In this year-end special episode, Sean and Gina recap a most unusual year and look back on some of the meaningful conversations, industry insights and stories of resilience shared on the podcast. Whether it is commitment to community through PPP or the rise of banking for good, we’ve covered the many ways that the financial services sector is rising to the challenge of our current moment, and beyond. We also highlight conversations with our special guests Ryan Kilpatrick from Origin Bank, Brad Tidwell from VeraBank and Jimmy Stead from Frost Bank who shared their thoughts on how to focus on relationship banking, meet customer needs for technology and compete by leveraging the power of the branch network.
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 podcast features information and conversations designed to enlighten and empower. Here are your Believe in Banking hosts, Sean Keathley and Gina Bleedorn.
Sean Keathley: This is our Believe in Banking podcast. I am Sean Keathley, President and CEO of Adrenaline.
Gina Bleedorn: And I’m Gina Bleedorn, Chief Experience Officer at Adrenaline. Sean, it’s been quite the year 2020. We started this podcast shortly after the pandemic hit as an extension of our conversations on the Believe in Banking platform as a way to help the industry. And at the time we started covering everything from the commitment to community, through PPP loans, that many community institutions were having to the need to shift but not be silent and to continue to communicate to having empathy led everything in your approach, to all aspects of the business and to the many levels of pressure that financial institutions faced amidst great uncertainty.
Sean Keathley: I’ve enjoyed the conversations, Gina and I think really the highlights started when we were inviting some of our great clients on who were experiencing this firsthand, these distinguished bankers. And it was interesting as we talked about having banks of different asset sizes and covering different markets, there were definitely themes that developed and talking to these three individuals. We started with Mr. Ryan Kilpatrick, Origin Bank. We brought on Brad Tidwell, the CEO of VeraBank, and then Jimmy Stead at Frost Bank. And we were seeing things around relationship banking and the really increased importance of meeting the customer right where they needed them, being for technology fast followers. I think we heard COVID as a real accelerator and thinking about how to expand into markets, having bankers in the neighborhoods where the customers were requesting them. It was really amazing listening to those gentlemen speak to us about what they’ve experienced in this crazy year.
Gina Bleedorn: So to wrap up this amazing 2020 year with a nice bow, we’ve put together the best of highlights of what we think is the best of what we’ve discussed with us and guests on Believe in Banking this year.
Sean Keathley: One of the advantages, the community banks and credit unions had, they had relationships with small businesses. So when they were able to process these PPP loans, they started with those people that they knew first names and dealt with, and they were able to actually get them funds that made the difference in them surviving or not. I think education is something that we’ve been talking about. I think banks and credit unions take for granted that they’re financial experts. We’ve talked about the lack of knowledge with the youth of our country, around things like credit scores, and student loan problems, and understanding some of the basic principles of finance. And I think that’s under a huge spotlight right now.
Sean Keathley: People are scared and their life is disrupted. And these clients like Origin really are a fabric of their community and they are reaching out and helping people. They have resource centers, they have appointment-based banking in every single branch, obviously being social distancing and being safe. But if people are worried and want to talk, they’re finding ways to communicate. And I think that’s very settling for people at a time right now, if you go quiet in a crisis like this people worry.
Gina Bleedorn: Yeah, Sean, we’ve been saying shift, not silence. Silence is the worst thing you can do in absence of communication there is fear and there’s already so much fear. We need to communicate now, even if we don’t have a full message to communicate. And totally agree, you need to be over-communicating in every way, shape and form and in a reassuring way and a very empathy led way and a very human way.
Sean Keathley: But I do find fascinating and I’m dying to get in here. But I think the success of this podcast will be if Brian talks more than all of us. Here’s what I’ve seen through the growth, your commitment to the playbook. You’re not out scaled it. And it gets hard to take someone from Houston that’s coming in for their first job out of college and give the commitment, the meet you in the marketing team. And I’m sure you’re seeing dividends and retention and the ability to continue to control the conversation. So that’s a good pivot I want to make. Just talk for just a quick second about the approach to banking. And I think a regional community bank is a good way to tee it up. In thinking about the balance of those cherished relationships and those century old markets where you’ve got great market share, and those customers are very important, but new relationships. So just talk about kind of the style Origin approaches that appears to be working across different types of markets as you guys scale.
