My BarStory - 39 Timothy E. Phillips and Becky Ruppert McMahon

The CMBA has long embraced the entire business community, and First Federal Lakewood  is a perfect example of that kind of partnership. This community bank has a unique model that helps build and sustain financial stability while giving back, including generous support of the CMBA. CMBA CEO Becky Ruppert McMahon sits down with First Federal Lakewood CEO Tim Phillips to about how to build a stronger Northeast Ohio now, and for the future.

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Rebecca Ruppert McMahon (00:05):

The C M B A has long embraced the entire business community in Cleveland, and that includes first federal Lakewood. This community bank has a unique model that helps build and sustain financial stability for individuals, small businesses, and others while giving back to the community, including their generous support of the C M B A. I was thrilled to sit down with first federal Lakewood, c e o, Tim Phillips, as we talked about how to build a stronger northeast Ohio now and into the future.

Timothy E. Phillips (00:34):

I'm Tim Phillips, president and c e o of first Federal Lakewood. Tim,

Rebecca Ruppert McMahon (00:37):

Thanks for joining us again this morning. We are delighted for the chance to have a conversation. First Federal Lakewood has been such an incredible supporter of our community and now our bar and we're thrilled for the chance to connect with you. Yeah,

Timothy E. Phillips (00:49):

Thanks for having me. This is great.

Rebecca Ruppert McMahon (00:51):

So tell me a little bit about when you came to First Federal Lakewood. When did that happen and why did you come to First Federal Lakewood?

Timothy E. Phillips (00:56):

Oh, geez. Let's see. I'm, I'm, it was probably 2018, so I think my five year anniversary is coming up and it was just a great opportunity for me. You know, I gr I started my career at a small community bank and so when I had the opportunity to come to Lakewood, it was, it was 88 years history of everything I love. So, serving customers doing things in the community, engaged employees that are active in the community. So what's not to like about that?

Rebecca Ruppert McMahon (01:24):

So Tim, where did you find that interest and that passion in going into banking and finance?

Timothy E. Phillips (01:28):

Yeah, well, what's not exciting about banking, right. So like most bankers, I started out as an accounting major <laugh>. And so I took my first tax class and after that it was banking and finance all the way. So quickly moved on from accounting.

Rebecca Ruppert McMahon (01:43):

I can't believe the tax class didn't kill your interest in banking. It

Timothy E. Phillips (01:47):

Killed my interest in accounting <laugh>.

Rebecca Ruppert McMahon (01:48):

Fair enough. Yeah. Fair enough. And then give us a little bit of background in terms of how you made your way into college and outta college. What did that look like?

Timothy E. Phillips (01:57):

Well, I was born and grew up in Marion, Ohio. So my dad had 50 years in with a telephone company and we moved around quite a bit. Landed in Medina in, I guess I was in seventh grade, found my way to Miami University and after college I hooked on with a very small community bank in Medina County, which was great 'cause it was my hometown. And it kind of spurred my passion because everybody was so involved. All the employees participated in various community events. Volunteerism was encouraged and it was great. And so and what I, what what I appreciate most about that community bank was even though they were very small, they still paid for me to go on and earn my master's degree, which is incredible.

Rebecca Ruppert McMahon (02:35):

Yeah, that's huge. What was your first position with that community bank?

Timothy E. Phillips (02:39):

Everybody back then had to start as a teller. And so I was a teller for about a year and a half. Moved on to head teller, moved on to new accounts, eventually branch manager found my way into commercial lending and that's probably the most of my background is, has come up through commercial sales. Yeah.

Rebecca Ruppert McMahon (02:54):

Being on the front lines as a teller is really oh. Yeah. I mean, you really see it all.

Timothy E. Phillips (02:59):

You can't appreciate it till you do it, but it's, you do. Absolutely. But it's the most meaningful part of what we do. Right. It's how we connect with the community. They don't care what I do or what who I am. They care about who they're going to see every day to take care of their money. Yeah.

Rebecca Ruppert McMahon (03:13):

So having worked on both the retail side and the commercial side, what are some of the similarities and what, what are some of the differences?

Timothy E. Phillips (03:20):

The similarities are really, that's the easy part. 'cause It's all a relationship. We have folks that come into our branch every day and no matter how busy the person they wanna see is, they'll wait because that's who their relationship is with. So we'll have new folks in the branch that they don't know, but they'll wait in line extra long to talk to the person they have that relationship with. So we focus on relationships and building those same on the commercial side. We're very fortunate our turnover is very low because the last thing you want as a business is to have the person that you've built trust with to move on to another organization. 'cause That disrupts your life. So we focus on that a lot.

Rebecca Ruppert McMahon (03:57):

So you've been in the banking arena for 25 plus years. I'm interested. I I can guess from my side of the house, there've been a lot of changes in banking a lot in those 25 years. Yeah. What are, as you think about the customers mm-hmm. <Affirmative>, what are some of the changes that you've seen in, in that 25 year time span in terms of how the bank whatever bank you've been with, but now currently F F L. Yeah. How has that relationship evolved?

Timothy E. Phillips (04:20):

Oh, change it's from everybody's perspective, whether it's customers, whether it's employees we have you know, when I got into banking before I had a cell phone, I had a palm pilot, and before that I had a beeper. And so when you think about all of the things that are going on in the world today with cyber and crypto and identity theft and fraud the customer's in a really different place right now. And it's our obligation to educate those customers on all of these, all of these things that are going on. So I think that's, or the role of a community bank is to really talk to our customers about those threats.

