Leading With a Sustainable Growth Mindset

Alana Muller:
Welcome to Enterprise.ing, a podcast from Enterprise Bank & Trust that's empowering business leaders one conversation at a time.

Each week, we'll hear from top business professionals about lessons on leadership and entrepreneurship that they've learned along the way. I'm your host, Alana Muller, an entrepreneurial executive leader whose primary focus is to connect, inspire and empower community. We at Enterprise Bank & Trust thank you for tuning in to another episode.

Enterprise.ing listeners, welcome back. I have a special treat for you today as we are celebrating the 100th episode of Enterprise.ing Podcast. For those of you who have been with us from the beginning, you know that we launched the podcast with Jim Lally, President and CEO of Enterprise Financial Services Corp. Jim is a passionate advocate for the company's mission to guide people to a lifetime of financial success through unmatched client attention, education and philanthropy. He's back with us today to celebrate our 100th Enterprise.ing Podcast conversation.

Jim, welcome back and thank you for being the number one fan and champion of this initiative.

Jim Lally:
I love it. Thank you, Alana. It's great to be back and hard to believe it's 100 episodes. Congratulations to you.

Alana Muller:
Well, thank you and to you. It's very exciting and the quality of the conversations has been so special, and I'm just delighted to be part of it.

Jim Lally:
I agree. And I spend my Saturday mornings typically catching up on the various episodes, so thanks for that. It makes my walks go very quickly.

Alana Muller:
I love that. Well, so to get started, tell our listeners a little bit about you and your role at Enterprise Bank & Trust.

Jim Lally:
Sure. So I've been with the company 22 years, almost 23, and I've had just about every job there is, but for the last eight or nine, I've been the President/CEO of the holding company, EFSC, and Chairman and CEO of the bank, Enterprise Bank & Trust. And really day-to-day, I look at my role being setting that drumbeat for the company and working with the executive team to establish and flex the strategy, and really hold ourselves accountable to the execution thereof. But really what gets me charged up is working with our teams, out with clients and prospects and really seeing the great work that the fabric of America is doing. Which is the small and medium-sized businesses that are out in all of our communities that are hiring the great people in our communities and investing in those communities, and what have you.

And our job is really to be great listeners and helping them achieve those great dreams that they have with our expertise and our products and our knowledge. And that's really, if I could spend 100% of my time, I would do that, but obviously, there's other things I need to take care of, but that's where I really enjoy and have the most fun in my job.

Alana Muller:
Well, Jim, I have to tell you. You are such an inspirational leader and it shows both with the way that you interact with clients, and frankly, the way that you interact with the team at Enterprise Bank, having had the privilege to interact with the bank, not only as a client, but as a member of the board, as a member of the Kansas City Advisory Board and through Enterprise.ing Podcast, I have the rare chance to see your interactions with so many different people. And I just want to thank you for your inspirational leadership, and really being the kind of leader that walks around and is part of the team. So I appreciate that.

Jim Lally:
Well, I had great mentors and I learned from the very best. And so, it's things that you pick up easily, because I was on the other side for many years, and still am really. And that interaction is so important, and it's hard to lead people if you don't know them well and you don't listen to them and really get out and understand really what's in their heart and on their minds.

Alana Muller:
I totally agree with that. Well, it's sort of in that spirit that I want to start today's conversation. And if we could, what I'd like to focus on today is the concept of a growth mindset.

Jim Lally:
Sure.

Alana Muller:
And the question really is, how do you define and adopt a growth mindset in your professional life? And really, are there times when it's easier said than done?

Jim Lally:
Great question. We spend a lot of time in our industry and in our company talking about growth. What's the right rate of growth for our company? And we've concluded that growth for growth's sake isn't for us. So it's got to be a pace of growth that provides for high-quality, consistent, predictable earnings year after year. That's what our investors expect and that's what we expect from ourselves.

Similarly, it allows us to invest, then, appropriately in the business, so we can continue supporting our clients with the best products, the best people, training, things of that nature. So it's about being able to consistently earn, in order to reinvest in the business to provide for that great experience for our associate base and our clients.

