Investing in the Family

Anthony Contrucci is a proud 5th Generation member of the Schrage Family. He serves in many roles within his broader family enterprise including his role as President and Board of Director of First Bancshares, Inc. (FBS) a bank holding company located in Merrillville, Indiana. FBS’s primary operating asset is Centier Bank. Founded in 1895, the Schrage family has owned and operated the financial institution for 126 years. From humble beginnings, today they are the largest private, family-owned bank in the State of Indiana with approx. $5.8 billion in total assets, over 60 branches, and in excess of 900 associates.

As his career has evolved, he has developed a true passion for governance and operations. One of his current focuses is the codification and institutionalization of the key elements that differentiate his family’s enterprise. At its core, this speaks to their desire to remain a purpose driven enterprise focused on the preservation of their servant heart culture for generations to come. This spans the continuum of the impact that they have on their associates, their clients, and the communities that they serve overlayed by a holistic approach which incorporates environmental, social, and governance considerations.

In addition, his passion for governance and operations has evolved beyond that of traditional corporate. For the better part of the last decade, he has led their family’s formalized family governance efforts. As they continue the transition from the 4th to the 5th generation, it was paramount to Anthony, and his generation, that they build the requisite operational and governance structures to ensure success in succession not just for their generation but for generations to come. With the collective support of the 4th and 5th generations, He has allocated a considerable amount of my time establishing their family office and formalized governance structure and framework.

Although he feels blessed to be able to serve his family and family enterprise in a variety of roles, the role he is most proud of is that of a devoted husband and loving father. He is married to his best friend and soulmate, Melissa Contrucci (nee Schrage) and has been blessed with two loving children.

Standout Quotes:

• "I really believe our success as a family kind of exists at the crossroad of this desire to be civically involved" - [Anthony]
• "That formula of putting people before profit is how you build long term sustainable value that transcends generations" - [Anthony]
• "In order to be successful in succession, you have to be intentional and you have to be strategic" - [Anthony]
• "If you think about the destination, you'll never start the journey" - [Anthony]
• "If you're trying to solve a problem that you can solve during your lifetime, you're thinking too small" - [Anthony]
• "Success requires action" - [Anthony]
• "You can't appreciate something if you don't know how hard it was to have or you didn't have to work for it" - [Anthony]
• "During times of dislocation, there's always opportunity" - [Anthony]
• "The most important investment I've ever made is my time in my children" - [Anthony]
• "Never try to replace your net worth for your self-worth" - [Anthony]

Key Takeaways:

