The 2009 Business Person of the Year is presented in association with the Institute of Chartered Accountants of Alberta and Robert Half Finance & Accounting. Larry Pollock wears a Baume & Mercier timepiece supplied by Gemoro Goldsmith, official timekeeper for Alberta’s Business Person of the Year.]
Don’t argue with Larry Pollock about global warming. Not unless you’re truly prepared to stand your ground. Halfway through our interview, in his downtown Edmonton office, 30 floors up in the Canadian Western Bank building, I realize I’ve touched a nerve. It’s not that he’s saying the climate isn’t changing. It’s the cause he’d contest, particularly if you believe that cause to be us.
“They can go back millions of years and prove that the Earth warms and cools,” says Pollock, calmly, in the same voice he’s used up until this point to describe his past 20 years as president and CEO of Canadian Western Bank Group. “Shit, this used to be the tropics at one time – that’s why we’ve got all the oil,” he adds. “Is CO2 bad? You need CO2.” “To an extent,” I say. “You could get me going on that one,” he warns. It seems better to let it go. One reason: it’s clear to me Pollock isn’t convinced Alberta could achieve what he sees as much needed diversification through, say, a greener economy. Another: it occurs to me I’m seeing a side of the unnervingly brawny 62-year-old I’m not prepared to take on in a one-on-one meeting, even if it is considerably subdued compared to how he might have expressed it 40-odd years ago. Back then, Pollock was an up-and-comer in industrial financing, and the kind of guy who never shied away from heading out to a job site to deprive a surly foreman of his bulldozer due to lack of payment. Whatever frustrations that might have left, Pollock got them worked out on the hockey rink, playing semi-pro as a defenceman. A self-described “grinder,” Pollock was the reason to avoid getting caught in the corners, if you wanted to keep your teeth. So we move on. But by then I’ve learned the Pollock of the past isn’t, fundamentally speaking, far removed from the one that led Canadian Western Bank to its 85th consecutive profitable quarter this summer, a record unmatched by any of Canada’s big six banks. If anything he’s just spit-polished those lessons of youth. Cart enough heavy equipment off to auction to recoup losses and it teaches you the value of due diligence before money changes hands more than it helps refine the art of repossession. In other words, you learn that a good defence is always the best offence. And if you’re winning, why change up the plays and risk getting out of position? The game, like the economy, can always turn. Though he’s been criticized by analysts for his conservative approach to a business built on the slim margins of commercial lending, he’s not about to be forced to relinquish it any more than he would his control of a puck or his point of view on global warming. But sometimes the only way to succeed is to get tough, especially when tasked, as Pollock has been, with realizing an against-the-odds dream held by a few Alberta business people of a Western Canadian-based financial institution.
There was also an instinctual entrepreneurism about Pollock that led the bank’s board to hire him in 1990 to lead the newly minted CWB. Even then, the idea of a bank by westerners, for westerners was nothing new. Nor was it predisposed to success. Even before you eked out a profit from loan interest, you had to get the business in the first place, and do it without rushing in. An ominous precedent had already been set in the province. The Canadian Commercial Bank and the Northland Bank were Alberta-based institutions founded in 1975. Both focused on real estate and the burgeoning energy sector in their home province, British Columbia and Saskatchewan, and both grew into bbillion-dollar operations. And, by 1985, both were out of business, thanks to a recession and what the Estey Commissionappointed to investigate the failures concluded to be bad management.