But, here's the “but” though, we preach though, it has to be done with a relationship orientation, which means that allows for a two-way win, if you will, with our client base, and what have you. And it forces us to really listen well and understand what they're trying to achieve with that business. And for some, it's simply trying to put kids through college. And for some, it's trying to establish a great legacy in their communities. And so, our job really is just to be that great listener and helping them shepherd the process by which they can achieve what they need to achieve.

Alana Muller:
Yeah, it's a special relationship. I think what you're describing requires that the bank associates really engage as partners with their clients. And that it's an advisory relationship and really more of a friendly, familial, almost type of relationship. And so, back to that notion of, is it easier said than done? Do you ever find that those concepts are at odds with one another?

Jim Lally:
I don't, because if you think about what a banker, where a banker derives enjoyment, it is the intimacy of the relationship.

Alana Muller:
Yeah.

Jim Lally:
And so, if you're not really having a high impact with that family, then it is a transactional business at the core, and that's no fun. It's interesting, Alana, that when we go out and we talk to businesses, or you're trying to group them, we group them by sales. We always ask, "How big is your company?" And the answer always is, "I'm $30 million in sales, I'm $50 million in sales." But in fact, it should be, "What's your bottom line look like?"

And same way in our industry, it's by asset size, as opposed to we should probably put a banner out there talking about our return profiles and things of that nature, because at the end of the day, that's what truly matters.

Alana Muller:
Yeah, 100%. Well, so as you think about your own career and the experiences that shaped your career and your life, and really, this belief in continuous learning and growth, what were those experiences and how did that sort of contribute to the career that you've had?

Jim Lally:
Yeah. So I'm going to take you way back. So I'm number five out of six kids. And one thing I'm so thankful for is my mom and dad had dinner every night at 5:30. So you can imagine eight of us sitting around a small round table. It was continuous learning, let me tell you that for a fact. But being five out of six, I got to see my parents really encourage my siblings to go as far as they could with education. That encouragement was in our household. I heard my dad say more than once that knowledge is power.

And so, as I became older, it was easy for me to continue my education, take it as far as I could. But I also think I have this great curiosity that my job allows me to satisfy, which is, how do people take very mundane businesses and operations and make them special? What is it about those great leaders and how they made simple businesses outstanding, and what can I then take from them and apply here at Enterprise?

An example I think about is I think about some of our best customers and how they are able to define well what we call here the “island of profit” in their business. They define it well, they're experts at something, but they're able to diversify, somehow, someway, within their business. Whether that be with different applications of that expertise, with clients all over the world, with different suppliers, things of that nature. And we too then, if you think about our strategy, our growth strategy of going west, southwest over the last six or seven years, really was about diversifying our islands of profit. We're still experts at being wonderful commercial bankers. That's what we do. But now, we've decided that not just doing it in the Midwest, but in the Southwest and the West, we've got these national businesses, we've become experts in certain verticals, and what have you. So staying core to who we are and what we do, but doing it in a much bigger way has really been, I think, one of our greatest accomplishments as a company.

Alana Muller:
Yeah, I love that. I love that you started with your parents really as the guideposts for your own mindset. Talk about the professional advisors that you've surrounded yourself with. How have they helped you grow? And is there one, or even more, best pieces of advice that you've received along the way?

Jim Lally:
Yeah, I'm very blessed to have a lot of great people in my life. And I have to start with my leadership team here at Enterprise. We all have particular expertise, but we're able to blend that expertise with a healthy dose of humility and trust and are able to really, I think, figure out just about anything that comes our way. And we've proven that time and time again. You mentioned your service on our board, our board is a great sounding board for me. And Mike DeCola, who's our Chairman, he's an incredible leader in his own right, but what he does for me is he doesn't give me the answer, but he leads me to the answer in his own special way. And these are things that you pick up along the way that now I utilize some of that skillset with my team, and what have you.

And our industry, though, our industry's a very collegial industry. I feel very comfortable picking up the phone and calling a fellow CEO. And yes, we're all in competition with each other, but we all know at the end of the day that a healthy, strong ecosystem of banking is good for everybody. So whether it be we're talking about applications of AI, or things of that nature, I have no hesitancy to pick up the phone and call a fellow CEO and humbly say, "Hey, listen, I don't have the answer for this. Can you help me with this?"

