Q&A: The key to this bank is a woman
Karen R Makowski, 38, the new president and CEO of Key Bank of Vermont, is the first woman to head a major bank in the state. Such accomplishments are no longer unusual, and Makowski herself suggests that women soon will be common among senior bank managers. However, it is still a milestone. Key Bank of Vermont, formerly Bank of Vermont, was acquired from Bank of Boston late last year by KeyCorp, one of the largest bank holding companies in the US with assets of $66.8 billion and more than 1,300 offices in 23 states. Banking observers believe that KeyCorp, which historically has been a strong competitor in rural and small to medium urban markets in northern states, will be a good fit in Vermont. Before coming to Vermont, Makowski was Executive Vice President for Branch Administration for Key Bank of New York, working out of Albany. There she managed 330 branches and 3,500 retail employees. Under her direction, the bank became the largest in New York state outside of Manhattan to receive an outstanding Community Reinvestment Act (CRA) rating from both the FDIC and the state banking department in 1993. Richard Andrews interviewed Makowski for Vermont Business Magazine in her office in Burlington on her fourth day on her new job. A suitcase in one corner was a sign of her temporary shuttle between Albany and Burlington until her family moves to their new home in Shelburne. However, the hassle of moving clearly didn’t diminish her zest for the challenge before her, which surfaced frequently in a pleasant laugh.
VBM: Where do you live now?
MAKOWSKI: I live in Albany.
VBM: In the city?
MAKOWSKI: Actually, I work in the city of Albany; I live in the suburb of Schenectady.
VBM: What interests you about coming to run a bank in Vermont?
MAKOWSKI: Actually, the state of Vermont and the city of Burlington had a lot to do with that decision. The quality of life is very attractive to my family. From a business standpoint, the opportunity to do business in a state that was experiencing recovery, had some opportunity for growth and had a healthy climate for business was very attractive.
VBM: Some people in business here complain that it’s a hard place to do business, and they say we have a reputation as an anti-business place. You seem to disagree.
MAKOWSKI: (Laughs.) That’s correct. I think I’ve probably heard the same feelings that you have about resistance to growth — a resistance to particular types of growth. I think Vermont is a state where there’s very careful planning on growth, and that’s very positive. We have lots of states in our experience to compare to, and we have found the regulatory environment reasonable. The State of Vermont and the Banking Department have been very reasonable in their dealings with us.
VBM: Some bankers say the regulations in Vermont actually restrained real estate development enough to prevent bank failures during the recession — there were only two in Vermont, and there were more than a dozen in New Hampshire. Have you heard that, and do you think it is true?
MAKOWSKI: Not having lived through that, I don’t have a real opinion on it. But I’ve heard that expressed also, mostly by bankers, some in this organization and some of my compatriots at other banks.
VBM: You are the first woman CEO of a bank in the state of Vermont. Does key have any particular attitude toward women in upper management?
MAKOWSKI: I think KeyCorp is a very progressive employer, and it’s had a tradition of giving people opportunities. I’ve been very fortunate with the company. My first leap into senior management was when I was eight months pregnant with my first child — not a traditional person to be promoted. The corporation just values people, it values individuals, and it’s basically a very entrepreneurial company that allows people to rise to whatever level they want — or not.
VBM: How did you become interested in banking?
MAKOWSKI: (Laughs.) Sorry to be laughing. But banking was my second choice. I was a dual major — started off in business management, and when the college offered a second major in finance in my junior year, I decided to pursue that also. I was one of the first seven graduates with a finance degree from Canisius (College of Buffalo, NY). I originally wanted to go into sales. I thought working as a sales rep for a large company would be a great career path: it could make a lot of money, it would be a lot of fun to travel and do that sort of thing. So I applied to some great companies — Kimberly Clark, Oscar Meyer, and a lot of big companies that came to recruit on campus. All of them sent me rejection letters, which I think I still have somewhere tucked away.
