In our next special guest episode, Sean and Gina welcome Brad Tidwell, president and CEO of VeraBank, a true community bank. Bringing a wealth of banking knowledge to the conversation, Brad talks about working as an executive with Chase (and Jamie Dimon) and what he learned about banking relationships and growth through his experiences. Those key lessons and learnings he was able to activate for community banking upon returning home to East Texas. Today, the bank maintains its growth by embracing their distinctive brand and continuing commitment to the communities they serve. This is Part 1 of our conversation.
Intro: This is Believe in Banking, a podcast series for decision makers, influencers, and leaders, featuring experts taking on the financial industry’s most pressing issues with insight and empathy. The podcasts features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: Welcome to our Believe in Banking podcast. I am Sean Keathley, President and CEO of Adrenaline.
Gina Bleedorn: I’m Gina Bleedorn, Chief Experience Officer at Adrenaline.
Sean Keathley: Gina, I am maybe, more excited than ever, about today’s podcast because we have our wonderful client and esteemed guest, Mr. Brad Tidwell. Brad is the CEO of VeraBank, a true community bank, based in Texas. Brad, welcome to the podcast.
Oh, I’m so happy to be here. Thank you guys for having me.
Gina Bleedorn: President and CEO, if I’m not mistaken.
Brad Tidwell: Yeah
Sean Keathley: Gina, CEOs like to drop the president and we like to pretend-
Brad Tidwell: Oh, sorry.
Sean Keathley: … we’re bigger deals.
Gina Bleedorn: Yeah. I wouldn’t understand. Brad, we are lucky and thrilled to have you. Thank you for being here.
Sean Keathley: Brad, I’d like to start by, the audience taking a minute to really understand your background. I would assume our listeners don’t know your history, and I think it’s a little bit, not just at VeraBank, but part of your background, working for Chase and such a national respected bank. And maybe how you got to a community bank, VeraBank, we would like to start level setting and just introduce the audience to your story, as a career banker.
Brad Tidwell: Sure. Be happy to talk about that. I got into banking in the summer of 1984, right out of graduate school. And banking in Texas was good for about a year, then went to heck in a hand basket, as you know what happened mid to late 80s and early 90s in Texas. But, learned a whole lot. In about late ’89, I went to work for, what became, Bank One, in Texas, which was a great bank. And at the time, probably the fifth largest bank in the country. And then in 2004, 14 years later, we merged with JP Morgan Chase, and I spent the next, most four years, with JP Morgan Chase. And so, the bulk of my early career was spent with the mega banks of the country. And really the last four years, the largest bank in the country, JP Morgan Chase.
Brad Tidwell: It was a great experience. I learned a tremendous amount. I got to work with some great people, got to do a lot of different things. But I knew at some point, I wanted to really become a community banker. And 13 years ago, April, I had that opportunity. I was a regional chairman for about half of JP Morgan’s footprint and Ohio and Kentucky. And I got an opportunity really to come home. I’m from east Texas. Our headquarters for VeraBank is Henderson, Texas. And Longview, where I grew up, is 30 miles away. They recruited me to come back here.
Brad Tidwell: At the time, it was a $700 million bank. Today, we are almost 2.9 billion. Best thing that ever happened to me, greatest career move I ever could have made, to go from the large banks to a community bank. And it’s been a wonderful opportunity for the last 13 years. And I’m looking forward to quite a few more.
Sean Keathley: Brad, you just summarized why we are so excited to have you in Believe in Banking. It is why you came to mind, as we were thinking about industry trends, the challenges in 2020, and just the notion that there’s only five top five banks, but there are hundreds of community banks. And we think you are uniquely qualified to talk to us about community banking in America, given your background, and the fact that you started your career with what is now become one of the biggest banks in the world. And yet, you’ve still chosen to go home and serve that community. It is exactly why we have you on the podcast.
Gina Bleedorn: Brad, if I can ask, that moment in time, when you decided in your head, 13 years ago, gosh… And 13 years ago, you must have been just a child, given your youthfulness. But at that time, why did you decide you wanted to be in community banking?
