Access to capital is necessary fuel for any type and size economy, and thanks to the River Region’s many banks, the funds and services required to do business are right here. But these financial institutions and the thousands of people they employ do so much more in our community than store and lend money. They’re engaged citizens working hard to better the quality of life where they (and we) live. That’s a fact you can take to the bank.
Another truth: If you’re a banker in the River Region, no matter which institution’s name is on your business card, you’ve got stiff competition all around you. With more than 20 distinct banks, the banking industry is big and robust in our area, and each bank is constantly vying for customers. And as veteran local banker Ray Petty (he’s been in the business since 1972 and now sits on the board of ServisFirst Bank) explained, they all do basically the same thing. “Montgomery is blessed to have a lot of very good banks, the whole lineup from large national banks to small community banks to everything in between, but at the end of day, all banks serve the same purpose and offer mostly the same products and services,” he said. Yet the way they deliver these products and services does vary, sometimes widely, and that’s a great thing for consumers. “All of these institutions are here to serve the community and have different business models,” said Pete Knight, Montgomery Market President of Renasant Bank. “Some focus on general community banking, some small business banking, while some are experts in retail and consumer banking. This means the Montgomery area should have plenty of financial alternatives to meet its needs.”
For bankers, putting emphasis on specific markets or niches gives them the opportunity to stand out in the crowded field and target a particular audience. And even head-to-head competition is healthy and beneficial to both bankers and consumers, according to Arthur DuCote, Executive Vice President of Regions Commercial Banking. “Choices and competition are always good,” he said. “It certainly makes it more challenging for bankers, but it makes for better bankers and better outcomes for customers.”
Carl Barker, Montgomery Regional CEO/President of ServisFirst Bank, agreed with Petty, Knight and DuCote, noting how facing worthy “opponents” is personally rewarding. “While we have 25 banks, and we all deal with the same basic commodity, which is money, we are all different in the way we present that commodity in the form of products and services, so customers have many choices,” he said. “It makes it exciting for me to come to work every day knowing that I have strong competitors out there.”
Our area bankers are mostly friendly adversaries, understanding how, as an industry, they have the ability to affect and shape the entire region. “It takes all of us to meet the banking needs of the region’s businesses and individuals,” DuCote said. “All of the banks work together to promote the well-being and progress of our community, including tangible banking product and service delivery and substantial community support in the form of charitable donations, sponsorships, and contributions. Taken as a whole, no other industry in the community is more charitable and supportive than the banks.”
Bruce Crawford, Montgomery CEO of BBVA, echoed DuCote on the industry’s role in the River Region’s philanthropic and quality of life arenas. “Bankers have long been considered some of the leaders in the community as they are often deeply entrenched in community activities. Board service, volunteer work, fundraising, church and civic groups — check the roster, and you are likely to find the name (or names) of bankers in every area of service,” he said. “That’s a big part of what having a multitude of banks adds to the community — people who genuinely care and work to make the River Region a better place.”
A long list of banks also adds to a local economy in quantifiable ways, employing many and by virtue of the services they provide, enabling other industries and companies to come here and grow here. “A thriving banking industry is critical to any community economy,” Petty said. “They contribute greatly to the creation of jobs because as other businesses expand or locate here, they have to borrow money to do so. The vibrancy of the business community is dependent on banks and their ability to provide that funding.”
In It Together
While all banks may do essentially the same things, they also face many of the same issues, some of the most challenging are the always shifting regulatory environment and the cyclical ups and downs of the economy. Petty pointed to the old adage, “The only constant is constant change” to describe where his industry stands — and where it has always stood. “The industry is going through changes now, but it has always gone through changes,” he said. “I hear some say things about ‘the good ole days,’ but banking was changing every year even back then.”
Still, current regulations are seen by some as cumbersome at best and strangling at worst. “We share some of the concern within the U.S. banking industry that financial regulation has become too complex and burdensome,” Crawford said. “We support efforts to modify regulation in a way that would support more robust job growth, increased lending and capital creation.”
Barker shared a similar sentiment but noted that regulations are equally applied and now, are simply a part of doing business. “There were some additional regulations that were imposed on the industry at the time of the recession and some of them can be viewed as a bit excessive,” he said. “But we all have to deal with them, so we adapt and move on.”
