Joe Henderson is community bank president for Commerce Bank in Peoria and is the chief lending officer for the bank's Illinois operations, responsible for all credit and lending decisions in the state.
Born and raised in Urbana, Henderson received a bachelor of science degree in finance from the University of Illinois at Champaign, and an MBA from Southern Illinois University at Edwardsville. He is also a graduate of the American Bankers Association National Commercial Lending School.

In 1979, Henderson joined Commerce Bank as a commercial lender in St. Louis. By 1990, he had worked his way up to senior vice president and leader of the bank's Illinois commercial lending division. He was named vice president–Regional Administration for Commerce Bancshares in 1993.

Henderson relocated to the Peoria area in 1995 to head the bank's growing operations here–as well as to fulfill an interest in returning to central Illinois. Since that time, he has become active in local community affairs, serving as chairman of the Heartland Community Development Corp.; vice chairman of the Economic Development Council of Peoria and the Lakeview Museum of Arts and Sciences; and a member of the Riverfront Business District Commission's board.

He has also served on the boards for the W.D. Boyce Council of Boy Scouts of America, the Peoria Area Chamber of Commerce, Tri County Urban League, and The Nature Conservancy.

He and his wife, Barbara–also a native of Urbana–have been married for 22 years. She is operations manager for Coldwell Banker Commercial Devonshire Reality in Peoria.

Tell us about your background. What led you to study finance in college?

Both my father and my grandfather were independent business owners, and my mother was a bank teller for years. So growing up, I always assumed that I'd be involved in business someday. While studying at the U of I, I started to gravitate toward the securities industry, which led me to study finance. When I graduated in 1976, the securities firms were only hiring people with extensive sales experience. While on job interviews in St. Louis, a broker suggested I consider banking as a great place to gain the experience I'd need.

So, I took a job in Belleville as a consumer lender for one of the predecessors of Union Planters Bank, and began work on my MBA at Southern Illinois University.

By the time I finished my MBA, I was no longer thinking about the securities business; banking had become my only focus. In 1979, someone I knew from Commerce asked if I had any interest in commercial lending, and the rest is history.

Working as a commercial lender, I managed many small business customers over the years. I also spent a number of years managing our downtown St. Louis branch, where I learned about the retail side of the business, and about the private banking needs of the professionals who worked nearby. Shortly after that, I was in charge of our business development efforts in Illinois, calling on businesses in central Illinois long before we established a physical presence there.

How has the industry changed since you went to school?

Today's banks are very different places than they were 20 or 25 years ago. Back then, bankers were people who sat behind desks, waiting for customers to come in and discuss their business. A banker who operates that way today won't be a banker for long. For a whole host of reasons, the banking industry today is much more customer-friendly than ever before.

First, the competition for customers is much greater, from various kinds of financial institutions. That, probably as much as anything, has really pushed banks to change their customer philosophies and expand their product and service offerings to address customers' many wants and needs. Banks have also developed into much stronger sales organizations over the past decade.

Second, consumer interest in the Internet and new technologies continues to create all sorts of opportunities and options, both for banks and their customers.

For us, the ready accessibility of information is helping greatly to speed our decision-making process. Commerce now has desktop underwriting technology, for example, that enables us to approve mortgage loans in a fraction of the time it used to take–sometimes over a customer's lunch hour. Internet banking makes it possible for customers to conduct transactions and do business when it is most convenient for them.

Most of the changes in our industry, I believe, have created win-win situations for both banks and their customers. Commerce, for one, has enjoyed substantial growth over the past decade, thanks largely to our expansion of services focused on customer needs.

You have primarily been involved in the credit and lending areas of Commerce. What is involved in a bank's decision to extend credit to a business?

At Commerce Bank, one of our primary objectives has been to help businesses–particularly small, family-owned companies–attain their goals, whatever they might be. Over the years, I've had the pleasure of helping many families grow their business, sometimes to the point where they are ready to sell them to larger entities and then start over with something else.

How do we decide whether or not to extend credit to an organization? We are in the business of assessing risk. And we make those assessments by first building relationships. In making credit decisions, we try very hard to understand an organization's local management team, particularly their management style and capabilities. We base a lot of our decisions on the abilities of the management team and their history over the past four or five years, because we believe that's indicative of how they'll manage in the future.

If it's a new business, the criteria aren't really that different. We look carefully at the business owner's experience, either at managing or being associated with a similar type of business. For someone just starting out, we look at the team of individuals they've assembled to work with: their CPA, their attorney, and their insurance executive. It's important to see that they've created a network of professionals who are capable of guiding them toward making good decisions.