Brad Tidwell: I guess it was childlike innocence then, I don’t know. At that point, I knew I had to make some decisions about either going to New York or Chicago with JP Morgan Chase. And as I said, I had a great experience at Chase. It was a great company to work for. It’s a company that taught me a lot, I learned a great deal. But I knew that I wanted to have the opportunity to lead my own bank, a bank where I could be the CEO and help guide the folks here, or the folks at whatever institution into the future.
Brad Tidwell: And so I knew to do that, I might could run a nice piece of JP Morgan Chase’s business, but I’m pretty sure that I wasn’t going to be Jamie Dimon’s successor, nor did I need to be. And so, the opportunity that was presented to me was really pretty easy to accept, when I really thought through, what I believe, the upside was. And quite frankly, 13 years later, that’s proven, more than anything, to be the case.
Brad Tidwell: And so, it really wasn’t an easy decision, but it wasn’t that difficult to decision, when I stepped back and said, “Longterm, what is it that you really want to do? Do you want to try to make a difference in an organization?” And the answer to that was, I did. And I knew to really make a difference, it needed to be something more like a VeraBank.
Sean Keathley: Brad, explain the benefit of the east Texas communities, because I think what you’ve just said is so important. There are so many rural communities across this country, and given what’s happened in 2020, there are actually… there’s more focus maybe, on people not being so focused on hitting that city center. Think about 13 years later, reflect back on the benefit of the communities, and really the kind of the mission of VeraBank, and just talk about the brand history. Although the VeraBank brand we’ll get into is rather new, who you are, is not. And just talk about the communities you’re serving across east Texas.
Brad Tidwell: Certainly. Our bank was founded 90 years ago at the peak of The Great Depression in 1930. Banks were failing left and right and some folks in Henderson, Texas had the intestinal fortitude to start a bank serving very, very small communities. Still today, we’re a $2.9 billion bank headquartered in a community of 14,000 people. Until about really two years ago, the largest market we served was close to a hundred thousand. Most of our markets, probably the average size market we’re in, we have 36 branches. The average size market is around 15 to 20,000 in population. So we really do serve small communities to a large extent. And we’ll talk about this a little more, but in the last two years, we’ve gone into the Bryan College Station market. And more importantly, from a size perspective, Austin and Travis county in Texas.
Brad Tidwell: But we really are a community bank. We really do serve small communities. We have made it, very much, a plan of ours. I guess you could say, we’ve made a point not to go into the larger metro markets of Texas like so many of our peers. Now, we have gone to Austin and we’ll talk about why we see that as a little different here in a little bit. But we feel like that these smaller communities still provide a tremendous amount of opportunity for banks like ours, who are willing to commit to them, and who are willing to put the time and effort into serving them. These communities are very loyal, they’re very stable.
Brad Tidwell: They’re not growthy, if that’s a word. There’s not a lot of growth in these small communities, but there’s a lot of stability. There’s not boom, and there’s not bust. So it means that, to the extent we stay in these small communities, which we’re going to, we’ve got to focus on organic growth. And we’ve done some acquisitions and we will do some more, but it’s not going to be growth that’s just going to come like you see in an Austin or you see in Atlanta or Charlotte.
Brad Tidwell: These are communities that need the kind of services that our banks provide. And if we don’t provide them, quite frankly, and nobody will. Or if other community banks don’t, because the larger banks, my predecessors, and the other large banks have largely left these smaller communities. And so, we see it as, it’s a commitment, but it’s a business also. We’ve got to make money at this, like everyone else does. We’re not in this business as a philanthropy, but we’re in it to make money and we believe we can. And we believe we can continue to serve these communities and balance out with other opportunities in higher growth markets that we may move into in the future.
Gina Bleedorn: Brad, we’re going to maybe fight over who gets to talk to you first or the most, but how are you approaching, based on what you just said, organic acquisition in those markets that aren’t necessarily growing. And love the way you put it, they’re not growthy, but they’re stable. And how do you acquire in those conditions? And you have.