And just about every case, they'd say, "Jim, absolutely. There's people in our company you can talk to, whatever you need." So that is an unbelievable resource for us.

Alana Muller:
I love that. I think that that's interesting. People don't often talk about that, that while, yes, healthy competition is a good thing, sometimes a challenging and a frustrating thing, but I think it makes us better, not only in our own right, but it makes our economy better, makes our economy healthier, but the fact that you can also rely on those competitors, almost as a cohort of peer advisors, is really a special thing.

Jim Lally:
Absolutely. And then you asked about great pieces of advice. I'll tell you a quick anecdote. It was my very first day as CEO of this company, and we had had an emotional evening the night before where we toasted my predecessor, Peter Benoist. And the next day was, that particular day was, my very first board meeting. And the then-chair of our company, John Eulich, came in my office after the meeting and he said, "That went well. So what are you going to do now?" And his point was, "Okay, that's over. Now let's get to it." And I looked at him and I must have had this blank look on my face. So he told me, "Get a piece of paper out." So I got a piece of paper out. He goes, "Write these words down." He says, "Do what only Jim can do."

So, do what only I can do, which his point was, "You're the CEO of this company, so there's only certain things the CEO can do that others can't. So make sure you focus your time and your efforts of your day in that manner." Certainly you can go in and be part of loan committee meetings and deposit pricing committee meetings and things of that nature, but you've got wonderful teammates who can take care of all that for you, so be the CEO, do what only you can do.

And we've used that mantra now within our company, which is kind of cute, because people kind of giggle and laugh when they say it, but it sticks with them. And it also says, "Stay in your lane. We got it covered. Be an expert where you are. Be inquisitive, but don't cross that lane, because we've got it covered on our side." Which is great.

Alana Muller:
Well, you talked earlier about trust, and it sounds like not only do you believe in that, but you're living it.

Jim Lally:
You have to, yes.

Alana Muller:
Right? And also, this notion of “do the things that are your highest and best use.”

Jim Lally:
That's exactly right.

Alana Muller:
You don't have to do somebody else's job. You can do your job with trusting that your colleagues will take care of the rest, right?

Jim Lally:
That's it.

Alana Muller:
Yeah. It reminds me, years ago, I was leading a team. At that point, it was a team of executive coaches. And I remember I was very intimidated that I was not a certified coach, but I had these amazing coaches on staff and I didn't know how to lead them. And somebody looked at me and said, "Didn't you just say that you have 10 certified coaches on staff?" And I said, "Yes." And she said, "I don't think they need another certified coach. They need a leader." Right?

Jim Lally:
Yes.

Alana Muller:
And I'll never forget that, it was eye-opening for me. And I think that's what you just described. And so kudos to John for bringing that up, I can imagine that conversation happening.

Jim Lally:
Oh, it was great. I remember like it was yesterday.

Alana Muller:
And I love it.

Jim Lally:
Yeah.

Alana Muller:
Well, and just the tactical idea of getting a piece of paper and writing it down. I think that there's actually something to that.

Jim Lally:
Now today he denies he ever said it, but I give him all the credit all the time. So I said, "John, take credit for it, because it was you."

Alana Muller:
Yeah, exactly. That's exactly right. Well, so with that in mind, how do you identify opportunities for growth? We started the conversation thinking about growth mindset. How do you identify in a very tactical way, and frankly, a strategic way as well, what those opportunities are?

Jim Lally:
Yeah. So I typically think about it in a Venn diagram where they have three concentric circles and where those collide really is where we look for opportunity. And, first of all, you have to have a competitive advantage somewhere, and you have to have the ability to differentiate yourself, but also be able to scale pretty quickly. And I just look at our expansion to the West. We did some de novo, we did some with acquisitions, but we went through the premise that these were faster, more growthy markets than we had in the Midwest, so there was more opportunities to begin with. But then we had the great break where we had significant disruption and continues to happen, especially in our Arizona markets, in Southern California and Las Vegas, and what have you, now in Dallas. So you have this disruption that's occurring at the same time.