Ryan Kilpatrick: Yeah, for us our business model centers around our culture and it centers around relationship banking. It is just the constant communication to our people, to our employees, that relationships matter so much in our business. And we think it’s through those relationships that we’re able to differentiate ourselves. At the end of the day we believe that our space where we need to operate and where we can continue to be successful is in the relationship space. And that’s where we’ve been able to thrive. I think for many of our markets that we’ve come into, say, over the past decade or so, it’s been an approach that’s been fresh and enlightening to customers that we bring on. I like to say, it’s the old way of banking with handshakes and face-to-face interaction.
Ryan Kilpatrick: Certainly COVID-19 has changed some of that. And we can get into some of those conversations about how we’re taking that approach and making it thrive today. But that’s really what it comes down to regardless of the market size. But at the end of the day, people want to do business with people who they trust. That’s a huge component of who we are. Community trust obviously was our old name. We stood firmly in one of our core values. Actually our first core value is trust is our foundation, earn it every day.
Gina Bleedorn: As we think about what the branch environment looks like from a consumer perspective, we first have to think about what their mindset is, where are their heads at? Novantas has been doing weekly surveys of consumers regarding their attitudes and intentions towards banks and bank branches. As of the third week in May, 53% of consumers said they were either somewhat or very likely to return to bank branches. Interestingly, that has crept up the last four weeks steadily. In week three, it was about 40% and now we’re at 53%. So as time goes on, people seem to be gaining confidence that they will return to the branches. But also interestingly, the two top behaviors that are expected to occur are depositing cash and depositing checks. Both of which of course are able to be done alternatively through remote or digital channels, ATMs et cetera. So this is curious now that is then followed by opening an account, which is great news for banks, because that means they’re intending upon either opening a new relationship or opening a new product. But why, why, why are consumers going to bank branches to deposit cash and deposit checks?
Sean Keathley: The statistics don’t surprise me. We’ve got to remember, we’re talking about human behavior and that’s not always captured with these outtakes of what everyone is thinking. And as I think about smaller organizations, community oriented credit unions or banks, they can often tell you the names of the people coming in to cash the checks or visit them regularly. And as I think back before the pandemic, we had some branch traffic and many would scratch their head as to the specific nature of the branch traffic. Why are they coming in with paper checks? Why are they coming in to see us with a cash deposit? We have ATMs, we have mobile, we have online. I think the answer lies in what everyone is craving and missing and that’s human interaction. I am not convinced the post COVID branch traffic will look considerably different by market than it did before.
Sean Keathley: So let’s think about why that is. I think back to something you’ve said, Gina, it is around trust, and we’ve said this, we’re talking about money, and finances, and people’s livelihood is not watching Netflix or booking a trip. And I think that’ll continue to be important. And I think that is a huge opportunity for organizations to fulfill that need. And let’s pick up the conversation. We were talking about doom and gloom around the branch, but we told our listeners to not worry we had ideas. So a little bit of pressure here. Do you want to start us off with some ideas that maybe you’re a little bit more hopeful and strategic as we look forward?
Gina Bleedorn: Well, yeah. I think what everyone is experiencing right now is an immense amount of negativity. There’s a lot of focus on what’s the future and where are we going? And we think that there are inherent assets community institutions have that can be leveraged. We think there’s some good news here in what in some ways the pandemic may even create from an opportunity perspective, as well as how you work with what you’ve got. You’ve got a bunch of branches that can’t just go away even if you closed half of them. That’s signaling death to the communities that you serve and to your customers. Right now, you need to be doing the opposite. This is yes, defensive, but it’s got to also be offensive. So in some ways COVID is a catalyst accelerating changes that were happening already. There are a number of you who have already made decisions pre COVID that are going to help you be stronger post COVID. And for those of you that haven’t, the time to make some of those decisions is probably now. Sean, what are some examples?