Beyond the Branch
Evolving with the times and rolling with punches is nothing new to the banking industry. For decades, interest rates have risen and fallen; rules have been altered and revised, but one change unique to the last 20 years is the rise of banks’ reliance on technology, a switch that comes with pros and cons, as Petty explained. “If you have a smart phone, you have a bank in your pocket,” Petty said.
Today, cash deposits and withdrawals are the only reasons anyone has to go to a physical bank. Mobile and online banking make things faster and easier for consumers, and technology is leveling the playing field, allowing smaller banks to do more with less and therefore better compete with large banks. But it’s not all gain; there are concerns and costs, as DuCote explained. “We want you to be able to bank when you want to, where you want to and with ease. Secondly, we want the use of our technology to keep your business with our bank safe. We invest the resources necessary to accomplish that, which is no small task,” he said. Regions annually spends $675 million on technology. Next to employees, it is the bank’s largest operating expense.
Barker pointed to the rise of cybercrime as a consistent tech-specific threat. “Being able to pay bills, handle other transactions with an app on a mobile device and have instant access to information about an account is extremely valuable,” he said. “But there are challenges. Cybercrime is the biggest. We work hard every day to protect our customer’s accounts.”
And, according to Knight, some things are lost in the transfer to heavy technology use. “We have cheaper, more efficient delivery methods for banking products, but the challenges center around the lack of customer contact because there is virtually no need for visits to our branches where we can interact,” he said.
Petty has seen the same decline in banker-consumer engagement. “Back before the rise of computers, regular visits to the bank used to be social in addition to a necessity for most people,” Petty said. It’s a key point. While almost every banking function and transaction can be carried out remotely, some people still choose to do some of their banking face-to-face; forging and cultivating relationships with consumers is still a vital part of the banking business model. “People bank with people, not with a sign out front or a logo,” Petty said. “Particularly when it comes to lending, relationships make a big difference. And that’s another reason having access to multiple banking choices is of such benefit to consumers. “Different people click with different people and different ways of doing things,” Petty said.
Knight offered evidence of how personal connections remain integral to success in banking. “The banking industry was challenged during the last recession, and in markets like ours where small businesses and consumer business dominates, the strong winners were the community banks and local bankers who held onto these relationships,” Knight said. More proof? Bank buildings aren’t empty; they haven’t been totally supplanted by websites and apps yet. “Twenty-five years after online banking was first introduced, bank branches are still around, and people still use them because they appreciate that human interaction, the human assistance and expertise,” Crawford said.
DuCote agreed with his colleagues, pointing out that an emphasis on relationships is an aspect of banking that will never disappear. “The business of banking has actually changed very little. It has always been a relationship business.” And according to DuCote, the correct use of technology by banks enhances relationships; it doesn’t replace them. “Banks today accomplish developing and maintaining those relationships with old school face-to-face visits and utilizing new technological tools,” he said.
As the pace of advances keeps quickening, there’s little doubt that 20 years from now, many everyday tasks will be done differently, but again, some things never really change. “Consumers bank differently now than just a few years ago, but banking will never stop being a service business and a people business,” Petty said.
State of the Industry & Economy
Despite some challenges, “strong and stable” is the consensus answer when MBJ asked River Region banking leaders about the state of their industry and about our national and local economies.