Brad Tidwell: Customer growth in most rural markets is something you have to accept as a long term game. If you believe that you’re going to come to Longview, Texas, which is one of our larger community markets, where I live, a town of 80,000 people with, I can tell you at least three or four other really good community banks here, one headquartered here, and just walk into a customer and say, “Hey, I’m Brad Tidwell. I’m from VeraBank. I’m a good banker, and we’re a really good bank. Now, come bank with us.” You’re kidding yourself. I call that the instant gratification syndrome, and it just doesn’t work in any business. And it certainly doesn’t work in banking. What you have to do, is you have to commit time and commit the energy over time to be patient and develop those relationships.
Brad Tidwell: And over time, you will be rewarded because other banks slip up, other banks change, such that customers are looking for something different. Or maybe at some point, you can provide something that may be a competitor can’t. So, I tell our folks in these smaller markets that, it is not going to happen overnight, but that our growth has to be incremental. And that if these markets are growing at 1% a year, which is… Some of them, that would be a lot of growth, be honest, from an economic perspective. But we can grow two, three, 4% a year in these markets through more aggressive, I guess, customer acquisition, or really putting a long-term focus on it, then we’re ahead of the game. Now as a bank, we need to grow more than two, three, 4% a year, but we’ve got other ways we can do that. In these markets, it’s doing the same thing every day, being willing to take the time and effort to commit and not fall into the instant gratification trap.
Sean Keathley: Brad, the reason I’m more and more excited as you talk, I think this is a real education for some of the next generation of bankers, and the new normal we’re in. A word that comes to mind is, balance. And maybe you can talk to us. I’ll just talk about three strategies or initiatives that are overlapping. And I think it speaks to the balance of what you’re talking about. You have made the intentional decision, in downtown Henderson, where quite frankly, if VeraBank ever left, I’m not sure there would be a downtown Henderson like there is. You’re doing a renovation to modernize that location, but still feel relevant with the community. And you’re even spending capital on the exterior to make sure people know the flag you’re raising there is going to be there. Henderson knows you’re committed to that small town. You’ve already talked about the size of it. That’s not going to get the board of directors or shareholders the return you want.
Sean Keathley: Number two is, you’ve acquired a bank and I want you to talk a minute about that growth. You mentioned 13 years ago, the asset growth from 700 million to, you’re about to be a $3 billion bank, the Travis County entrance to Austin, as a growth, but also, a different way to grow. You are entering a market at College Station and it wasn’t an acquisition. I think it was more founded in bankers. And then you thought for bankers to be successful, you needed a prototype branch. Talk to us a minute about how you’re balancing those three things. I think it’s a great thing for banks to think about. How are you working all those things simultaneously to take a slower, more methodical approach, but get the type of return that allows you to invest in employees and get shareholder return?
Brad Tidwell: Really great question, Sean. You do have to have a balance to your approach. I couldn’t say it any better. I think balance, focus, and prioritization is critical, if you’re going to grow as a community bank. And so to your point on balance, if we want to see VeraBank grow from 2.9 to 3 billion onto four to 5 billion, we know we’re not going to do that all in our legacy markets of east, Texas. As important as they are to us, that’s not going to happen here. We’re going to have to find other ways and other areas to grow.
Brad Tidwell: Now, I want to say real quickly, for any banker that hears that, we’re also not looking for growth for the sake of growth, we’re looking for profitable growth. And if you look at our track record from 700 to 2.9 billion, you will see, we lived up to that. That’s critical. Growing just for the sake of growth and not getting that return on investment, which you talked about, it is absolutely critical. And that’s why you have to put the focus and the prioritization on the right things.