Sean Keathley: I would love to talk about a few, Gina and it does start to feel more and more like the pre COVID strategies are holding true. Let’s take a true community bank like VeraBank. A relatively new brand that’s been created because their name was Citizens National Bank.
Gina Bleedorn: There’s a lot of those.
Sean Keathley: 315 after we rebranded VeraBank left. So, absolutely. The problem for VeraBank did not start with the Citizens name when they were focused in Longview, Texas, Henderson, Texas Corsicana, some of those smaller markets. However, as we’ve been talking about, if you want positive growth, you go find the people. They were migrating to larger towns and communities looking for growth. It was interesting. They did not forget about where they came from. Now, we didn’t spend as much money on the renovation at Henderson, Texas population, 13,000, but that headquarters is where they’re from. So they are raising the VeraBank flag. They invested in a lobby renovation and an exterior upgrade at their headquarters. And it’s a good example of a bank balancing, true community commitment, not just going to the new frontiers where there’s opportunity, but let’s not forget where we came from.
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 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: Two and A half years ago, we made the decision to change our bank name. We had been Citizens 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 to the market, “Are you the Citizens State Bank? Are you Citizens First?” “No, we’re Citizens National.” “Are you the one with the green roof or the red roof?” So we knew we needed something different and we were very fortunate to know these people in Atlanta. I think their company was 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, we went through a name change process.
Brad Tidwell: 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.” 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 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. It wasn’t new ownership, but we needed a different name so we could continue to grow and differentiate ourselves.
Brad Tidwell: It was one of the best things we’ve done. 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. It really has made a big difference in how people perceive us, which I know sounds kind of crazy because a name is it’s 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.
Sean Keathley: VeraBank is $2.9 billion in assets, give or take a couple hundred thousand dollars right now. And Chase will spend this year $3.2 billion in technology. So can you even begin to think how a bank your size could compete on technology? And I know the answer is no, but what you’re saying and Gina is asking, don’t let that be the excuse for everyone because those numbers aren’t changing.
Brad Tidwell: Right. How we compete is I think you have to be a fast follower. You hit the nail on the head, Sean. We can never keep up with the technology that JP Morgan Chase, or Bank of America, or Wells can roll out in a given year, but we can be a fast follower. And what we have to do is make sure that we have everything that our customer needs. What I tell our folks all the time is, “From a consumer perspective and a commercial perspective, we have to have the products and services to compete with Chase locally.” We’re not going to be first to market, but we can be a fast follower.
Sean Keathley: What’s more even more interesting I’m not sure some of those second cities, even tertiary cities may not be more appealing as we go into this summer than as we did last summer. Is that a crazy thought or what do you think about?
Gina Bleedorn: Yeah. So while urbanization on the whole has been an increasing in the world, 83% of the population lives in cities. In the past decade in the US the largest cities have experienced slowing growth. New York, LA, they started slowing growth rates around the beginning of the decade. And towards the end of the decade, cities like Houston, Denver, Atlanta, they started slowing. And now there is a trend towards emerging suburbs, exurbs and secondary cities, and further, Deloitte predicts post COVID that movement to secondary cities is going to continue to increase. So we’re not too far from a city center or a big airport, maybe within an hour or two hours, but there’s all of a sudden amazing growth opportunity in areas that there didn’t use to be.
Sean Keathley: This creates I think an exciting opportunity for these community minded organizations, go to where the people are. Some of the people are coming to where they’ve been. And when you were talking to Gina, I was thinking about Andrew Young, a hero of mine, incredible individual he’s impacted so many things so positively. The City of Atlanta and broader had the honor of hearing him speak about 16, 17 months ago. So COVID-19 wasn’t a thing. Urbanization was more apparent to people and he was asked by someone in a crowd, “What do you think is going to happen to small town America? Will it shrivel up and die?” And his answer surprised me, but he said, “I bet on small town America.” And he said, “I really believe as this new generation retires and slows down there is going to be a place for lots of space, maybe chickens, organic foods, no traffic, and just get me to the airport in 90 minutes.”
