Eide Bailly recently sat down with Bill Stovall, CEO of Community National Bank in Texas, to hear his thoughts on the current state of the banking industry.
EIDE BAILLY: Community National Bank is approaching its 35th anniversary, growing from one location to 10 in that time. What are the keys to continued success?
Bill: Our success is really due to our people and making a decision to bring in young talent. We made sure to bring in some experienced bankers as well, but we’ve really had a lot of success recruiting and growing our own team. That has given us quality people from top to bottom who understand our economy. We all remember 2016 as a tough year, but because our people were so well-trained, we got through it, especially on the credit side. We had just as good of an exam that year as we would expect in good times. We have good processes, and that’s because we have good people who are committed to the bank and our success. We have a loyal employee base. I know that is not unique to our bank, but we really try to build a culture that our customers and our staff want to be a part of. We’ve had good people from our competition come to us because they want to be part of our culture, too. Our customer growth is because of our culture.
In addition, we’re also trying to diversify and not be as locked into the cycles of the oil and gas industry. We just opened a loan production office in the Dallas-Fort Worth area with the intention of opening a full-service branch, though we’re being patient. That’s been a big event for the bank this past year.
EIDE BAILLY: How do you maintain a culture that attracts community members to the bank?
Bill: We’re in competition with the oil companies when it comes to benefits. These large, independent, publicly traded companies offer things such as workout facilities, cafeterias, physicians and daycare on site. So, what are we going to do when we can’t match that kind of expense? We try to foster a strong culture that’s open, honest and flexible. I tell our employees we’re not naïve, we know that there are things they would rather do some days instead of coming to work. My hope is that when they get up for work on Monday, they say they are thankful that it’s for Community National Bank. We provide a lot of time off for family and for community service. We offer the flexibility to have a life outside of your job. We give staff their birthday off, we have floating holidays, you can buy time off as part of our United Way campaign, and we have fun events throughout the year. We have a Christmas party with a talent show that we model after American Idol. All of a sudden you are seeing employees that say little during the day get up and sing. It’s a challenge in this market to keep people, but we have good retention. We take our jobs seriously, but we have a good time along the way.
EIDE BAILLY: How is the current regulatory environment affecting your bank?
Bill: Since Dodd-Frank, we have followed the book as well as we can. Regulation is always going to be a challenge. The one thing that has been consistent in my 42 years in the industry is change. The federal bill that’s been introduced recently could give us some relief in areas such as HMDA, regulatory capital and examination burdens. We’re on a 12-month exam cycle, and if they raise the threshold in regulatory relief, we would go back to an 18-month cycle. But I tell our staff if we’re doing what we need to do, it doesn’t matter when the exam comes. There’s not any single issue that’s preventing us from managing and operating our bank the way we want to.
EIDE BAILLY: What do you think are the major concerns currently facing community banks?
Bill: Our market is unique because we are in the oil and gas industry, and it’s only been in recent years that we have been able to get through to the regulators that we’re a one-trick pony—no matter what type of business we deal with, that business is affected by the oil and gas industry. I think the smaller banks are going to continue to be challenged by the expense of the regulatory burden. We’re at a size where we’ve been able to absorb those costs. Sure, it would be nice to reduce those costs, but it’s not affecting how we’re performing. I think it’s going to be tough for the smaller banks in small communities to get a return that will sustain their operation. We’ll likely continue to see more M&A activity. A lot of the competition we have currently are banks that started out in smaller communities and then had to come to the Midland-Odessa markets to survive. It’s helped them grow, but there are still many banks who are facing the challenge of being efficient at a certain size.
EIDE BAILLY: How does your bank tackle the challenge of keeping up with technology?
Bill: We have in-house staff who are always in training and always looking into technology trends. The big banks are the ones who create a lot of the products we use, but we like to let them do the testing and marketing to make sure an idea works, and then we base our decisions to change on customer demand. We’re really a commercial bank, but a lot of the young people who are creating new success in business want the latest technology. We’re making sure we’re keeping up and doing our due diligence when vetting new technology for our customers.
EIDE BAILLY: How can community banks ensure they have a successful future?
Bill: Continue to do what we do and understand the purpose of a community bank. We do pretty much the same thing as the big banks, and we tell people that, but we need to keep up with the technology and services. The key is to still foster local commerce and be part of the community. That’s something we don’t see the larger banks doing any longer, and that’s still important. Time will tell, but I think mainly our success is tied to being able to do the right thing, to do what’s good for the company and the customer. At Community National Bank, we want every customer to feel like they are the only customer we have. That’s been said by a lot of banks, but that’s the philosophy I grew up on, and that’s the message we were built on, all the way to our front-line tellers.
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