And so, we feel that this platform we've built, we're just looking for talented, problem-solving, relationship-oriented bankers in these markets to then be able to find those great clients in those markets who are willing to jump onto our platform, who want to be coached, who want to have relationships, and things of that nature. And it's working extremely well. And what's nice about it is that what we ask of our teams is just go find the very best where there is fit. Where there is fit, that's the key. Because not every company wants that interactive relationship, so let's not force the shot. They're probably great people and what have you, but if they don't want to have that great two-way relationship with their banker, then it's not going to be a great fit for us, okay?

Alana Muller:
Yeah.

Jim Lally:
So, we spend a lot of time with our teams, coaching them on that, reinforcing it. But it does start with the fact that we feel as if we've got a slightly better mousetrap in these wonderfully growing markets, and I think the sky's the limit for us out there, for sure.

Alana Muller:
Well, you've talked about a drumbeat of growth. It doesn't have to be exponential, it doesn't have to be some seismic shift, but it's kind of this drumbeat of growth. And one of the things that I've observed with Enterprise Bank & Trust is that sometimes it's, whether it's acquisition or sort of brand new growth, it's sometimes in the markets, or in the types of instruments that we're already offering. And then sometimes there is an expansion of products, or markets, or type of relationship. What's the secret sauce there? Is there some magic, or how do you do the litmus test to decide what makes sense from a growth perspective?

Jim Lally:
Yeah. So, I think you look at our national deposit verticals, as an example, where they were developed by a company that we purchased, but their constraint had to do with the size of the balance sheet that they were on. You take those great people that we acquired, they're all still on our platform, by the way. No one's left. And you put them in a company that says, "Okay, we're going to support you with more resources, better technology, and let me tell you how important you are to our overall growth." So now, it goes back to what I learned when I spent the summer out at University of Virginia, at Darden, where we learned about the “Three I's of Leadership.” We did the invitation to the strategy. We included them as it relates to, “this is how we think you can play on our platform, but what do you think?” And then the inspiration, which is, “we won together.” So now that just compounds. And so, we bought a business that had about a billion dollars in deposits in 2020, and today is at three billion.

So what did we do? We took a really fine, great business with wonderful people. We didn't change anything other than give them a little bit wider room to run, great encouragement and wonderful reward. That team, in particular, knows exactly how they fit into our overall company. And we publish our strategy statement so everybody can see it. And my ask of them is, find where you fit in that strategy statement. See yourself in that statement. And once they do that, it all crystallizes for them. They understand sometimes we ask them to work a little bit past 5:00. Sometimes they have to come in a little bit early. Sometimes they're out of town, but they understand that and appreciate where they fit within the overall strategy of the company. And that comes directly from that invitation and inclusion piece of the three I's.

Alana Muller:
So nice, so nice. Well, so you make it sound so beautiful and easy, and I know it's not. I know that it takes hard work and grit and determination. Talk a little bit about a time when you, and maybe the organization, overcame a challenge. And tell us about how you took that challenge and made it into a valuable learning opportunity.

Jim Lally:
Yeah, I come back to this often. So the spring of 2023 for most just meant another spring. Spring break and baseball starting, and what have you. But for the banking industry, it was scary. You thought about in the course of a day or two, we saw banks failing, and all of a sudden there was this liquidity crisis that occurred in our industry. And I remember clearly that Sunday afternoon, we as the leadership team, and it all of a sudden it evolved into several hundred people, working, dropping everything. And mind you, this was on no one's schedule for that Sunday, but just by a phone call and text and email, we were able to get 250, 300 people working towards what we didn't know was going to happen the next day.

So, we had to have a premise of what might happen the next day, and so we had the marketing team working on something, the commercial team working on something, certainly finance and operations working on something, having multiple calls that night. And when we all put our heads on the pillow, we had great confidence that we had done all we could do to make sure tomorrow was going to be successful for us.