Brad Tidwell: We have done growth through M and A. We’ve done five acquisitions for Whole Bank and one acquisition of five B of A branches. And we’ve done those acquisitions since 2011. We have de novoed in a couple of markets. Most recently, we’ve de novoed in Bryan College Station and in Austin. One of the acquisitions that I talked about a minute ago was an acquisition in central Texas, which was Bell County, which is the county two counties north of Travis, which is Austin. And then Williamson County, which is Round Rock and Georgetown just on the north side of Travis County. Williamson county has been one of the top five to 10 fastest growing counties in the country, the last 10 years.
Brad Tidwell: And so, the opportunity for us to acquire in fast-growing communities was very exciting for us. And those are communities, believe it or not, that are not that much different, at least historically, not that much different than some of the communities we’re in today. Though the dynamics of Austin and Travis County are changing that. Then as you indicated, we went into Bryan College Station and said, “There’s not an acquisition opportunity here, but there are some bankers that we’d really like to have.” And whether you’re in our legacy markets of east Texas, whether you’re making acquisitions in Bell and Williamson County, or you’re doing effectively, a de novo in hiring bankers in Bryan College Station, it all comes back to the people. If you don’t have the right people, it really doesn’t matter what nice branch you have and what your footprint is.
Brad Tidwell: And so, in Bryan College Station, we hired really some outstanding bankers who have joined us and just set the world on fire since they’ve been with us in a very appropriate and prudent way. And we’re doing the same thing right now in Austin. We’ve finally de novoed. It’s really a loan production office at this point, but soon to be a branch. We’re taking advantage of the opportunities that the acquisition in Williamson County gave us. And we’ve just opened our first office actually, in Travis County, Austin. And we’re doing it around people, we’re not doing around facility. And now the facility will come. It’s going to be very important at some point, but it’s around the people.
Brad Tidwell: And so, I think you have to balance it, as you said earlier, Sean. But I also think the other thing you have to do is, you have to make sure that everybody in the process understands they are equally important. And I know that may sound naive, I know that may sound simplistic, but the day that that banker in Longview thinks they’re not as important as that banker in Austin, your culture starts to deteriorate. You cannot let that happen. They have different goals and expectations, but at the end of the day, their value to the company cannot be seen as any different. If it is, then senior management has failed. More importantly, the CEO has failed.
Sean Keathley: Brad, that’s a perfect summary. And it really is a team effort. If you were to not look into new markets, it would be difficult to be so devoted to Corsicana, Longview, Henderson. If you were to only focus on profit and growth and not reinvest and where you were founded during the great depression 90 years ago, and close Henderson to be able to do that faster, you would have a cultural disaster at your bank. I still say it. I believe this honestly, and I’m not sure it’s just the team you’ve built, your servant leadership approach, the fact that you got trained by some of the smartest bankers in the country and have this calling to come home, or just a combination of all those things, you are laying out the blueprint and how to balance legacy and growth markets. And that’s why we wanted to talk more, maybe, above VeraBank. And Gina, you’ve got some questions to think about. If we kind of zoom up to 30,000 feet, how does this apply the industry as a whole?
Gina Bleedorn: What I really love about Brad and VeraBank is that, in some ways, it’s the antithesis of mindset about business in banking and across all businesses. It is about longterm and it’s about a real investment in people, not for short-term gain, but long-term profitability. And Brad, I just want to know, what’s the secret to how you’ve done that, how you have made profitable acquisitions, and how you have inspired advocacy in the people that work for you so that they all feel equal and as important from top to bottom? In your organization, what is your secret?
Brad Tidwell: Well, I don’t know that there really is a secret, Gina. Thank you for saying that. First of all, it starts with, you’ve got to have a commitment from a shareholder group and a board, and I was very fortunate in that. I do not own this bank. I mean, my ownership percentages is tiny. But I was blessed to come into a situation where we had a board and an ownership group that said, “We’re in this for the long haul. We want to do it right. We want to grow.” Matter of fact, that first day I ever met with them, their philosophy was, “If we don’t grow, then we’re going to start to die.” And we want to, as I said earlier, do it right. Brad, don’t come here with the idea that this is a small, sleepy bank where you can retire on the job. And anybody that knew me, that wasn’t going to happen anyway. But they didn’t know me that well.