Then there are the more tangible criteria. Through our financial evaluation process, we try to determine a company's ability to repay its loan. If a company has demonstrated that it can generate profits, and that it can grow profitably by completing an expansion or entering a new venture, then we're likely to make the loan.

If, on the other hand, a company hasn't yet demonstrated an ability to turn a profit, then we often encourage them to seek a different source of funding, such as the Small Business Administration or the Economic Development Council's Revolving Loan Program. These organization's programs are usually better suited for these types of ventures.

Explain the history of Commerce Bank, both nationally and locally.

Commerce Bank's history dates to 1865, when a man who later became mayor of Kansas City founded The Kansas City Savings Association. The bank's name changed a few years later to reflect the bank's growing involvement with commerce.

Through the years, Commerce expanded throughout Missouri and Kansas communities, entering the St. Louis market in 1969. David Kemper, the bank's chairman and CEO, works from the major banking center Commerce established there.
Commerce entered the Peoria market in 1992 when we purchased The First National Bank of Peoria. Then we expanded our Illinois business in 1995 with our acquisition of the Peoples Bank of Bloomington.

Today, Commerce has assets of $11 billion and operates more than 330 banking locations in Illinois, Missouri, and Kansas. Ten of those locations are here in central Illinois–including the very branch in Roanoke where my mother worked as a teller many years ago.

Has the focus of Commerce Bank changed through the years? How so?

From my perspective, the bank's focus has expanded over time. We're now providing our services to a larger customer base through a wider range of channels than ever before. To accomplish that, our organization has increased its focus on the retail side of our business. By that I mean things like our credit card and consumer loan businesses, as opposed to wholesale services like business loans. In recent years, we've developed more products aimed at a larger number of people.

We've also expanded our efforts on money management. That means helping our customers address their long-term money issues by offering financial planning services and providing mutual funds, securities, and other products that help them accomplish their financial goals.

We're also finding ways to make it easier for consumers to do business with us by offering products such as Home Banking (our Internet banking product) and our 24-hour Account Information Line. You might say these changes are all indicative of the changes in the industry. But I think Commerce saw this coming and began addressing these issues early on. We've been successful at developing top-notch products that are very competitive in the marketplace.

You came to Peoria after Commerce purchased First National Bank. How difficult was the transition? Internally, from an operations standpoint, and externally, from the acceptance of the community?

A change in bank ownership is obviously a lot more than just changing the name on the door. You need employee buy-in of your ideas, and they need to believe in the improvements you bring to the bank's operation.

With that said, I'd have to say that, from an internal standpoint, the Peoria bank acquisition didn't go as well as we would have liked. This was one of the first large acquisitions we had done, and there were things about the transition process that we learned the hard way.

For example, we should have established internal transition teams to guide each of the bank's departments through the process. If we were to do it today, we wouldn't complete the acquisition without having a team of employees in place that stays together even after the transition to make sure all the internal issues are resolved.

Fortunately, we think the transition went much better on the external side of our business. There was already a very talented account relationship team at the bank–which remained largely intact, with one addition from Commerce. We worked hard to communicate that we wouldn't be making big changes at the bank; I think that helped our acceptance in the community.

When Commerce makes an acquisition, our intention is not to go in and replace the existing management team. We believe a lot of what we're buying are the management skills already in place. Our goal is to let our bankers do what they do best–under the framework of the Commerce organization.

We also worked hard from day one to take a visible role in the community, which I believe helped us considerably.

The local Commerce Bank promotes civic involvement. Is that as important to the national corporation as it is to central Illinois?

Civic involvement is a significant priority for Commerce Bank at all levels of the organization. An important part of building a relationship with a community is to have employees who are involved. A perfect example is our employee volunteer group that manages our United Way campaign. In addition, our employee involvement has worked to maintain our internal morale. I couldn't be more proud of the efforts of our Community Service Committee. We encourage everyone throughout the organization to be active, whether it's in Little League, church groups, or not-for-profit agencies. That's one important way we learn what our customers want and need.

On a corporate level, Commerce Bank is one of the most civic-minded organizations in the Midwest. The bank has two charitable foundations affiliated with it–the Commerce Bancshares Foundation and the William T. Kemper Foundation–both of which contribute hundreds of thousands of dollars each year to the arts and human service organizations in communities served by the bank.

Locally, for example, the bank and its foundations have been major supporters of Bradley University, the Gateway Building on the Riverfront and the United Way. In addition, we contribute to Christmas in April and various arts organizations. And like it does in each of its markets, the bank also sponsors Community Service awards to honor and reward the unsung heroes of service in our local communities.