The very first thing we had to do though is call clients. So we got on the phone and we made, I don't know, close to 5,000 dials that first day, and just called our clients. And what was so amazing and humbling to us is how much faith our clients had in us, in our strength, in our ability. They knew we ran a very conservative operation. They knew we had a rock solid balance sheet, and things of that nature. So that encouragement said, "Okay, it's not quite checked the box, but boy, our clients are behind us, so let's keep going."

And we worked really, really hard, but about day three, we had had several board meetings, but day three, I got our leadership team together and said, "Guys, let's go on offense. We don't look good playing defense. Let's go on offense." So we went on offense and we assured our clients, who then assured their friends, and we were out calling and saying, "We've got plenty of liquidity. We've got plenty of capital. You guys didn't cause this. We're behind you 100%." And 2023 ended up being the best growth year of our company's history. A billion dollars in loans and a billion dollars in deposits during a year where there was a financial crisis, a liquidity crisis.

And that was off the heels of COVID, and things of that nature. So we look at each other and say, "Well, we hope nothing's next. We don't want that to come, but we're very confident that whatever comes our way, good or bad, we've got the ability to take full advantage of whatever that is."

Alana Muller:
That's great. It's great. And what I really admire and appreciate is how the team rallied and jumped in. And despite not really knowing what to do, not really knowing what the outcome would be, showed up. And I think that half the battle is showing up and they did.

Jim Lally:
Yeah. I can only imagine how many spring breaks, and Sunday dinners, and things of that nature, were thrown out the window. And really, they didn't know either. No one knew the severity of it until we got on that first call and said, "Let me tell you what's going on." And then they were like, "Oh, now I get it." And not only — this sounds a little bit naive, but I think they were excited to be part of this. They were really excited to be part of this thing that we were doing together with not knowing what tomorrow would bring, created a great deal of, I think, positive excitement.

Alana Muller:
Well, I have to tell you, as the beneficiary of one of those phone calls, a recipient of one of those phone calls, Jeff Carson called me from the Kansas City market. And I have to tell you, I was traveling that day and getting that call was reassuring. And it did sort of give you the sense that, "You know what, everything is going to be okay. And yeah, we don't really know what's coming, but it's going to be okay, because we've got a team that is rallying together to do this." So, bravo. So with that, kind of on the heels of that, let's talk a little bit more generally. I want to think about what practices you've put in place in the bank to encourage a growth mindset across the company and across the associates. So, I'm not even sure where we are now in terms of numbers of associates, but there's obviously sort of this culture of a growth mindset, because we keep seeing the way that the organization is growing, is continuing to amplify its vision and its work. How do you make that happen?

Jim Lally:
Yeah, I think… I spent this morning up at UM-St. Louis with a finance class. And one of the questions that they had for me is, "Can you describe the culture of your company?" And I describe it this way: it's a culture of winning, but it's winning the right way. It's winning in a relationship orientation. It's winning where others' achievements are better than your own, greater than your own. And with that mindset, and the way we go to market, people understand what is the right pace, what is the right way to grow.

The other thing, too, is the way we think about planning. Planning is bottoms up for us. It's our leadership in the markets come to us saying, "Based upon the questions you've asked, Jim, based upon the economic indicators, and what have you, here's what we think we can do." And mind you, the people who run our markets tend to be much more optimistic than I am. So, we often have to talk them back a little bit, but so, we're taking it right from the horse's mouth. We're not giving them what we think. And the other thing I think is special is this, is that the large majority of our associates in our company, the first thing that's on their incentive grid, if you will, is earnings per share. So immediately we're aligned with respect to if we all do these other little things well, at the end of the day, we're going to achieve together earnings per share.

The other thing, too, is it's about, then we also publish internally what is our compounding growth of our tangible book value per share, because that's the real value of the business over time. We're quite proud of the fact that over 10 years, we've got 10%, or slightly greater than 10%, of that growth over that 10-year period on a CAGR basis.

So point being is that we're aligned financially. We're aligned from the standpoint of what our strategy is. And we're aligned in terms of what does success look like, and that success of winning isn't just an internal vision, it's also an external vision.

Alana Muller:
That makes sense. And I know that you measure yourself by those same metrics, the same metrics that you're asking the team to measure themselves against. At this point, how do you continue to challenge yourself to grow? So, certainly you're adhering to those metrics, but is there anything more intrinsic, or extrinsic, that you're utilizing to continue to motivate yourself?