Brad Tidwell: And so, you start with that, and a commitment from those folks. And then you’ll hire good leadership and I’ve had the very good fortune of, in my 13 years, to really bring in some outstanding people that share my belief that, it has to be about the people. It has to be about a consistent approach. It has to be about building a culture around those three very simple rules that we have at VeraBank of, work hard, do the right thing, and no jerks allowed. And again, some of this sounds very naive and very simple, but it’s just how I am. And I maybe it has to be simple because I’m not able to deal with the complicated. But we’ve got managers, senior managers who accept and understand that.
Brad Tidwell: And you’ve got to check your ego at the door. We all have egos. We all think we’re good. And we are good at some things, and we’re not as good as other things. And we have to be willing to make mistakes every now and then, but admit the mistake. And so I think, then if you take it back a step further and say that, really these legacy markets add tremendous value to our franchise, tremendous value. And you ask, “Well, how did you make these mergers and acquisitions work and turn them profitable?” What we did, and I’m always a little of saying this, because I don’t want to insult people, but unlike most banks, we didn’t go out and buy a real profitable banks. We bought banks that had no asset quality problems. We didn’t want credit problems, but quite frankly, were under-performers, but they had really good deposits. And they were in a place that we wanted to be, because we felt like we had the management. We could build the teams to grow those banks, but they had to have the basics. And frankly, you can pay less for them. Okay?
Brad Tidwell: So we’ve done that now, five times. It works. But it’s hard because you have to rebuild, in some cases. And that’s what we had to do in each case. But it really has worked well for us. And I’ll go back to, it’s because we have a group of people who, pretty much, are on the same sheet of music. And if they’re not… If someone joins our organization and doesn’t buy into that, we try real hard to make sure that folks do understand and buy into it before we hire them. But if they don’t, quite frankly, they’re not going to be very happy here and they’re going to want to opt out. If it’s all about them, if they’re the only person that matters, they’re the jerk in the room, they’re going to figure it out pretty quick and they’re going to opt out or we’re going to help them opt out.
Gina Bleedorn: Well, I think one of your secrets, clearly is, no jerks allowed, because that speaks to so many things about, you say, simplicity, but there’s brilliance in simplicity. But also, what I said earlier about your strategy being in some ways, the contrary to the industry, which is very risk averse, and you took, in a way, chances, calculated chances, but chances based on potential. And you knew you had to come to the table too, and you had confidence that you could do that because of the people that you have. And you’ve attracted those people, not so much because you’re so fortunate, although you’re humble to say that, but I think also because good people attract good, like-minded people. That’s just a beautiful story that, again, is a bit of an untold story in banking. And the way you’ve gone about it is nothing but admirable.
Gina Bleedorn: As we think about the things that become priorities and also the leverage points for community institutions, the branch is certainly one of those things. It’s your locality, it is your presence, it’s where you have community connection. But there’s another piece to that in your reputation and it’s your brand. VeraBank has an interesting story with your brand and your name, as it relates to that brand. Talk about that.
Brad Tidwell: Yeah. Two and a half years ago, we made the decision to change our bank name. We had been Citizen’s National Bank for 87, 88 years. And it seems like just about every other bank in the state of Texas, and maybe around the country, had citizens in their name. And as we expanded and went into other markets, that became more and more problematic. And we just couldn’t differentiate ourselves, at least to a customer, when we went into the market, “Are you the Citizen;s State Bank? Are are you Citizen’s First? “No, we’re Citizen’s National.” “Are you the one with the green roof or the red roof?”
Brad Tidwell: And so, we knew we needed something different and we were very fortunate to know these people in Atlanta. I think their company is called Adrenaline, that did some of this and called them up and said, “We need some help.” After we had struggled with this for quite a while ourselves, went through a name, change process. I think the marching orders that I gave to folks through that process was, we want to keep it simple, but we want it to be different. We want it to be recognizable.