MAKOWSKI: This is a true story. Many of them said, You interviewed very well, and while you have the grades and the education, you seem to be a little too reserved for sales. You’re soft spoken and shy. Which is very interesting, because, as it turned out, I ended up becoming the head of retail for Key Bank of New York, which is the biggest cheerleader’s job in the world, biggest sales job in the world — to motivate 35 hundred sales people on the branch side. So I get a chuckle out of that question, how did you end up in banking? Banking was my second choice. I tried sales, and since I had the finance, applied to banks also for management training programs.
VBM: Was your first job at Key Bank?
MAKOWSKI: My first job was with Marine Midland, in Buffalo. I started as a management trainee there in 1977, went through their program, and then I did a couple of non-traditional jobs for Marine. I worked on telemarketing for them. I worked in consumer lending in the floor plan area, back when Marine Midland was moving to a national scope on floor plan lending. It’s a very non-traditional approach to banking, but it gave me good experience in both consumer lending good commercial lending. And I went on to become a commercial lender for Marine, working in small business lending. I left Marine to go to the Bank of New York, into corporate lending, and that’s when Key acquired me.
VBM: You came as part of a deal, then.
MAKOWSKI: I was!
VBM: To an outsider, it appears banks have many women working in clerical jobs, and few in other roles, particularly management. Is there an aversion to banking among women, and if so, why?
MAKOWSKI: I don’t think there is. There are more and more women in management. Certainly when I met the regional market managers here, half were women. Our lending group is very diverse. I think it’s just process. Senior management positions generally are filled by very competent people, so they don’t turn over a lot. So it’s taken longer for women to get into the ranks. But I could name half a dozen women who have very high paying, visible bank jobs.
VBM: So my observation is a little out of date.
MAKOWSKI: I would say that’s really changing. There’s a few more of us around.
VBM: Good. To turn to something simple — what is a bank?
MAKOWSKI: It’s a place designed to meet all your financial needs.
VBM: With so many other financial intermediaries around, how do you distinguish the role of a bank from that of others, and how is it evolving?
MAKOWSKI: There are some unique features of banks that are really important. A bank is not a part of government, although we are often used as a method to enforce social policy and to help enforce regulations. For example, the responsibility of CRA (Community Reinvestment Act) lending delivered through the banks because they were a regulated entity. It has not been passed to other people who are in our business: credit unions; Fidelity, Merrill Lynch, and the other brokerage houses that have taken so much of our business; the lenders like GMAC, Ford Motor Credit, who have taken a lot of our auto business. Even home equity business is going to those captive companies now. So we are an instrument of social policy Lifeline banking is something banks have been asked to deliver. Again, you may have a car loan from GMAC, but they’re not going to provide low-balance checking to the community. And laws that have to do with money laundering in an effort to catch drug dealers come through the banks.
VBM: That doesn’t apply to other institutions?
MAKOWSKI: I do not believe that it applies to the same extent to all other institutions.
VBM: So if I want to launder money, I should do it some other way than through a bank?
MAKOWSKI: (Laughs.) I think there’s other ways you could do that. Money changers would be one. The regulation may in fact apply, but the inspection is not as thorough as with a bank that constantly has regulators in for other reasons.
VBM: I’ve read complaints that CRA puts banks into the social services business, where they don’t belong, and it puts them at an unfair competitive disadvantage with non-bank competitors, What’s your view?
MAKOWSKI: Well, I go back to the question you asked me before about what a bank is. A bank is a place to put your money and to get loans. It’s also a business that’s part of the community. People who work here live in our communities. We go to church here, we shop here. We invest here. We spend our salaries at the grocery store. We spend our volunteer time with the Girl Scouts, or at church, or with the United Way. There are other entities; that look like banks that don’t do the same thing for a community.
VBM: Does a bank have to do all of those things, or does it just happen that they do?
