15 Minutes With…Jay Kennedy

Jay Kennedy enjoys everything about football, including coaching local young players. “I love the sport. I love being around it. I love coaching it. I love helping kids.”

Jay Kennedy enjoys everything about football, including coaching local young players. “I love the sport. I love being around it. I love coaching it. I love helping kids.”

President for the $41 Million-Asset First National Bank of Frankfort, Kan.

IB: Tell us about First National.
Kennedy: Our bank has been in this community since 1921. I am the fourth generation in our family to work here, and the bank was formed because another bank had left town. I was fortunate enough that my great-grandfather was in the group that started the bank. He really wasn’t a banker. He was a farmer. The group just elected him president of the bank because none of them were bankers, too. My grandfather is the one who truly built this bank. Then my uncle and my dad, who had seven sisters, continued growing it through the 1980s and 1990s. I also have two aunts who are still shareholders.

IB: Tell us about your marketplace.
Kennedy: Frankfort is a town of about 750 people. We are in northeast Kansas. We are about 40 miles northeast of Manhattan, Kan., where Kansas State University is. We’re agricultural based. Corn and soybeans are our biggest commodities, along with cattle. A lot of farmers and a lot of small, family-owned farms are here, as opposed to the big corporate farms. At the same time, our main street is busy on a weekday with entrepreneurs who have started their own businesses. We have great local businesses that serve the area. All these places are locally owned.There are several area manufacturers, large and small, that are major employers and most are locally owned. The Union Pacific Railroad goes through here, so that’s a pretty large employer as well.

IB: Frankfort must be a friendly place.
Kennedy: We’re a close-knit community. Two years ago in October we had a very unusual hail and wind storm. Not a tornado, but it was straight-line winds that knocked 100-year-old trees to the ground. There were huge trees and debris in the road. You couldn’t even walk through it.
Well, within about 40 minutes you could have driven a semi-tractor-trailer through it, and it wasn’t because we called FEMA. We didn’t ask for disaster recovery. It was because of people who came into town with their chainsaws, with their tractors, with their backhoes and with their skid loaders.
That’s what happens in towns like Frankfort. We do it ourselves, and we don’t ask for handouts. We ask each other for help. That’s the big picture of it.

IB: How’s your local economy now?
Kennedy: It’s good. Something that’s putting pressure on it is the price of commodities that we are raising. Cattle prices are low. The price of corn and soybeans is lower. As far as the manufacturing, those things seem to be holding their own.

IB: Tell us more about First National.
Kennedy: We probably have about 2,500 demand deposit accounts, just based on our statement activity.
Our biggest line in our loan portfolio is one-to-four family residential homes. They’re actually larger than our ag loans. Some of those are for residential homes on a farm, so I’m not saying we’re making loans in six cul-de-sacs.

IB: How did you weather the Ability-to-Repay regulatory storm?
Kennedy: Well, we’re still weathering it. We have our umbrella out. But it goes back to the people we have working here. We have a good team who has done a good job of trying to stay up with the rules. I think our true desire and intention to do it right is what carries us through.

IB: How about your other products and services?
Kennedy: We provide debit cards and credit cards and all of that. We do online banking, but it’s a limited product, to be honest. We’re still developing mobile banking, because of the expense for a small bank like ours and because of the few customers we feel would use it. But we’re gaining more of those customers, so we’re still looking into mobile banking as opposed to pure online banking.

IB: So no text banking?
Kennedy: I have probably five customers, which isn’t a lot, who might text me on my personal mobile phone at 8 o’clock at night and say, “Please advance $10,000 on my line of credit.” So I do. It works for them and for us.

IB: That’s very personalized banking.
Kennedy: Exactly. I take pride in the fact that they’re comfortable approaching me at 8 o’clock at night. And I don’t care. I’m glad they’re doing it. They know that they can write a check the next day if they need to. That money’s available to them.