Pollock was familiar with all this. He was in banking then as well, in Calgary as regional vice-president of Lloyds Bank. But after the CWB board approached him with a job offer following a business meeting he’d had with the burgeoning company – “this little bank in Edmonton that I had never heard of,” recalls Pollock – the failures of others didn’t affect his decision. “How many people actually get the opportunity to run a Schedule 1 bank in Canada?” Pollock asks. “How many people get an opportunity to build something?” At the time, CWB, the product of a 1988 merger of the Western & Pacific and Alberta Banks, had assets of about $400 million (“peanuts” as far as banks go, Pollock points out, and nothing compared to the current value of more than $11 billion). But it was in good shape as far as capital was concerned. It was something that, in his own way, he could work with. “I’ve watched Larry mature from being the guy who went out to meet somebody who had a construction company, shook their hand and said, ‘Look, you need a couple of new Cats and a scraper. Why don’t we finance them?’” says Jack Donald, a member of the board that hired Pollock and who serves as its current chair. “It was almost like it was Larry’s business. It was almost like [watching] an entrepreneur.” The approach came naturally to him. Born in 1947 in Yorkton, Sask., Pollock grew up on land 16 kilometres east of town that was his grandfather’s homestead. Money was tight. “If you wanted a new bike, Dad said, ‘What are you asking me for? Go deliver papers, dig gardens, wash cars – do whatever you have to do.’ So I did,” says Pollock. With the $3 he made cutting garden plots (at just seven or eight years old), he bought a bike. Then he used the bike to get a paper route, the profits from which he then put toward a carrier so he could drop flyers as well. “When I graduated high school I was the richest guy in school.” Not that it was all about the money, Pollock is careful to point out. “It was just something I did. I just liked the work, to better myself.” Despite this aptitude for business, that same drive for continual self-improvement almost sent his career in an entirely different direction. Pollock’s size and skills as a defenceman had made him a mainstay on, first, Saskatchewan’s top-tier junior hockey circuit where he played against the likes of Flin Flon’s Bobby Clarke, and later in the semi-pro Western Hockey League with the Saskatoon Quakers.
“In the new hockey as it is today, I wouldn’t be surprised if a young Larry Pollock would have been drafted by an NHL team,” says longtime friend Reg Berry, a Victoria-based corporate financier. But 40 years ago, the National Hockey League consisted of six teams. Competition was tough and the money reminiscent of days on the paper route. So when the WHL folded in 1971, taking the Quakers with it, Pollock committed himself to finance with his day job as assistant manager of business development at Industrial Acceptance Corporation in Saskatoon, secured with a business administration diploma at what was then the Saskatchewan Institute of Technology in Moose Jaw. He was satisfied with that. “I always enjoyed myself,” says Pollock. “I never did anything I didn’t like. Still haven’t. Forty-one years in this business and never had a day that I didn’t want to go to work.”
Even though the news of the day revolved around previously unthinkable failures in the financial sector, the recent recession didn’t change that attitude. As long as consumer fear didn’t grow to the point that clients started turning up at banks for their life savings, the Canadian industry, and CWB, would be fine, Pollock recalls thinking around the time American investment bank Lehman Brothersfailed in September 2008, triggering the global financial crisis. Besides, CWB had extra liquidity for just such an occasion. “It’s insurance for the worst,” says Pollock. “It’s something you should do. You never bet the ranch on any situation.” Still, market watchers fretted that Canadian Western was exposed to the same resource-dependent regional marketplace that helped bring down Northland and Canadian Commercial. Moreover, its stock wasn’t cheap to begin with. In the spring of 2008, Bloomberg News had named it the best-performing bank stock in all of North America over the previous five years. In contrast to its larger rivals, though, CWB continued to post profits through the bleak winter of 2008-09. At the bank’s annual general meeting last March, friend and client Cal Nichols watched as Pollock instilled in shareholders his sense of optimism – despite share prices hovering at $7.50, down from roughly $25 a year earlier. “Larry in his style and presence had created a very good spirit in the room about the economic recovery and their bank and their stocks,” says Nichols, whose relationship with Pollock began in the late 1990s, when the Edmonton-based businessman was exploring financing options to keep