Rebecca Ruppert McMahon (04:57):

And what, what are you seeing from inside F F L in terms of how the, how banking has evolved in the 25 years as an employee of a bank? Well,

Timothy E. Phillips (05:06):

We have a lot less file cabinets now. So one of the things that I like to preach is when I, when I first came to the bank, I think we counted 410 file cabinets, and we have about 400 employees. And so our challenge to them which was Covid assisted, by the way, COVID was a big help to us in that perspective because the behavior change was, was accelerated significantly through covid. We found ourselves at home, we found ourselves without printers. We found ourselves learning how to do e-sign very quickly. And so that's, that's one of the positives I think that has come out of out of the covid. So

Rebecca Ruppert McMahon (05:41):

First Federal Lakewood is a mutually owned bank. Can you tell us a little bit about what it means to be a mutual bank?

Timothy E. Phillips (05:47):

Yeah, that's the best part of what I do, right? As opposed to a publicly traded bank, 90% of my job would be talking to shareholders, raising capital, selling our stock, promoting our stock. We're not, we're own, we're deposit or owned. The people in the community own us, the people that bank with us, own us, which gives us a number of advantages. And one of them is we can take a longer term perspective into how we invest our money. We can decide to lose money for a year if we want to make some investments to further our technology or all of those things without getting criticized from the, from the market, so to speak. So it's one of the things that I love most is that our customers actually have a say in our bank, and I appreciate that.

Rebecca Ruppert McMahon (06:28):

So one of the things that I think is so interesting is that the mutual form of ownership in when F F L was founded in 19 35, 35 is the same as today. Mm-Hmm. <affirmative>. Yeah. So, in a time when there's incredible change everywhere we look and a little bit of instability in the markets, what do you think that concept of mutuality brings to the community and to the customers? Yeah.

Timothy E. Phillips (06:51):

Well, what we're seeing today, right? So there's been a lot of banking in the news lately. And frankly, I get, I get a little annoyed when I feel like the banks are getting painted with a very broad brush. And so comparing a mega bank that makes a lot of startup loans and has very large uninsured deposits, comparing that to a community bank that makes local home loans, has local business customers sources all of their money locally from depositors. It seems a little misplaced to me to make those assumptions. But on the flip side, this has provided us with a very great opportunity right now. So we're able to tell our story. It resonates with people. There's no financial incentive. We, whether at the management level or at the board level to sell our bank or to have our bank be acquired. And I think that's what's really special about our charter.

Rebecca Ruppert McMahon (07:44):

Tim, what's your vision for F F L into the future?

Timothy E. Phillips (07:47):

Oh great question. So, lots of things we've built our business as most mutuals have on selling CDs and deposits and turning those into home loans. So one of my visions is we have an opportunity to diversify that. So we've we've really amped up our resources on commercial lending side. We have a wonderful marine business that we do, which is thriving. We also do auto loans. We're a consumer bank, so we want to, we wanna provide all of those products that that our customers want. And I think we just need to do more. We're not gonna do less of the home loans, but we're gonna do more of all the other things. It's a

Rebecca Ruppert McMahon (08:23):

Great opportunity for sure. In all respects. Yep. So one of the reasons that we're sitting here today is because there's a commonality between F F L and the Cleveland Metropolitan Bar Association. We're both acting in service of our community here in the broader Cleveland area and beyond. Mm-Hmm. <Affirmative> and F F L has stepped up with an incredibly generous contribution to support the C MBA's 150th anniversary campaign.

Timothy E. Phillips (08:45):

Yeah, it's exciting.

Rebecca Ruppert McMahon (08:46):

It is exciting. And so thank you first and foremost. Sure. For your and the collective generous support from F F L I'm interested in. So why did F F L decide to make this significant investment in what the bar is doing in the future?

Timothy E. Phillips (09:00):

Yeah, well, what an exciting time. So we're really happy to be a part of it by the way, but it was so easy to draw a correlation between the three Rs. So the C M B A brings folks in to high schools to talk about things that really matter in life. And so it partners really well with our financial literacy program. So we're happy to bring that module that takes education into the classrooms and talks about things that these folks are gonna need as they, as they continue to go through their life. And so it's a natural fit.

Rebecca Ruppert McMahon (09:30):

Well, we couldn't be more excited about it. And as we head into the fall here in 2023, we'll be building out that the curriculum that we take into the schools a little more robustly. So things like how to pay for college. Yeah. The difference between grants and loans. What other resources might be available to help kids really afford the ability to get through college mm-hmm. <Affirmative>, and then onto whatever waits for them next. Yeah.

Timothy E. Phillips (09:53):

I wish I had it. My high school didn't have that stuff.

Rebecca Ruppert McMahon (09:55):

Mine either. Yeah, mine either. So talk a little bit about, in general, not just the, the support of the C M B A, but one of the hallmarks of first federal Lakewood is that you are very much an organization that supports a variety of community organizations. Why is that such an important part of what F F L does?

Timothy E. Phillips (10:12):

Oh my gosh. Easy question here. I say it all the time. Employees, employees, employees, they're our greatest asset. So it's the hallmark of a community bank. It's what makes us engaged in our communities. We have we have employees that don't need prompted to volunteer. They do it on their own. And so many times, as a smaller bank, it's, it's, we're not able to outspend some of our larger competitors. But I can tell you, we can out network 'em, we can out volunteer 'em, and we can have a lot of fun doing it. And I think it's what's, what's critical to our network. Our network. And I couldn't be more proud to be part of the C MBA's hundred 50th anniversary.

Rebecca Ruppert McMahon (10:50):

Thank you, Tim. And first federal Lakewood for your generous support of the Cleveland Metropolitan Bar Association. To learn more about how you can support Legacy one 50 and help us provide even more service throughout Northeast Ohio, come visit us at c metro bar.org/legacy one.