Sean Keathley: And I thought a lot about it. And now as we sit here today, it feels so relevant, I guess, as 45 honorary degrees, Dartmouth, Yale, he’s a smart guy, and I’m not sure he’s not onto something. And I mentioned that VeraBank example. Both being in those city centers, but those towns that are 50 minutes away from those big airports, that’s a real strong play for a community bank to really make a big difference and make a difference not just in success with the organization, but creating success in those communities.
Gina Bleedorn: There’s this whole new relevance to the idea of values that I think in some ways have been dismissed by some as fluffy and doing branding in the financial industry for quite some time. That is a thing that has been maybe not given the full importance by some that it deserves, but we have long said, think about your values as an organization, but also think about your audience values. Because even organizations that have really strong internal values, many of them haven’t done enough to ensure that those are reflected externally and also to truly consider the values of the people they want to serve when it comes to the services that they provide. So this idea of identifying shared values, what is important than resonant to you as an organization that is also important and resonant to that of your target customer. And I have, and continue to love as a brand REI.
Gina Bleedorn: Ironically, I hate camping and outdoor stuff, but I really respect them as a brand because they believe that a life well lived is a life lived outdoors, hiking, cycling, camping, glamping, skiing, whatever. And they did one of the benchmark moves in being real about what you stand for in closing their stores online and physical stores on Black Friday. And they said, “Join us outside.” So their number one opportunity for commerce on their biggest day, they literally closed down and that’s because they believe in what they believe in and their target believes in it too. And what’s so successful and kind of magical about that is it’s resonant even with people that aren’t their target like me, that it really stands for something. And when you know a brand stands for something, you like them more. So you better believe when I am going to buy something for camping or outdoor stuff for somebody else I know where to go because I respect their brand and what it means.
Sean Keathley: Unlike you I have been in an REI store recently. When you walk in, they are genuinely interested in what it is you want to do outdoors. And they are very helpful because when they’re not working, they themselves are outdoors. And that again is how you build a brand around people that can pay off that brand promise.
Ryan Kilpatrick: I’ve mentioned new hire culture day. We talk about the experience. We get those new employees to tell us about what brands, what experiences stand out to them? Well, every class, one of the employees says Chick-fil-A as well they should. Chick-fil-A creates an incredible experience for their guests. And Chick-fil-A sells a piece of chicken with two pickles in between a bun, but yet Chick-Filet gets mentioned in every class that we do. And all they’re doing is selling nuggets and chicken sandwiches, but people love them. As bankers, we’re helping people start businesses, helping people get into their first home, we’re helping individuals maybe who have gone through tough times and need additional capital to be able to survive. You think about that as compared to a chicken sandwich, we have so much opportunity based on the way that we can transform an individual or a company by being trusted advisors to them, by setting up and establishing just dynamic relationships. That’s a business I think that a banker should be proud to be in, to know that we can have that type of impact.
Gina Bleedorn: There are numerous studies that report on customer experience being far greater in companies that have good employee experience and for Citadel, the importance of making sure their employees first and foremost could understand the brand and the new positioning and what it means and engage with it, get behind it, was as important if not more important than getting that message out to the members and potential members in the markets they serve. So employee experience really, really matters and organizations are those that haven’t are forced to put attention on it. Those that have are in a better position.
Sean Keathley: Gina, couldn’t agree with you more and listening to you speak about that. One of our great clients we’ve worked with for a dozen years is a bank in San Antonio Frost Bank. And they were just such an interesting story, founded 152 years ago. And they’re just so humble. If you ask Phil Green, the CEO, or any of the executives, “Why have you been so successful?” It’s always the same answer, “It’s a deep desire to take care of the customer.”
Sean Keathley: And the way they do that is by building a one of a kind culture with employees. And when Phil took over, he was the CFO and took over was promoted to CEO, really a seamless transition and a public company that’s been very successful in CEO transitions are something that you have to be very thoughtful about. Frost continues the legacy of being successful over a decade and a half. And a tradition that was carried on by his predecessor that he is sticking to is he would love to shake the hand of all 4,500 employees.