IB: Your bank’s customer loyalty must be marvelous.
Kennedy: One of our commercial customers told me a story. He’s in a larger metro area, and he banks with us from two-and-a-half hours away. He got hit up by a big regional bank, and he asked the loan officer who was trying to sell him, “Can I get the cellphone number of your president, and will he call me and talk about football for an hour?” The loan officer kind of looked at him, and our customer explained, “That’s what I have with my bank right now. I’m just curious if you offer that?”
And that’s exactly what we do. That same customer will call me and say, “Hey, can you advance on my line of credit?” Then we’ll spend an hour talking about the Kansas City Chiefs or Kansas State football, or whatever. I don’t get to see him in person, so we’re building the relationship over the phone, and I see him about twice a year. I’ve known him for a long time. But he’s way out of our market now, and we’ve kept him loyal for about 10 years.

IB: Tell us about the blank check a customer left in your overnight drop box.
Kennedy: A customer left a signed blank check in our night drop with a handwritten note with instructions on it to pay off his loan. So we did that. The loan needed to be renewed. He came in three days later and signed a new note for his revolving line.
He’s a third-generation customer at our bank, and I told him, “You know, I’ve shared your story. Of course, I didn’t use your name, but I’ve shared your story with other bankers in our industry.” He just kind of smiled and said, “As long as you guys have a door open, I will be your customer.”
This way of life and this way of banking still matters. It’s important to the customers who experience that kind banking.

IB: So personalized service is your tremendous advantage.
Kennedy: We’re not the bank that’s putting these fancy-titled products on TV and on the radio and in the newspapers. We try to customize every customer’s account for that customer. I know it sounds cliché, but that’s what we do. We have customers who don’t want their bank statement, so we send it directly to their accountant, things like that.
If a customer asks, we’re going to start with, “How can we get this done?” We don’t start with, “We can’t.” We start with, “What can we do to help this customer have their account?”

IB: So, really, First National offers the same products and services as most every other bank, but maybe in a little bit different but certainly a more personalized fashion?
Kennedy: To the best we can, yes.

IB: First National must have a casual workplace.
Kennedy: Well, I don’t wear a three-piece suit to work, I guarantee you that. I have a couple suits but I rarely wear them.
If I’m the first one here, I make the coffee. I help with getting the cash out occasionally, but I have a very good staff that takes care of that most of the time. I may be helping an elderly woman figure out what to do with her $1,200 a month in Social Security, or I may be helping an entrepreneur with a half-million-dollar loan.
I have seven people here who do the same things. So it’s not just me. A half-million-dollar loan, obviously that’s going go to our loan committee. But if any customer walks into this bank, I feel confident that any seven of us can help them, and we have a part-time teller who’s been here longer than anyone. So add her into the mix and we have a pretty stellar team, in my opinion.

IB: Sounds like great teamwork, too.
Kennedy: I’m very, very fortunate to have the team that we have and people who care as much as I do about our customers. They’re phenomenal people. They cover each other. They cover me. They take care of our customers. So they get it. They understand who we are and why we’re here.
If I did this interview and didn’t recognize the people who work here, I would be a failure. I’m really proud of who we have working here.

IB: You’ve also adopted the universal banker concept before it was any glimmer in some consultant’s eye.
Kennedy: Oh yeah, I get a chuckle out of, what do they call them, personal bankers. I mean, what’s more personal than sitting down with a 75-year-old widow who’s never handled a checkbook before and spending an hour with her? Because that happens. That’s real.

IB: What do you like about your career in Frankfort?
Kennedy: The freedom.
I say regulation is holding us back, but at the same time, I can say, “We’re going to do this,” whether it’s a donation or a loan that doesn’t look good on paper.
I’ve had to battle some credit analysts with our regulator about making loans that don’t fit the mold. And I’m willing to do that, because I believe in that person—and that person is going to see me on the street, they’re going to see me at the basketball game, the football game, and they’re going to look me in the eye every time. Because they know they’re going to make it right, and they know they’re going to succeed.
I don’t have to go to a weekly loan committee meeting 40 miles away, or by Skype or whatever, and ask somebody to do an $80,000 loan. We can make that decision in 10 minutes. That’s my favorite part of being small, independent and knowing our customers.

IB: What do you do when you’re not being a community banker?
Kennedy: I have two daughters, so my wife and I do things with them—river floats, traveling, Community Bankers Association of Kansas conventions, and other events. I am also very passionate about football, at all levels. I volunteer as an assistant coach for our high school football team. This will be my 12th year coming up. I love the sport. I love being around it. I love coaching it. I love helping kids. So that’s also what I do.