Roundtable: Community banks

®oundtable:

Community banks

Community bank leaders discuss their milestones and highlights from the previous year, while touching on areas including technology, areas of growth and tackling low interest rates.

Jack Barrett

President & CEO First Citrus Bank

How did the First Citrus Bank perform in 2020? We surpassed half a billion dollars in assets on the balance sheet, so that was a seminal moment for our company. We surpassed over a billion dollars in loans in Tampa Bay.

Reflecting on 2020, it was one curve ball after another in terms of acclimating, adapting, reconfiguring and moving X’s and O’s on the organization chart between telecommuting and COVID testing. The PPP was really the opportunity to deliver growth capital and blow it out on a massive scale to small businesses that were struggling. Sometimes, adversity really shows your true character. I think we’re the seventh-largest lender in the state of Florida for PPP as quoted by the Hovde Investment Bank out of Chicago, based on the percentage growth in our loan portfolio. We did a lot of the smaller ones too. We really helped the little guy. Even though there was a lot of uncertainty in the market and that breeds anxiety, it was our best year ever in terms of earnings and asset growth.

What do you think the impact of low interest rates will be? It really depends on how COVID gets knocked out and if other mutations of the virus become more pronounced throughout society. The sooner that stabilizes, in terms of the healthcare pandemic implications, and the more you let a few quarters pass under your belt, that’ll be the harbinger for rising rates. We don’t see this as any type of quantitative easing infinity as we saw during the Great Recession. We see the economy becoming very resilient. But then again, we have a new administration, so there’s a lot of uncertainty as to the fiscal policy implications that could come about as well.

David Moore

President Bank of Central Florida

What were some of the highlights and milestones for the bank in the past year? One of the things we are most proud of is that we had the ability to participate in the PPP program and deliver critical funding to clients and the community. There was so much uncertainty, and information was coming fast. We were not an established SBA lender, so we had to start from zero and get to 100 in a very short time frame. We did 550 loans in 10 days, which is the equivalent of three years’ worth of work in normal times. The other highlight was our growth of about 40%. That was unexpected. It is a testament to the work of our staff and the value our clients place in us.

In which areas have you seen the greatest growth in the last year? We’ve seen a great acceleration in technology adoption. Banking has a very traditional legacy, and the embracing of technology has taken a lot of time. Fintech companies have pressed banks to embrace change. Our older clientele was still very much rooted in the habit of coming to the banking offices. But last year, people who had been resistant to download the app, or even pick up the phone, started using online banking. For us, it’s helpful because it’s a more economical service delivery model. We already had in place most of the technology. We want people to do business with us in whatever way they choose, whether online or in the office. We’re a very fast follower of new banking technologies. Our technology offering is very robust. The main challenge is educating clients and bringing awareness to the advantages of using it, but the pandemic accelerated the adoption.

John Thompson

President & CEO Central Bank

What have been some of the successes and accomplishments for Central Bank in Tampa Bay? We grew during 2020 even though we had to move to a different form of operations in March due to the pandemic. We quickly pivoted to a remote desktop approach for 50% of the staff, and we limited access at our three offices, although they were never closed. We allowed limited access to the lobby by appointment only, with unlimited access to the drive-throughs, ATMs and on-line access. We grew our deposit accounts during this time and our residential lending business has really taken off because of low interest rates and the resulting pandemic-related increase of in-migration to Florida. Except for a brief period during the lockdown, the residential sales/lending market has been at record levels. We also participated in CARES Act PPP1 and PPP2, making a total of about $60 million of these loans. We received a lot of deposits related to this lending, and our asset size increased to just under $300 million.

What actions should the Biden administration take to regulate credit unions? The credit unions pay no federal income taxes, yet minority financial institutions and community banks do. The original mission of credit unions is long gone and their services are now just like those of a commercial bank, which makes commercial loans. Pressure is increasing on Congress, especially now that there is a need for more federal tax revenues. That has been a difficult political subject in the past but this will perhaps make it more of an issue. It’s hard to believe that the average individual pays personal federal income taxes but credit unions pay none. How is The Bank of Tampa tackling the low interest rate environment? It’s at least as big a challenge or a bigger challenge than the COVID-19 situation because it is going to be longer lasting. The Fed has given some guidance that this rate environment is likely to remain in place until at least 2023. We need to figure out what to do about this. First, we are controlling our expenses where we can. We are going to do as best we can but not at the expense of the longer term. We are going to invest smartly for the future, knowing that we want to be ready to go full speed once on the other side of the pandemic. Our digital strategy is a perfect example of that.

How are you tapping into the fintech community to your bank’s advantage? It is the No. 1 issue on our mind: delivering a digital banking experience and making it relationship-oriented. Most of our effort of growing the bank over the next five years is going to be solely focused on developing our digital strategy. We have created an Innovation Council within the bank and brought together a small group of people who are most likely to be the thought leaders within our bank regarding how to innovate. We are working on ways to reduce friction and make it easier to do business with our bank. We are paying attention to fintech incubators aimed at supplying products and services to community banks. We are going to work with some consulting firms to help us develop our digital strategy. It needs to be the most important thing we do because if we dismiss it, by 2025, we would be fighting a difficult uphill battle with banks that did figure out their digital strategy.

Bill West

CEO The Bank of Tampa