Independent Banker - January 2020 - 45

Community Bank CEO Outlook 2020
with fi scal discipline, maintaining interest margins and
keeping the loan portfolio strong-the top priority at 10%
of community banks.
The interest rate environment and the potential for a
fl at yield curve is the biggest challenge to profi tability at
Brentwood Bank, in the suburbs of Pittsburgh. " We're
defi nitely a spread bank, " Bailey says. " We make the loans
and gather the deposits. There's not a lot of fee revenue. "
The commercial real estate lender is ramping up its
residential lending to drive profi tability in 2020. It's
hired an additional residential originator and brought
Community banking remains as competitive as
ever, with other community banks reported to be
respondents' most significant competitors (42%,
up from 37% in 2019). And CEOs are decreasingly
worried about nonbank competition. Nearly 7%
of CEOs say competition from nonbanks is a top
concern, down from 14% in 2019.
" We have seen more new entrants into
[commercial real estate] investment and real
estate lending than ever before, " says president
and CEO Jack Barrett of First Citrus Bank in Tampa,
Fla. " We have out-of-state new entrants [and] outof-market
new entrants, and a large community
bank in our market is now in the CRE lending
space for the first time in over 30 years. "
Community banks' long-term foe, credit unions,
in an expert on the bank's new loan software. The goal
is to make the most of its investment by maximizing its
functionality and automating the loan process.
It's all about the loans
Loans remain the top driver of community bank
profi tability, the survey shows, particularly residential
mortgage and commercial real estate lending (47% of
respondents). Loans are also expected to be the largest
source of revenue growth in 2020.
One-third of respondents cite growing loans as a top
challenge, down from 39% in 2019, and 13% say it's their
bank's single most important business goal for 2020.
Golden Valley Bank in Chico, Calif., experienced a
huge infl ux of deposits after one of the most destructive
wildfi res in U.S. history destroyed 14,000 homes in a
neighboring community in late 2018. Loan growth hasn't
kept pace with a surge in deposits-a result of insurance
proceeds and charitable giving, says Mark Francis, CEO
of the $346 million-asset community bank.
" With the tremendous deposit growth and just good
loan growth, our securities portfolio has ballooned,
defi nitely providing a boost to profi tability, " he says.
Community Bank is hopeful that technological
In your local or regional market,
which is your community bank's most
significant competitor?
1.1%
A fintech lender
7.8%
A Farm Credit
System lender
5.6%
A megabank
20%
A credit
union
23.3%
A money center
or regional bank
independentbanker.org Q 45
42.2%
Another
community
bank
present the greatest competition for 20% of
community banks, while Farm Credit System
lenders are major players in 8% of community
bank markets.
On a related note, 6% of respondents say
remaining competitive and improving the
customer experience is their number one goal
for 2020.
Hustling to outsmart the
competition
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Independent Banker - January 2020

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