culture had to be erased and replaced with new ways of thinking. Managers had to learn to share information; staff had to learn that there were consequences for not adhering to the new policies and procedures.
However, members were glad for the changes – some could not receive quality financial services from the local banks. If the organization went away, so would their only viable banking option.
First South Financial began improving upon its very poor financial ratings reaching the very highest ratings for financial strength and performance in the early 1990’s. Now that the foundation was solid, it was time to start building. And once again Craig Esrael demonstrated his visionary leadership skills.
In 1993, the federal charter was converted to a state charter and the name was changed to “First South Financial”. This gave the organization the chance to grow more quickly since the state had a more streamlined process for expansion. And the timing couldn’t have been better. In 1994 the Base Realignment and Closure Committee (BRACC) decided to move the training activities conducted at Naval Support Activity Mid-South to Florida. Had Esrael not pursued expanding the organization’s field of membership, there would have been another crisis – the loss of its major sponsor. However, when the base transitioned from a training facility to a headquarters for some of the Navy’s major departments, it didn’t affect First South Financials growth at all.
First South Financial was building its membership base and that meant the need for more locations. Within his first 10 years of service, the organization grew from two locations to 12 while keeping the highest marks for financial performance solidly intact. In fact, it was also in the early 1990’s that First South Financial started earning Bauer’s perfect 5-star rating and perfect 300s from IDC. Both are national independent rating organizations.
A full-service mortgage department was developed along with an investment and insurance subsidiary, First South Financial Investment Services. This allowed First South Financial to compete more effectively with other financial institutions in its local market. Any financial product or service a consumer might want could be found at First South Financial. And with better rates and/or lower or no fees.
In 2003 First South Financial won the bid to be the on-campus financial institution for the University of Memphis. The partnership has been beneficial for both organizations, and First South Financial receives high praise from U of M faculty, students and staff for their convenience, service and financial education efforts.
Still looking to push forward, in 2004 Esrael took First South Financial through another charter conversion – from a multiple common-bond to a community charter. And in 2005, another location was opened in Southaven to serve its members and potential members in DeSoto County, Mississippi.
The organization engaged in a simple but elegant image campaign that rolled out in two phases. The first phase was to inform the general public that they could do all of their banking with First South Financial more easily than they could with any other bank in town. After about 18 months the message was shifted to a more straightforward message “You can bank on us”.
A tag line was added to the logo that states “Banking with Friends since 1957”. The organization displayed this message across all type of media outlets – TV, Radio, Internet, Print and Outdoor – to let consumers know that they had a strong, stable, and service-focused alternative to the banks.
In order to differentiate itself from the imperious and impersonal image of other local banking institutions, Craig Esrael also took on the role of being the face and spokesman for the organization. The idea that the President and CEO of First South Financial is so confident that his organization offers the best products, prices and service that he’s willing to personally guarantee it was unheard of in this market. And the response has been overwhelmingly positive. New members and even new employees frequently mention that the commitment, honesty and sincerity of the CEO were the primary reason they looked at First South Financial as a viable alternative for them.
And when the economy sank into a deep recession in early 2008 and the financial markets tumbled, First South Financial was able to immediately quash any fears regarding its financial strength and stability with a media blitz communicating the fact that ALL independent rating agencies ranked the organization as one of the strongest and safest financial institutions in the entire nation. And this is still true today.
Thanks to Esrael’s establishment of conservative lending and investment strategies, First South Financial has:
The longest consecutive history of perfect (300) IDC scores out of all financial institutions in Tennessee and for any credit union in the nation – 35 consecutive quarters and counting
76 consecutive quarters of perfect 5-star ratings from Bauer (top 10% in the nation)
A capital position so strong that it can withstand over 10 years of severe economic conditions without any effect on its ability to offer products and services to members or on its locations or staff
Consistently high member service scores – 3.95 or higher on a 4.0 scale (A+)
Asset growth of more than 1330 percent
Capital growth of more than 7567 percent
Grown to the 10th largest banking institution in the region
Grown from 2 to 15 banking centers
The longest tenured CEO of a top ten banking institution in the entire region
An A+ rating from Weiss Ratings, making it the strongest financial institution in Tennessee and among the top 20 in the United States
A Green/*** rating from Veribanc
An A+ rating from Ratewatch – the only A+ in its peer group
Net Promoter Score (NPS) of 78% versus an average of -6% for other banking institutions in the nation
Thanks to Craig Esrael’s devotion, determination and vision, First South Financial has come a long way from a broom closet on a naval base. A true leader is one who can adapt to any situation, someone who sees only opportunities. Craig Esrael is that kind of leader and the remarkable transformation of First South Financial is a testament to that leadership.