Brad Tidwell: And I will tell you, it was absolutely one of the best decisions we ever made. The group that was most fearful and had the biggest problem with the change, was us. Our customers had no, no negative pushback at all. And that’s shocking when you think that, especially in small town, rural east Texas, we had been this stable company for so long that we feared what the response from the customer was going to be. And when we explained our story, while we were doing it, we weren’t changing anything else, the people weren’t changing, it was the exact same folks providing the service every day, wasn’t new ownership, but we needed a different name so we could continue to grow and differentiate ourselves, it was one of the best things we’ve done.
Brad Tidwell: It’s allowed us to set ourselves apart, as we’ve gone into these new markets. And honestly, looking back on it now, so we rolled it out a year and nine months ago in January of ’19, I tell you what, there is not been a day since then that I have not been anything but very, very pleased with that decision and in the way it’s gone. And it really has made a big difference in how people perceive us, which I know sounds kind of crazy because a name is its form, it’s not substance. But it’s a very important form.
Brad Tidwell: And as we’ve gone into these new markets, it’s allowed us to stand out, because VeraBank, all one word, is not common. It’s not something that most banks would come up with. So, I can’t be more pleased with the way that went and we’ve been able to build around it and talk about, it’s the people behind the name that matters, it’s the genuine banking. It’s all of that. It’s a process that, if somebody is thinking about going through, it’s not near as challenging as you think it is, if you commit to it and you have some really good help. And we had some really good help.
Gina Bleedorn: Brad, you just explained branding in two minutes, better than I ever could, and I do it for a living. So, that was beautiful. Say for a moment, how do you explain understanding that a name is just a signal of everything that’s behind it? In and of itself, it means nothing, but what it represents means everything. What does the name VeraBank mean in how you explain it and how it connects to who you are as a bank?
Brad Tidwell: Folks have asked us, “What does the Vera bank name mean?” And we would tell them that it doesn’t, per se, mean anything. The word vera, V-E-R-A, it’s not from the Latin word Veritas, but we built kind of our own identity around it. To us, it did mean, honesty in banking. It meant that we were genuine in what we did and how we delivered our services. And so, while vera, the word vera might not really mean anything, except a lady’s name, if you change it to Vira, what it meant was what we wanted it to mean. And what it meant was, the story we tell about the people that we are behind it. And I think that’s just the best way I can explain it. And the fact that we didn’t pick a name that had some historical significance, like frankly, the CEO of the bank wanted to do, I think, made it a lot better for us, and a lot easier to create the story that we want to tell about VeraBank.
Gina Bleedorn: Bank, that was so well stated, as to what the VeraBank name and brand did for you, and really why branding matters and why it matters more today. It is absolutely imperative, as you go into new markets, to have a way to be resonant and stand out, especially when you, let’s say, have the same name as somebody else. But even if you don’t, if you have a name that’s not meaningful, you need to make meaning, whether that’s rebranding around that current name to connect it to people, or in some cases, considering a new one.
Sean Keathley: Gina, I totally agree. Brad, thank you. This was an amazing discussion. We really appreciate everything you’ve brought to us today. It’s great advice for everyone out there listening in how to get set up for future success. As we think about part two, and there is going to be a part two, we thought this would happen with the dynamic discussion, we really want to get into the spring of 2020. I think you’ve brought us through the great history, both of your personal career and what you’ve done with the community bank you’re a part of. But I think now we want to get into section two, 2020, which we know has brought plenty of headwinds.
Sean Keathley: We want to talk about the bank’s response and the help in communities around east Texas. We want to think about COVID as a catalyst, where the roadmaps for future development got accelerated. We want to think about differentiating yourself as a true community bank competes with big banks and how you position yourself for success. And then, maybe how some of the things that are the heart of who you are, are helping you survive these challenging times. We’re as excited about part two as we were to have this discussion today.
Outro: You’ve been listening to Believe in Banking, a podcast series created to empower decision makers, influencers, and industry leaders in financial services. Be sure to also join us on our flagship site, believeinbanking.com.