On Solid Footing: “The current state of the banking industry is on solid footing, having the strongest balance sheets and capital in modern history. Banking is a cyclical business, so it is important to be prepared for good times and bad times, at all times. The state of the local and national economy is good, while showing signs in some sectors of slowing after a long, record period of growth. Business, whether in your household or company, thrives in consistent and positive environments. The current political and social environment of growing polarization is probably our greatest challenge to a positive outlook which impacts actual business results. As we all know, an environment of everyone working together for the betterment of their community supports a stronger economic and social environment for everyone.” - Arthur DuCote, Executive Vice President Regions Commercial Banking
Strong Spending: “The current state of our industry is strong and stable. We are currently in a declining rate environment, which creates uncertainties that bankers typically do not like. Even though we have political and global issues, national consumer spending is strong, and our unemployment numbers are very good, which always supports our outlook.” - Pete Knight, Montgomery Market President at Renasant Bank
Declining Interest Rates: “While declining interest rates create a difficult operating environment for the banking industry as a whole, it has created mixed results for our customers. The interest rate environment is beneficial for businesses and consumers who are looking to borrow money, but obviously less so for investors in money market accounts and CDs. Here in Montgomery, we continue to have good opportunities for growth across a number of sectors, including consumer, business banking, corporate and commercial real estate.” - Bruce Crawford, Montgomery CEO of BBVA
Stable Local Economy: “We are very fortunate to have a stable local economy, mostly thanks to our state government, strong military presence and strong support of our business markets. Some argue we suffer from a lack of wealth because we have a limited supply of higher paying jobs, but we have a strong middle class that keeps us from having big swings in our economy. Our local unemployment rate is at a record low and indications are we have good job opportunities on the horizon for the coming year.” - Pete Knight, Montgomery Market President at Renasant Bank
Small Banks Stand Out
The River Region offers a wide range of sizes when it comes to banking, and that’s a good thing. But when it comes to business banking, should big companies work with big banks and small businesses seek out smaller banks? We asked Caryn Hughes, Senior Vice President and Alabama Commercial Lending Executive at Valley Bank, if size really matters.
How does your bank stand out, particularly when it comes to what it can do for area small businesses? Valley is unique in a sense that we’re large enough to provide the products and services of a big bank, while maintaining the feel of a community bank. We have the balance sheet and capacity to serve large customers but in a very customized way. When it comes to our small business customers, we have extensive experience with Small Business Administration (SBA) lending. In fact, we’ve previously-ranked as one of the top three SBA lenders in Alabama, based on loan volume figures provided by the SBA Alabama District Office.
Do you think that smaller banks can better serve local small businesses? All banks can compete with their products and services, but the differentiator is the people who work at the bank. A banking relationship that’s based solely on transactions will only get you so far. At Valley, we pride ourselves on the relationships we make with our customers and the community. We strive for customer loyalty — and we do that by getting to know them.
Sure, small business owners might typically turn to us for loans and ways to maximize funds, but it’s our job to have first-hand knowledge of that business’ successes, challenges and opportunities. It’s about the people, not necessarily the size of the bank. - Caryn Hughes, Senior Vice President and Alabama
Commercial Lending Executive of Valley Bank
Model Growth: River Bank
In 2006, a new bank burst on the scene: River Bank & Trust. Founded in Montgomery, the bank has grown into one of the largest state-chartered banks in Alabama, with current assets exceeding $1.1 billion and 200 employees in 16 locations, including 93 in the River Region. President Jimmy Stubbs calls the growth both “organic and strategic.” Much of its success has been the natural result of its ability to attract customers, thanks to an emphasis on relationship-driven hospitality and involvement in the towns and cities it serves.
But a large part of its growth game plan has relied on mergers and acquisitions, as Stubbs explained. “River Bank has utilized M&A opportunities and de novo startups as a significant part of our growth strategy,” he said. “The opportunities have provided both balance sheet growth and increased earnings per share for our shareholders.” River Bank’s most recent merger — with Trinity Bank — was finalized at the end of last October and marked the third since 2015.
Yet it’s not just facts and figures factoring into River Bank’s M&A decisions. Stubbs and his team have taken great care to preserve River Bank’s community-centered philosophy. “We’ve merged with banks that have similar cultures and community-focused values; that has been key when it comes to integration and assimilation,” Stubbs said. - Jimmy Stubbs, President of River Bank & Trust
ASK THE EXPERTS
With the prevalence of online and mobile banking, are relationships still important in banking? If so, why?