the NHL’s Oilers in the city. “That’s what leaders do: when things aren’t going well they stand strong and when things are going good they pat everybody on the back. The guy’s a master at it.” “Insurance” aside, heading into the downturn, Pollock had good reason for confidence. For one thing, CWB’s market – comprising the small to medium-sized businesses that account for almost 90% of the bank’s lending activity – was a defendable niche that traditionally had been of little interest to the big eastern-based banks. Another point in CWB’s favour was the bank’s diversification through acquisition into stable and, with existing eastern Canadian presences, truly national trustee and insurance businesses, the latter of which now accounts for roughly 10% of annual net income. But perhaps most importantly, the bank had always exercised rigorous due diligence. When the market for asset-backed commercial paper imploded, CWB watched from the sidelines. “We had people in here pitching this stuff” – the likes of Merrill Lynch and Lehman Brothers, says Pollock – “saying, ‘You guys should be buying this,’ and we looked at it and said, ‘We really don’t understand it.’” That ABCP had earned the same triple-A credit rating as a bond issued by the Government of Canada raised suspicion amongst Pollock’s asset liability team. “The flaw in all this is you’re selling it to your own customers,” says Pollock. Why risk letting them down, or, worse, losing them? Ultimately the decision, in contrast to almost every major financial institution in Canada, was to play it safe. “We never recommend anything we don’t understand and Larry’s always 100% behind that,” says CFO Tracey Ball, a CWB veteran whose arrival preceded Pollock’s. That said, Pollock acknowledges the careful, do-the-right-thing approach hasn’t sat well with everyone.
“I get criticized sometimes by analysts for being too predictable or being too boring,” he says. It doesn’t get to him. “Banking is a business where you should work hard at being boring. Boring is good.” Forty years ago, back with Industrial Acceptance in Saskatoon, boring was a tougher state to achieve. On one repossession run in the late 1960s in Assiniboia, 330 kilometres south of Saskatoon, an angry contractor put two bullets through the windshield of the half-ton Pollock had come to collect. On a trip north of the city, a blasting specialist blew a vehicle to pieces in anticipation of Pollock’s coming to reclaim it. Another contractor took it relatively easy on the young financier, merely hiding a D6 crawler deep in the bush rather than letting it go to auction. Pollock today isn’t quite the same person who wrested heavy equipment from hostile workmen in the wilds of Saskatchewan. But, just as he’ll argue his side of the climate change issue, he’ll still stand his ground in a way that reminds friends and colleagues of his days in the WHL. “Larry can be a little edgy, like all hockey players,” says Jack Donald. The chairman laughs. “Get him in the corner and give him a thump the wrong way, I think he can, on a hockey rink, be capable of getting the gloves off.” Pollock won’t argue that. “I can be as tough as anybody,” he says. But, he counters, “I’m more patient, I think, now.” For him, the passage of years has distilled his experiences into what he refers to as “character and ambition and resolve.” Find yourself in a debate with him and you might call it stubbornness. Either way, in the financial sector, it’s Pollock’s brand of confidence that has some analysts convinced CWB’s profitable streak will continue for the foreseeable future. “The steady-as-she-goes approach worked for them,” says Gabriel Dechaine, financial services analyst with Genuity Capital Markets in Toronto. Pollock, he adds, has been instrumental in that. “His vision and his strategy permeate the culture of the bank. [The founders] envisioned this to be the best bank in Western Canada catering to companies operating there and they’ve been very successful growing with that strategy.” “I think we’re realizing the dreams of our founders,” says Pollock. It’s one of the few subjects he seems to approach with uncertainty. But that dream included continued growth, making an ultimate goal too abstract to give Pollock the feeling that his work is done and that it’s time to retire to the cabin in Kelowna. That’s never been his style anyway, even from the beginning. Looking back on the days when, as friends would argue, he was choosing between divergent futures, the one that led him here to his role with CWB and the one that might have sent him to the NHL or at least to a few more years of making a mark in the minors, Pollock offers a confession. “I was a grinder because I didn’t have a whole lot of skill,” he says with a chuckle. “But I was the kind of guy that would still be givin’ ’er in the last minute of the game. Because I know we’ve got to play another one, and I want them to remember how competitive we are.”