MAKOWSKI: I think a good bank, like a good company, just is socially responsible and does those sorts of things. KeyCorp has a strong tradition of being a good neighborhood bank, to being a good neighbor. That’s the foundation of our banking. In a lot of communities our bank manager is also the town council person or the mayor. We’re just involved. It’s our choice to support the community with charitable donations and with volunteer efforts. KeyCorp has a policy, which will be instituted in Vermont, of asking all of our officers to be involved in at least two community activities, and to take a leadership role in at least one. When people come before us for promotion, we’ll consider that. Are you out there representing the bank? Are you out adding and building in the community? Because that’s important to us. I don’t think CRA lending puts us at a disadvantage, because CRA done well is just good business for the community and for the bank. It can be misunderstood. We have an obligation not only to the community and to CRA, but also to sound, profitable banking and to our shareholders, many of whom are friends and neighbors in the community. I don’t believe that CRA lending has to cost the bank money. It should be good, sound lending, because if you’re making good, sound CRA loans, people manage to stay in their homes, there isn’t default, there aren’t losses to the bank. And while it doesn’t necessarily have to be profitable, it can be break-even. And I think the dialog that CRA generates is good for a bank, if you have a positive attitude towards it. Our communities would be much better served if credit unions and other depositories and other lenders had a CRA responsibility. Just think how much it would leverage in this community. It’s a great opportunity, but one that has so many sacred cows associated with it that it will never be done. But if everyone had the same responsibility — that if you took a deposit or made a loan, and you had to have some CRA accountability — I think communities, particularly communities with large urban centers or large rural low-income areas, would benefit.
VBM: What has been your area of community activity, and where have you exercised leadership?
MAKOWSKI: OK. I was an executive committee member of the board of directors of the Albany-Colonie Chamber of Commerce. I was on the board of the New York State Rural Housing Coalition, which was a CRA-related organization dealing with poverty and housing in rural areas. I served on the board of United Way. I served on the policy board of the Early Childhood Investment Fund, a governor’s program in New York State that leverages public and private dollars. I’ve also served with Meals on Wheels for Buffalo and Erie County, and with the Niagara County Businessmen’s Association, which we changed to the Business Person’s Association. (Laughs.)
VBM: So you’re well over the two. And you were involved in Girl Scouts as well?
MAKOWSKI: I am a Girl Scout leader — recently resigned from my troop and without a troop, but hopefully soon I’ll find another troop.
VBM: I was a scoutmaster myself once.
MAKOWSKI: That’s very rewarding work, isn’t it?
VBM: Yes. Some people have said Key Bank is the Wal-Mart of banks. (Makowski chuckles. Is that an accurate description? What is Key Bank’s approach to banking?
MAKOWSKI: Well, I don’t know if the Wal-Mart of banks is a positive or a negative, so I don’t think I’ll react to that. (Chuckles.)
VBM: I think they mean it’s ubiquitous and oriented toward ordinary people.
MAKOWSKI: Key Bank and KeyCorp are a very interesting entity. We have access to world-class products and services. There isn’t a thing you could want from a bank that I couldn’t provide for you through this institution. If you want to be in Eurodollars, if you want to be involved in foreign trade, we do a lot of foreign trade. The Pacific Rim in particular is an area of our expertise. We can facilitate any transaction — banker’s acceptances, all of the flashy things. Our strength, however, has been good, sound, basic lending. Taking local deposits, making local investments in local businesses — whether they’re small or big, but doing businesses locally, keeping decision making local.
VBM: How may Key Bank operate this bank differently than Bank of Boston did?
MAKOWSKI: I know exactly how it’s going to be different. There’s local decision making, which I’m told there wasn’t always at Bank of Boston. The lending committee here, for example, will make all lending decisions up to our legal lending limit. If a loan is bigger than our legal lending limit, we will have to participate, but we’ll participate with anther KeyCorp bank. And that decision making is all housed here, with our lenders, Steve Massicotte and Bob Danyow and others. We will be very comfortable doing loans here, multi-million dollar loans, all local decisions made right here on the third floor. That is a big difference from Boston, which had a lot more control in sign-off on things after the deals were done. The other big difference is that this entity will be managed locally as a state entity with accountability among the management team to each other for its profitability, as opposed to being accountable to a line of business managers, maybe in Boston.