Sean Keathley: In Texas, they’ve seen their share of tragedy and challenge over the last 150 years. I’ll think about his branch tours after the big floods in Houston in 2018 and getting hugs from customers because they had helped people get back on their feet. And I think Frost continues to be really focused. It was actually interesting. There was a lot of media around this. Frost processed enough PPP to help 16,000 small businesses. And when I asked on TV, “How did you do this?” He said, “It was a all hands on deck, over 500 volunteers in the bank that didn’t work in the department helped process loans at all hours of the day.” And a lot of what they did was contact their customers, those small businesses less than 25 employees, I think they said over 82% of the loans they processed were with people that had less than 25 employees.
Sean Keathley: So that was the truest meaning of that entire federal initiative to help those small businesses. Frost has this relationship strategy that you need people where people live and people work. And I think that there’s no better Testament to that than Houston, where Houston’s been a newer market for you and there’s been expansion goals, and Houston’s a big market. Not everyone lives in the city center, you’ve got people commuting. And I think your branch plan has been around where people have asked you to go and where the customer needed you. But just talk about maybe the difficulty in thinking about balancing that as COVID hits, talk about the strategy of how the physical network plays a role in being community oriented.
Jimmy Stead: Yeah. We’ve decided to try to double our size in Houston, and that is part of our organic growth strategy. And we are very committed to it. We’ve already opened up 20 additional locations in the Houston market, and we’ve got five more to go plus just outside the Houston market where we’re going into Bryan–College Station. I think the real core of your question is obviously branches are a little less needed over time less and less needed to take care of transactions. And it’s undeniable that the pandemic has sped that process up, it’s less need for transactions in the branch. But I still don’t think it means the branch is dead, at least not for a company like Frost Bank. We’re really at our best when we have people who in communities, that are engaged in communities, are making a difference in communities. And for us, the brand serves as a focal point. So we have a lot of communities that we weren’t serving as well as we could in Houston. So we set out to fix that.
Sean Keathley: The other thing that really stands out with Frost, you have so many tenants of a community bank mindset, but the sophistication and the forward thinking, that’s allowing you to compete above your fighting weight. At $40 billion, you are competing with banks much bigger than you and you’ve been outlining why.
Gina Bleedorn: If I was a CEO of a financial institution, what is keeping me up at night?
Sean Keathley: I think the dual pressure of keeping associates safe, making sure they know we care about them in that intense pressure to honor those communities and help them succeed in a very trying time.
Gina Bleedorn: What about credit pressures and the rate environment and my shareholders?
Sean Keathley: In a financial crisis that was created from a health crisis that is now being amplified by social unrest. So I think helping our clients rebound and survive and trying to balance keeping the institutions safe, but not losing the consumer. And I think the more of a unique relationship you can create, the more you play the long game with your end consumer.
Gina Bleedorn: Brand value. What we talk about why brand at all, why not just be a product and do infomercials? It’s the next best product with a slightly better feature will outdo you or that’s 3 cents cheaper. But to your point, you can’t beat real value if it’s unique.
Sean Keathley: You’ve been saying that and I think-
Gina Bleedorn: You finally believe me?
Sean Keathley: I’ve heard you say that. I’ve heard you tell bank boards. I’ve heard you talk to credit union CEOs. I think if you were to say it today, they may better understand.
Gina Bleedorn: The way I think about it, you’ve got two things. You’ve got the virtual you and the physical you. And the virtual will you is your brand and you can’t touch it. The brand is you, your purpose, your people and your physical presence is how you exist and when you are a business that delivers services and no tangible things, that’s where the service is disseminated and that’s in your branches and all the places where you touch customers. So those are where you focus on making genuine connections and having a brand instead of just a product or a feature.
Sean Keathley: We’ve had great discussions and heard so many inspiring stories, and we want to continue that conversation into 2021. Please be sure to tune in January and we’ll continue talking about why we Believe in Banking.
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.