• Anthony is a 5th generation member of the Schrage family currently serving in the role of President and Board Director of First Bank Shares, a bank holding company with a primary operating asset "Centier Bank" which was founded in 1895. They are now the largest private family-owned bank in the state of Indiana.
• The Schrage family came over from Germany into the US in the 1800s, and over time the family has always been passionate about the community. This alongside the risk tolerance accounted for the success of the family because being involved with the community helped identify needs and create solutions. The name "Centier" Bank was coined intentionally to represent a century of service, the founding of the bank on Center Street, and that the bank strives to be the premier provider of financial services for the communities. The headquarter is in Merriville Indiana.
• Despite the pandemic, banking is a good business to be in right now. Data from the bank shows that Centier Bank tends to outperform during times of market dislocation or pain. Clients are put even before the shareholders in the business, and this is how long-term sustainable value is built over generations. 2020 has been the best year financially in the history of the bank.
• This success was achieved by consciously and emphatically considering the safety of clients and workers physically while also keeping them confident about their finances. They set out to help communities through different programs, mortgages, credits, and low-interest loans.
• Anthony met his wife and her family at the age of 20 and she was his best friend before becoming his wife. Anthony had no intention of working in the family business but wanted to chart his course in life. He had always been in the financial sector, including commercial banking and investment. Later he started with wealth management in the family business, and then the investment services division. After a while strategic intentional steps were taken to ensure an impact in the community. Currently, Anthony spends time in the financial holding company level, family governance, and the family office.
• Although the family has grown since the first generation, there are 27 family members and 16 shareholders. There is a family assembly every year, and also a family governance structure.
• The goal of the family assembly is both business and to bring the family members closer together. One of the main reasons for starting the family assembly was communication flow. Success and succession in a family business is literally the equivalent of fighting gravity; only about a third of family businesses make it from generation to generation.
• As a broader family, the family meets monthly with specific agendas and occasionally invites subject matter experts. There is also a family business consultant and a family psychologist as well as other subcommittees. There are G5 monthly check-ins with no formal agenda.
• About the Family Portal: While trying to organize family documents that have piled up over many years and made work inefficient, Anthony came up with the idea of the Family Portal. This has been a great tool for increasing efficiency and improving workflow.
• When it comes to starting Family Governance, "you've got to go slow to go fast". Even it is a small start, it's about building the behavior; for Anthony's family, the starting point was about Mission, Vision, and Values. This is where to start to build a foundation with simple things like a code of conduct or attendance policy. It gives some wins and then these goals can be dialed up to more complicated plans.
• The Emergency Transition Planning (ETP): This refers to very detailed planning done such that in the event of the demise of a leader, things can be set in motion to instill confidence in multiple audiences across multiple mediums. It's a succession plan on steroids.
• The family psychologist has been very valuable especially in helping family members communicate effectively. This also includes constructive conflict, which is the most important thing in communication and trust-building. Additionally, having a facilitator around when the family constitution was created was very helpful. However, the values or by-products of this exercise are less important than the journey. Families are encouraged to start this process and take their time.
• After attending a family business conference where he was introduced to the concept of a Family Book, Anthony applied it in documenting the family history to ensure that future generations would understand how hard the journey was. While collating different materials to create the family book, an enormous collection was accumulated and Anthony had the idea to get a corporate historian to manage the collection. This brought the next idea to have a "Centier Museum" for these family artifacts.
• Using the idea of cohesion dynamics which include the family aspect, as well as the business, financial and emotional aspects, Anthony understood that it was paramount to use the family history to keep family members emotionally tethered to the family business. This determines the filter they would use in making decisions regarding the family business because rather than simply thinking like investors, they would think like stewards if they felt emotionally tethered to the family enterprise.
• The 6th generation is currently between the ages of 8-18years. For a long time, the family legacy was the bank, but now there's so much more opportunity for the G6 to get involved with the family enterprise and create an impact.
• Advice for someone looking to lay the foundation for a Family Enterprise: Slow down; "you have to be patient and focus". The other thing is to save; "live below your means and always have reserves because having that additional financial capacity allows you to be opportunistic".
  
• There has had to be a shift from being a family that operates a business to a family that has an enterprise. "We had the belief for so long that the legacy was the bank but now I believe that the legacy is the culture that fuels the enterprise" Thinking about it this way gives the motivation to lean into Family Governance and Family Office. It also shifts the mindset from being competitive to being more collaborative. All of this takes curiosity, communication, working through conflict, and never being afraid to fail, knowing that growth comes from failure.
• Anthony's letter to his kids: Happiness comes from the important things in life; love, health, the time spent, and experiences created with loved ones. True fulfillment comes from finding something you're extremely passionate about, that is meaningful but extremely hard; if you don't grind, demonstrate grit, fail, and pick yourself up, you will never find fulfillment and self-actualize. If you always lean into what's important in life and push yourself, you'll find that fulfillment.

Episode Timeline:

• [00:50] Introducing today's guest, Anthony R Contrucci.
• [02:05] The history of Anthony's family business.
• [08:20] How is the banking industry right now?
• [12:16] Anthony's entrance into the family and the family business.
• [17:40] The structure of the family enterprise.
• [29:28] How has your governance structure taken shape since its implementation?
• [37:55] Where did you start in terms of Family Governance?
• [41:34] The Emergency Transition Planning (ETP).
• [45:00] Discussing the role of the family psychologist.
• [48:30] How did the family constitution come to be?
• [51:14] About the Family structures put in place to guard the family history.
• [57:54] With regards to the 6th generation, how do you look to the future of the family enterprise?
• [01:00:21] What advice would you give to someone looking to lay the early foundation of a Family Enterprise?
• [01:05:08] Is there a new habit you've adopted that was meaningful to your journey?
• [01:09:16] Anthony's letter to his kids.

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Special Guest: Anthony R Contrucci.

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Links:

• Centier Bank - A Family-Owned Indiana Bank Since 1895. — Michael E. Schrage, CEO and Chairman of Centier Bank
• How Centier Bank celebrated its 125th anniversary