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AGRICULTURE

How First Western Bank weathered 2020

Success in agricultural lending depends on many factors, and one of them—the weather—cannot be controlled by the farmer or their community banker. In 2020, the weather was good for the farmers and ranchers who count on First Western Bank & Trust for credit, and in turn, it was a strong year for the community bank.

“We had some timely rainfall, so we ended up having some very good yields in our area,” says Tom Larson, senior vice president, commercial and agricultural lending. “And with the increase of some prices and the government support payments, it ended up being a good year overall.”

The successful farm yields of 2020 were a pleasant change from the previous few years, says Larson, whose customers include cattle ranchers and wheat, soybean, corn and canola farmers. In 2018, crop prices were lower. In 2019, excessive rain fell during the harvest, which reduced quality of the crops and created problems for farmers getting their crops in.

In 2020, in contrast, farmers and ranchers in some other parts of the world had reduced inventory, which pumped up crop prices overall.

“And then there were some very good government support payments in 2020, some from the COVID stimulus and some from tariff relief,” Larson says.

The community bank way

But there’s more to First Western Bank & Trust’s success than just good yields and good weather.

“[Our lenders] have worked with our borrowers through many peaks and valleys. The borrowers know we will present them with a solution that works for everyone.”

—Brenda Foster, First Western Bank & Trust

“It’s all about building the relationships with the customers,” says president and CEO Brenda Foster. “[Larson] has been in the industry for many years. He and our other lenders have worked with our borrowers through many peaks and valleys. The borrowers know we will present them with a solution that works for everyone.”

Regular visits to farms and ranches help the lending team understand their clients’ businesses and their needs, Larson says. On the customers’ end, those visits help farmers and ranchers feel at ease working with the community bank.

“Sometimes, they feel more comfortable being on their own turf than always coming into our office,” Larson says. “And then when they do come in to talk about a specific piece of equipment or parcel land that they need, we know what they’re talking about, because we’ve seen it.”

Foster also credits the bank’s board of directors—several are local business owners—for being understanding when a borrower hits a rough patch and can’t make payments as anticipated. They observe the same conditions as local farmers and ranchers, so they know what’s going on and allow Foster and her team to continue working with the borrower.

A prominent indicator of First Western Bank & Trust’s ag customer relationships can be found at the entrance to its headquarters in Minot, N.D. There, you can find a collection of local ranchers’ brands imprinted in stone.

“Most of the brands were placed there by farmers in our area starting when the bank was founded in 1964,” Foster says. “They connected them to the bank. They really gave them a sense of ownership. When they came in with family or their children, they would show them the brand.”

CONSUMER AND MORTGAGE

Austin Capital Bank finds success in unlikely places

Austin Capital Bank’s strength comes from the fact that it’s a nontraditional bank—and that its founder and CEO, Erik Beguin, is a nontraditional banker. Beguin likens himself to a brand manager and the community bank to a fintech.

“When I go to banking conferences, I feel like the odd duck out,” says Beguin, whose background is in brand and product management, including a short stint branding antiperspirant at Procter & Gamble. “A lot of community banks are running the same business model, but I read the OCC [Office of the Comptroller of the Currency] list of permissible bank activities, and I figure out which ones no one else is doing and do those.”

Austin Capital Bank’s innovative character is evident on its website. There, the community bank prominently features its financial technology services, including various consumer fintech products. The bank describes itself as “like ridesharing for banking” because as an organization it’s technology-enabled and community-driven.

That clear focus on technology and innovation, plus the strength of its mortgage business, are the reasons 2020 was a successful year for Austin Capital Bank, Beguin says.

“I’m passionate about the community bank model. The reason I started the bank is that a community bank is one of the only entities that multiplies the wealth in the community it serves.”

—Erik Beguin, Austin Capital Bank

“We’re really a digital-first bank, so 2020 lent itself nicely to us,” he says. “And we have a mortgage division, and 2020 was a banner year for that.”

Austin Capital Bank wasn’t always on the list of successful banks. When Beguin and a partner launched the community bank in 2006—right before the Great Recession—they hired other people to run it. But the bank’s first two years were so rough that Beguin took the reins himself.

“When I took over in Q1 of 2008, we were the worst-performing bank in the state of Texas,” he says, “but I was too stubborn to let us fail.”

Taking the reins

Soon after taking charge, Beguin decided to stop traditional consumer and mortgage lending and focus on other markets, such as lending to investors.

“Lending to investors in Austin from 2008 to 2014 was fantastic,” he recalls. “Since I’m not a banker, I created products for people who didn’t fit the typical bank customer model. The success of those years got us over the hump and created a stable platform that has allowed us to build the technology platform and add the mortgage division.”

The community bank launched its mortgage division in 2018 and now has 14 loan production offices around the country. Its proprietary Trident technology platform, which Beguin may license to other banks in the future, allows Austin Capital Bank to offer financial services securely online.

Despite saying he’s not a banker, Beguin has served on various bank advisory boards, such as the Federal Reserve’s Community Depository Institutions Advisory Council and the CFPB’s Community Bank Advisory Council.

“I’m passionate about the community bank model,” he says. “The reason I started the bank is that a community bank is one of the only entities that multiplies the wealth in the community it serves.”

COMMERCIAL

Showing community banking’s true colors

COVID-19 challenged community banks, but when they rose to that challenge, they showed why their model is different. Wendy Ross, president of Bank of San Francisco, says the pandemic showed the positive difference a community bank can make.

“We felt we owed it to our clients and the community to be as active in the PPP [Paycheck Protection Program] as possible,” Ross says. “For several weeks, we took no weekends off, and I was getting emails at 2 or 3 in the morning. I think that intense period really brought home the meaning of community banking.”

That effort by Ross and other Bank of San Francisco staff powered the bank to “an extraordinary level of growth” last year, Ross says. Among the clients served by the community bank’s PPP lending was a restaurant owner who had failed to get a PPP loan from her—now former—much larger bank, Ross says.

“We found that a lot of the larger banks were slower than we were getting themselves ready to do these PPP loans,” she says. “In the first round of lending in March, the funding ran out and there was this sense of panic. This client realized that her relationship manager at Bank of San Francisco had worked through the night to get her loan done, and when she got it, she cried.”

Winning new business

The bank’s success at securing PPP money for its clients—mostly small to mid-sized businesses and nonprofits in the greater Bay Area—not only generated revenue but also resulted in a number of new permanent clients for the bank, Ross says. Many were referred by current clients.

“Typically, our new clients come to us through referrals, and they’re typically not getting the level of service they deserve through their existing banks,” Ross says. “The PPP gave us some wonderful opportunities with clients whose existing banks weren’t there when they needed them. They heard about us, saw us perform and now are moving their entire relationships to us.”

Lending at Bank of San Francisco is a team effort, Ross says. Relationship managers initiate loans, and underwriters handle the credit work behind the scenes. A commercial banking associate also gets involved in most business customer relationships. And it’s not uncommon for borrowers to meet senior management.

During the pandemic, the community bank’s relationship managers regularly connected with clients over the phone or virtually to see how they were doing. They reviewed their portfolios with senior management quarterly, often giving updates client by client, Ross says.

“I think our clients really appreciated the fact that they were hearing from their banker regularly, and not in an adversarial way,” Ross says. “Everyone was working collaboratively to get through this period. All in all, it’s been heartening to see how our clients plowed through this period.”

The Bank of San Francisco’s work to help local businesses survive 2020 made true its slogan: “With You When It Matters.”

“Boy, did last year really bring that slogan home,” Ross says. “We are entrepreneurs serving entrepreneurs. And we have an undying commitment to our community.”