Jim Lally:
I wake up every day and there's certain things I do, from a personal perspective, to get ready for the day, but then quickly I focus on our 1,300 associates and their families. And that's my fuel, knowing that my responsibility as a leader of this company is to make sure that they have an unbelievable opportunity to earn well, to take care of their families, to have a positive experience, not to miss life-changing moments, things of that nature, because that's the experience that I've had here, and that's the experience I want to make sure that they have going forward.

And there's the other thing, too, I do it because I know they have my back, as well. Right?

Alana Muller:
Really nice.

Jim Lally:
It's a two-way street. It's a two-way street, for sure.

The other thing, too, is I know the metrics show, the data shows, that we have one of the best banks in the country. From an earnings perspective, from our client experience scores, from our associate survey scores. But I think we all know this, there's a lot more we can do. And everybody, we don't have a number out there. We don't say, "This is the goal." Because once you set that goal, it's kind of over at that point. So it's a perpetual goal out there that we said, "This could be better." And that's: be better than the other guys. And so if we can continue performing that top-quartile area, and what have you, sky's the limit for this company. If we want to acquire, we can. If we want to grow organically, we can. So if we want to keep investing in ourselves, we will.

And those are the things that I think drive all of us every day, but in particular me, because when my grandkids come along and they say, "Well, what kind of a guy was he?" I don't want it to be in a boardroom or on a building. I want to make sure that people say, "You know what? I was able to educate my kids, go on a couple of vacations a year, and things of that nature." And that's the kind of company, that's the type of lifestyle I want my associates to have.

Alana Muller:
I just think that's really beautiful. I love that. Well, Jim, you know, since you are our number one listener, that I always ask our guests if they could meet one person living, not living, fictional or nonfictional, who would it be and why? And I remember on episode number one, I asked you that question. Do you remember what your answer was then?

Jim Lally:
I said the Senate.

Alana Muller:
I think, actually, you got even more specific. You said Abraham Lincoln.

Jim Lally:
Oh.

Alana Muller:
If I'm not mistaken.

Jim Lally:
Yeah.

Alana Muller:
You may have gone back to the Senate. I'm going to give you one more cup of coffee. Who would you meet now? Is there somebody new that you would meet?

Jim Lally:
Well, I'm going to tell you something. I'm going to go back to what we talked about earlier in my family, and we don't miss an opportunity to get together. My dad's 95, my mom’s — shouldn't say her age — but almost 90. I learned so much from them and my siblings that… and I have them all, by the way. They're all still with us.

Alana Muller:
Amazing.

Jim Lally:
And to take the opportunity to continue to have that cup of coffee, meal, whatever it may be, a cold beer, I take that every time I can.

Alana Muller:
Beautiful.

Jim Lally:
And I would continue to do that, because I go back to those days around the kitchen table that we talked about before. I learned so much then and I know I can learn so much going forward from them still. So I'll stick with them for sure.

Alana Muller:
Really beautiful. I love that answer. I love that. Well, Jim Lally, President and CEO of Enterprise Financial Services Corp, thank you for being the number one champion of Enterprise.ing Podcast.

And listeners, as we celebrate the occasion of our 100th episode, I also want to express my deep gratitude to the Enterprise Bank team that helps to make this podcast possible, especially our Producer, Gabrielle Costales, who has been unwavering in terms of her partnership on this journey. Thank you all for being part of the Enterprise.ing Podcast community.

And Jim, where can someone go to learn more about you and about Enterprise Bank & Trust?

Jim Lally:
Yeah, just go to our website, www.enterprisebank.com.

Alana Muller:
Wonderful. Jim Lally, thanks so much for being part of Enterprise.ing Podcast.

Jim Lally:
Take care now.

Alana Muller:
Thanks for joining us this week on Enterprise.ing. Be sure to visit our website, enterprisebank.com/podcast to subscribe, so you'll never miss an episode. If you found value in today's program, please consider leaving a review on Apple Podcasts or telling a friend about us.

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