“We are a relationship bank, that’s what we’re about. So of course, I believe relationships are still important in banking. But it isn’t a question of ‘either or’ for us. As customer expectations change, we’re redefining how we engage with customers to build and nurture these relationships, and technology is a huge part of this. Our customers want to feel valued and appreciated, and they want access to a team of experts – but they want it all on their terms, whether in person or through our mobile banking app.” - Mark Snead, President & CEO of Synovus
“The short answer is absolutely. Like most industries, banking has evolved with the cyberage. In addition to online and mobile banking, debit card transactions, third-party payment options, remote deposit options and a host of other traditional banking operating updates have put distance between customers and brick and mortar banking associates. Research confirms that customers, particularly younger generations, want the ease and flexibility associated with automated services. Nevertheless, the same research indicates that customers across all generations still want and appreciate competent advice
when they have questions, encounter problems or need guidance on the nuances of their various banking options. The latter makes relationship banking even more important than before.” - Tod Etheredge, Executive Vice President, Retail & Commercial Banking Manager – Montgomery Metro, Trustmark
MGM CHAMBER #ATWORK
The Chamber team works every day to stay a trusted and valuable partner to all of our area’s businesses and industries, and our community’s banks are no exception. Here’s how local bank industry leaders rank the Chamber’s role in their success.
There is an old saying, “A rising tide floats all boats.” The Chamber works to support and improve the economic well-being of the business community — that is its mission. Why is that important? Because it seeks new partners (both national and international) to come to our area, and it encourages the economic development that enhances quality of life for our citizens. Expanding business in our area helps bring economic stability to families. - Bruce Crawford, Montgomery CEO of BBVA
We have one of the most active and most respected Chambers in the Southeast. Our ability to grow and prosper as a bank is largely dependent on the Chamber’s success. This helps our consumer and commercial initiative. Our Chamber is constantly recruiting industries to our market, and the pipeline is very encouraging, but just as important is its support to existing industries in helping with plant remodeling and expansions. This may or may not include additional employment opportunities or equipment purchases, but the key is the total investment in our community increases. If businesses are expanding or investing in their physical plant, they most likely will not leave. - Carl Barker, Montgomery Regional CEO/President of ServisFirst Bank
The Chamber in Montgomery plays a truly unique role in our community that a lot of people do not understand. The Montgomery Chamber of Commerce is our primary industry development entity for our city and has been for many years. Many cities have this function broken into several areas in their communities. Ours is one team and the results show it. The Montgomery Chamber is THE entity that takes the lead on the region’s efforts to maintain and grow our businesses, working directly with the State, the County, the City, adjacent communities and the Alabama Retirement System. It is a one-stop shop that drives that effort for the benefit of us all. I have had the pleasure of working in multiple communities in my banking career and have never seen a more effective, lean, team-oriented Chamber than the one found in Montgomery. - Arthur DuCote, Executive Vice President of Regions Commercial Banking
We have the best Chamber that I have worked with over my career. It fosters growth by working to bring new business to town, and it also assists existing businesses by providing all kinds of assistance. The Chamber also works hard to create an environment that brings tourism to the area. Our Chamber makes Montgomery a much better place for businesses and residents. - Pete Knight, Montgomery Market President of Renasant Bank
RISING STARS: RIVER REGION BANKERS TO WATCH
We asked some area banks to share the names of their team members under 40 who are truly shining.
- Draper Stanford, Commercial Relationship Manager
- LaShenna Clayton, Branch Manager Western Branch
- Anne Dalton, Private Wealth Relationship Manager
- Jonathan Avant, Business Banker
- Ahmee Mun, Commercial Relationship Associate
- Christian Ware, Commercial Banker
- Chapman Barranco, Assistant Relationship Manager
- Chase Chambliss, Vice President & Relationship Manager
- Shannon Webster, Associate Relationship Manager
- Clay Cook, Financial Advisor at River Financial Services
BANKING INDUSTRY BY THE NUMBERS
- Number of banks: 11
- Total number of offices: 16 Deposits (as of June 30, 2019): $610,465,000
- Number of banks: 10
- Total number of offices: 20 Deposits (as of June 30, 2019): $853,725,000
- Number of banks: 20
- Total number of offices: 63 Deposits (as of June 30, 2019): $6,925,707,000
SIZE SNAPSHOT: RIVER REGION
- Regions: 19 Branches; 200+ Employees
- BBVA: 7 Branches; 75 Employees
- Valley Bank: 6 Branches; 46 Employees
- ServisFirst: 2 Branches; 35 Employees
- Renasant Bank: 2 Branches; 18 Employees
- River Bank & Trust: 6 Branches; 93 Employees