Independent Banker - January 2020 - 43

Community Bank CEO Outlook 2020
rainmakers for the fi rst time ever to help achieve its
deposit mandate and is opening its fi rst new offi ce in
a decade across the bay in St. Petersburg, Fla. It's also
opening a loan production offi ce.
Compliance costs stabilize
Just as important, the community bank has made
internal improvements, with senior managers dedicating
nearly 500 hours to new systems, processes and execution
road maps. The goal is to put a structure in place that will
allow it to grow into and fl ourish as a $600 million-asset
bank, Barrett says.
First Citrus Bank is also enhancing its internal culture.
The senior management team " is clicking, and it's
contagious, " he says. " That's the soft stuff that will drive
the fi nancial outcomes that we're seeking to attain. If we
don't have the right operating framework qualitatively,
all the checking accounts in the world don't matter. We
still need the appropriate risk management framework in
order to capitalize, harness, leverage and arbitrage those
beautiful low-cost funds. "
Growth is also the name of the game at $700 millionasset
Brentwood Bank in Bethel Park, Pa., as the bank
" plays the scale game, " according to CEO Thomas Bailey,
In 2007, First Citrus Bank in Tampa, Fla., spent
less than $25,000 on compliance. Now it spends
close to $500,000. Fortunately, president and CEO
Jack Barrett doesn't think he'll have to increase
spending, a change he attributes to regulators like
FDIC chairman Jelena McWilliams.
" I think she gets it; 'it' meaning less is more
when promulgating banks to be an agent for social
reform, " he says, lauding McWilliams' transparency
and sincerity. " She understands there is as much art
as there is science in the community bank space. "
Barrett is not alone. Just 26% of community bank
CEOs rank regulatory compliance as a top-three
concern, the survey found, compared with 34% last
year. Compliance spending continues to decline,
with just 32% of CEOs expecting to increase their
spending by at least 5%, compared with 40% in
2019 and 62% in 2017. Almost two-thirds (62%)
expect compliance spending to remain the same.
Tom Moran, president and CEO of Community
Bank in Joseph, Ore., is among the 32% of
community bank CEOs who expect costs to
increase by at least 5%. The bank is considering
technology to increase eff iciencies or at least bring
more consistency to internal processes. He adds:
" A lot of ink has been spilled, about compliance
and regulatory reform targeting smaller financial
institutions, but to date we are not really seeing
a material change in that area that would warrant
less of a spend. "
Do you anticipate spending more or less
money on compliance in 2020?
2.2%
Not sure yet
" With the tremendous deposit
growth and just good loan growth,
our securities portfolio has
ballooned, defi nitely providing
a boost to profi tability. "
-Mark Francis, Golden Valley Bank
32.2%
Increase by
at least 5%
62.2%
Spending to
stay roughly
the same
3.4%
Decrease by
at least 5%
independentbanker.org Q 43
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Independent Banker - January 2020

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