Independent Banker - January 2021 - 44

2021 Community Bank CEO Outlook
has worked to reduce fatigue and
keep morale high while utilizing
a rotational schedule with two
separate teams to limit exposure.
" We've encouraged supervisors
to do special things for employees
like award a spot bonus if someone
is doing exceptional work, " says
president and CEO Pete Johnson.
" We're encouraging people to be
creative in the branch.
Opportunity Bank of Montana
is not the only community bank
that's trying to build a better work
environment. Roughly one in fi ve
CEOs say attracting and retaining
qualifi ed staff is among their bank's
greatest challenges.
Eyeing future loan growth
With a bounty of deposits,
community bank CEOs are even
more focused on loan growth
than the past two years. Nearly
half (48%) of CEOs say increasing
loans will be among their greatest
challenges in 2021-up from 33% in
2020. It's also the top goal of 14% of
community bank CEOs.
Not everyone is optimistic that
growth is likely. " I don't see any
meaningful growth in loan revenue;
however, we are starting to see good
customers wandering away from
competitors who are experiencing
change, " Propst says. " I think there
will be continued weakening of net
interest margins. "
While Propst expects to gain some
income when the bank reinstates
fees it waived for customers
when the pandemic began, he
doesn't expect them to have a
dramatic impact.
" I hate to say this, but for as
long as I've been in banking, we've
been asking, 'How do we diversify
revenue away from NIM and
increase fee-based revenue?' " he
says. " The reality of it is, unless
you get into low-rate environments
16.4%
More
branches
Does your bank anticipate
having fewer or more
brick-and-mortar branches
at the end of 2021?
70.3%
No change
8.0%
Fewer branches
5.3%
Not sure yet
like now, with banks selling into
the secondary market of mortgages
where you have just a massive
stream of income coming in, we
are who we are. We rely on net
interest margins and the idea of
meaningfully increasing fee income
is just playing on the margins. "
Others are more hopeful.
Opportunity Bank of Montana has
a good pipeline of commercial real
estate and commercial lending,
and Johnson anticipates " decent "
growth. While lending activity
slowed when the pandemic fi rst
hit, Montana's economy has been
resilient, and there is pent-up loan
demand, Johnson says. Some of
the community bank's markets are
seeing strong growth, especially as
city dwellers continue to move out
West, he adds.
In your local or regional
market, which is your
community bank's most
significant competitor?
16.8%
A money center or regional bank
46%
Another
community
bank
19.1%
A credit
union
Flagship Bank in Clearwater,
Fla., plans to grow relationship
deposits and loans by expanding
into new markets and " reintroducing
community banking " to potential
customers, making it among the
16.4% of community banks that
expect to have more brick-andmortar
branches by the end of 2021.
The vast majority-70%-expect no
change in their network.
" For every market we go into,
we hire our team fi rst and then
we worry about real estate, " says
Bob McGivney, CEO and vice
chairman of the $300 million-asset
community bank. " It's the antithesis
of 'build it and they will come.' That
doesn't happen. If you don't have
relationships, you won't grow in
that market. "
3.1%
1.3%
A fintech
lender
A megabank
13.7%
A Farm Credit
System Lender
Competition remains varied
among community banks. While
most competition comes from
noncommunity banks, 46% of
executives say other community
banks remain their most signifi cant
competition. Meanwhile, 16.8%
pointed to money centers or
44 Q ICBA Independent Banker Q January 2021
Independent Banker - January 2021

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