Commerce now has on-line banking. How do you see this changing the banking industry? How fast are customers adapting to the change?

On-line banking gives people another option–a convenient way to check their account balances, or pay their bills or whatever service they are seeking. It gives them access to the information they need when they need it.

At Commerce, customer acceptance of on-line banking services continues to be exceptional. Currently, 7.5 percent of our household base are active on-line customers. That puts us well in the top tier of banks across the country. And we're really still just scratching the surface.

As time goes on, I think small businesses in particular may garner some of the greatest benefits from this technology. That's because, thanks to technology, even very small businesses are able to have lockbox, cash management, and other services previously only available to large companies. Commerce Bank is establishing a virtual small business community on its Web site. Businesses will be able to create their own customized home page and have access to other small business resources.

It's all very exciting. While technology now allows banks to offer wide-ranging services and products to consumers and businesses, I believe it will never replace one-to-one banking relationships. Technology has driven the creation of virtual banks, which offer banking services and products throughout the nation via modem and the Internet. And although these organizations have whittled out a niche, people benefit most from a banking relationship built on trust, an understanding of your unique needs and the ability to deliver quality financial services on a consistent and cost-effective basis.

There have been reports of people seeking a small, hometown bank so they can have more personal service. How is Commerce addressing this issue?

At Commerce, we operate with a "supercommunity" banking philosophy. That means people who bank with us can expect the kind of personal service they'd expect from a so-called "hometown" bank. We work hard to know and develop relationships with our customers, and–contrary to what some people believe–we make decisions locally. Since the acquisition in 1992, there have only been two people added to the team from outside the Illinois market, myself and a seasoned commercial lender.

We then go an extra step, by providing our customers the breadth and depth of services and technologies that you can only get from larger regional banks. In short, we think we offer the best of both worlds.

Personal investment services are growing in the banking industry. How has client demand impacted the growth of Commerce Brokerage Services?

Over the past five years, our brokerage services and investment management group have been among the fastest growing areas of the bank. As proof, The American Banker magazine recently ranked Commerce Bank 29th in mutual fund and annuity sales among the top 100 banks in the U.S.

I see this trend continuing. The booming economy, the Internet and other factors have raised peoples' awareness on investment issues. With people living longer, many are recognizing they must plan their finances if they expect to have the resources needed for their children's education, their retirement and other special needs.

It's these individuals who are driving demand for banks to provide competitive investment products and services. They've kept their savings here, so it's a logical extension for them to look to us to help them manage their investment portfolios. They like the ability we give them to transfer funds quickly and easily. And they like working with someone they know and trust. We like that too.

You are involved with the Economic Development Council of Peoria and the Riverfront Business District Commission, among others. From a business/finance perspective, what is needed for a thriving riverfront development and a thriving local economy? How is city government and public opinion thwarting development efforts? And what are your predictions on continued economic growth in the next 10 years?

At heart, this question is really about what we need to do to improve our region and attract companies to locate here–which is what we need to ensure continued economic growth.

The tough answer is that we must have better schools to develop a pool of well-trained potential employees; an effective government that will help promote business and business expansion; and other quality-of-life factors like a extraordinary symphony and museum, an attractive riverfront, and more. If we can accomplish all that, the new companies and the economic growth will follow.

To accomplish all that, however, is a tall order. And it means we're going to need to do a better job of long-range planning than we do today. Specifically, I think we need to undertake a three-pronged effort. First, we need to provide a vision of how we intend to grow the city in the future. Second, we need to address how we can provide governmental services at a reasonable cost. Third, we need to specifically address issues surrounding education and housing; those have got to be in place if we intend to attract people to live in the city itself. We need more people in the city limits if we expect more businesses to locate within the city limits.

The problem is, our city council has been less than effective because of its tendency to micromanage the process and its inability to reach a consensus on how to improve our government.

As a member of the Chamber of the Commerce, I was one of many people who worked hard on education and other issues and, unfortunately, the city council didn't seem to want any input. They don't appear interested in long-term issues, such as what the city could do to attract new homeowners to the city. But they should be interested because too many of the single-family homes in the city are rental properties. Research shows that the higher the percentage of homeowners, the higher the graduation rates in local school districts.

As a solution, we need a council that will focus on a vision for the future and work together to promote that vision. We need a council that takes responsibility for the welfare of the community by being efficient and effective in making decisions that help grow our tax base and get people back into the city. Additionally, we need to benchmark our educational system against other school districts in the state and around the country and learn what we're doing well and where we can improve.

If we do all this, we'll go a long way toward keeping our local economy strong. The opportunity to improve is out there; we need to have strong local leadership to move the community forward. IBI