VBM: What new products or services do you expect to introduce?
MAKOWSKI: There are 30 opportunities our management team has already identified for new products, new services, new lines of business, that exist somewhere in the KeyCorp world that you could import into Vermont. Our job is going to be to put all of those opportunities down on a sheet of paper and prioritize them — decide which ones fit with our marketplace, with our market position, the type of bank we are, and bring those to market. A few of them are very exciting. We’ll be introducing a home equity product in April. It’s called Key Equity Options, and I believe it’s going to be the first product in this market that will give the customer the ability to choose between a fixed rate and a variable rate loan within their home equity lines. It’s a high-end home equity product for the sophisticated borrower who says, I know better than you where interest rates are going; I want flexibility, so I can switch back and forth. It’s had great acceptance across the country, and once we’re on the Key Bank system we’ll be rolling that product out. We also hope to roll out a debit card in July, which some of the competitors do offer. We’ve found that that’s very convenient for customers, and we’re very focused on convenience. These introductions will be staggered because new lines of business require staff training in systems, and we don’t want to overload the staff here. We have trust services, including a Prism Account, which is one of KeyCorp’s premier accounts. It’s state-of-the-art 401 (k) management. Any company with 50 employees can access this product. It’s wonderful, because it gives the employees a lot of different choices on their investments. It gives the employer the ability to offer a program that’s totally managed, separately and distinct. Customers can call in and change their investment options daily, check their balances daily. Many employees now have 401 (k)s for which they get a statement only once a year.
VBM: Fifty employees is a big company in Vermont.
MAKOWSKI: It is. But there’s a lot of companies that have 50. And it’s also available to coalitions of companies. If they want to pool, they can. And there are variations of that product, affectionately known as Baby Prism, for smaller companies. We have other investment vehicles for them that are probably more cost-effective.
VBM: And there are 30 possibilities so far on the list?
MAKOWSKI: (Laughs.) Yes. We won’t be able to do them all in one year. We’ll be busy for years to come deciding some of those features.
VBM: Do you plan any more acquisitions or mergers in Vermont?
MAKOWSKI: KeyCorp has a policy of never commenting on mergers and acquisitions, but I would say that that would be a very nice opportunity for this bank to utilize our excess capital in the state of Vermont.
VBM: Most banks in Vermont are considered somewhat overbranched, but this bank has already reduced its branches, What are your plans for the branch system here?
MAKOWSKI: We do not plan on closing any branches. We would consider new markets if there’s a need for new markets and we can cost-justify them. But I do share your view that the state is pretty well banked at this point. So we’ll try and grow the existing franchise that we have.
VBM: Well, it’s not so much my view; it’s just what I’ve read bankers have said, Do you have any things we haven’t covered that you’d like to discuss?
MAKOWSKI: I’d like to share the excitement I have being here. It’s a great bank and a great franchise; people, both within the bank and in the community, have been very warm and welcoming. And it’s a neat opportunity to grow and bring some new things to the marketplace. And the reception has just been so much warmer than I expected.
MAKOWSKI: It’s a very open community, and I think that’s great.
VBM: Do you plan to get into Girl Scouts here?
MAKOWSKI: (Laughs.) Well, I have a 10-year-old who would tell you I do. KeyCorp is very family focused, and supported that effort. But it depends on my kids and whether they want me to do that. If not, there will be something else. I do think Girl Scouts is important. Any program that provides young women with role models is important.
VBM: How many children do you have?
MAKOWSKI: I have two girls — an eight-year-old named Sondra, in second grade and an almost 10-year-old, named Lauren, in fourth grade.
VBM: In Vermont Burlington’s considered a big city.
MAKOWSKI: Well, that’s good. We like Burlington. We actually looked for a house in Burlington.
VBM: Did you find a house?
MAKOWSKI: We have. In Shelburne. This area is a great community to come to, because there were so many great choices of school districts and communities.
VBM: Well, thank you very much.
MAKOWSKI: Thank you.
Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Mar 1995
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