40 Under 40: 2023 Community Bank Leaders

Edited by Tiffany Lukk / Lettering by Luke Lucas / Artwork by Randall Nelson

Lenders

In a tumultuous housing market, these community banking leaders demonstrated quick thinking and good judgment, leading to easier mortgage processes and more housing security in their communities. By Beth Mattson-Teig

Raising the bar on mortgage best practices

The current mortgage market is difficult to navigate for both borrowers and lenders. Higher interest rates have pushed some homebuyers to the sidelines, while others are struggling to find a dream home that checks the right boxes in what remains a supply-constrained market.

“There’s a lot at play that makes this a very challenging market to be in,” says Darryl Caffee, senior vice president and director of retail lending at Webster Five Cents Savings Bank in Auburn, Mass. “The good news is that I think community banks are really well positioned in the mortgage business, particularly when compared with mortgage companies.”

The $1.1 billion-asset community bank’s approach is to identify an issue, such as a borrower’s access to down payment funds, and find ways to mitigate that issue to make the path to homeownership easier. Since 2020, Webster Five has introduced several programs that have offered closing cost credits to certain groups of borrowers, including low- to moderate‑income (LMI) borrowers, first responders and people within underserved Gateway Communities, among others. “It was something that we could do quickly and implement immediately, and it has had a significant impact,” says Caffee.

Community banks are working to make customers aware of the different programs that are offered in-house and through various public agencies, especially for first-time homebuyers. For example, cfsbank in Bentleyville, Pa., is educating its customers on the First Front Door (FFD) program, a federal grant program offered by members of FHLBank Pittsburgh. FFD provides qualifying borrowers with grants of up to $5,000 that can be put toward closing costs and a down payment.

“Even though we can’t control the high-rate environment we’re in, we can control how we focus on our customers,” says Katelyn McCauley, a branch manager at the $600 million-asset bank. “We keep our customers at the forefront of everything that we do, and in return, we gain their trust, even in a very competitive mortgage pricing environment.” 

Thinking outside the box

Community banks are adopting new strategies to help generate mortgage business. One marketing move cfsbank took recently was to register the bank as a lender on Zillow. McCauley came up with the idea when she was using the app herself. She did some digging and found that she could get the bank included on Zillow’s mortgage lender hub, for free, with email inquiries routed directly to the bank based on zip code. 

Getting linked to Zillow puts the cfsbank name in front of a larger group of homebuyers, and now it’s a process that continues to work on its own, notes McCauley. The Zillow listing also helps the bank connect with younger, tech-savvy customers. 

“We just try to make sure we are keeping up with the times and adding products, services and technologies that will allow us to grow,” she says. 

Another key step that cfsbank has made is to expand its sphere of influence by strengthening relationships with real estate agents, home builders and construction companies. McCauley attends a variety of events ranging from business expos to chamber of commerce luncheons. Meeting people and exchanging business cards creates a personal connection where realtors and builders have someone they can reach out to directly with a question or a referral, and it helps to keep the bank’s name at the forefront in the community, she says.

Timely technology upgrades

Banks are continuing to lean more heavily into technology to both increase efficiency and provide a better experience to the customer. Stephenson National Bank & Trust recently made the transition from using Mortgagebot to the Encompass loan originating system. 

“We just wanted to make things a little bit easier, and the new system has helped immensely,” says Alyssa Manley, a mortgage underwriter at $675 million-asset Stephenson National Bank & Trust in Marinette, Wis.

Underwriting that used to take about five days now takes an hour or two at most. Those efficiencies also have cut the overall days to close from 55 down to between 30 and 40. Borrowers also can upload documents at their convenience from home or work and at whatever time they choose. 

“There have been a lot of people in our community who have come back and said, ‘I can’t believe how fast that closed,’” says Manley. That speed helps to generate repeat business and word-of-mouth marketing for borrowers who are telling their friends or neighbors, she adds. 

Stephenson National Bank & Trust is now working on adding more virtual lending capabilities, as well as exploring ways to streamline its closing process. Younger customers in particular are doing everything online until they have to sit down at the closing table, while older customers might prefer to come into a branch and talk with a lender face-to-face. 

“We want to make it so that we are accommodating the customer where they are the most comfortable on the tech side wherever we can,” says Manley.

Webster Five is continuing to take steps to improve on its technology platform. The bank introduced Blend in 2019 and has since surrounded that system with other best-in-class tools, such as Optimal Blue as its pricing engine, Surefire as its CRM and Reggora for appraisal management. The bank recently began a project to implement Encompass as its operating system. 

“We felt as though you had to first leverage the technologies that could drive business, then once you can generate business, implement some of the tools that make the back-office functions easier and more efficient,” notes Caffee.

He also sees more opportunity ahead for community banks to reach a more diverse homebuyer market. Fannie Mae and Freddie Mac are both dedicating resources to special purpose credit programs, and they are encouraging financial institutions to develop those same programs. Along those lines, Webster Five has introduced a First Step credit program that helps customers establish credit. 

As Caffee says, “It is so important that we bring some of those underserved communities into the homeownership sphere and start getting that equity.”

Educators

These community bank leaders know the value of education.

Innovators

Putting customers at the center of tech innovation

With an eye to the future and a finger on the pulse of new technology, these leaders are helping their banks make strides in the innovation space. By Elizabeth Judd

Using the latest technology, farmers can subdivide their fields, apply variable rates of fertilizer and seed after testing small subsections of soil and determine what’s required, says Todd Borchardt, chief ag credit officer and president of the Langdon, N.D., location of Choice Bank.

Farmers are not the only ones refining age-old ways of running their businesses. Taking a signal from customers at the vanguard of agricultural change, Borchardt and his fellow bankers are using technology to deliver improved finance solutions at the $4.2 billion-asset community bank.

“If it’s springtime, it’s planting time. We can’t be face-to-face with our borrowers because they’re too busy,” says Borchardt. Choice has therefore introduced digital banking solutions, from DocuSign to paperless systems, that let farmers use their tablets or smartphones to secure necessary financing without losing sight of their tractors and land.

For bankers, everything from promissory notes to security agreements can be viewed online and offer impressive time savings. “We get quicker results with fewer people touching documents,” says Borchardt. “There’s a lot less redundancy.”

Customers are one of many forces driving community banks to change, according to these 40 Under 40 honorees. For instance, Max Anderson, assistant VP and commercial lender for $380 million-asset Honor Bank in Traverse City, Mich., is upgrading his community bank’s user interfaces to better serve his Midwestern customer base.

“User interfaces are extremely important. People don’t always remember what you told them, but they do remember how you made them feel,” says Anderson. 

“We want them to be happy because banking with us was quick and easy and convenient,” he adds.

From fintechs to Instagram

For a community bank of Honor’s size, partnerships make all the difference in delivering a top-notch user experience, says Anderson.

“We’re not a [megabank] that has a separate division of programmers and its own proprietary technology,” he explains. “We have to utilize other fintechs to offer the products that our customers deserve.”

Among the innovations Honor offers are ACH Positive Pay and, in the near future, the integration of Apple Pay and Google Pay. 

The community bank also signed on to Banno’s digital platform to update and upgrade its online user interface and systems for personal banking and will soon roll out similar upgrades for businesses.

Finally, Honor Bank is unveiling a new lending platform through nCino, which will serve as a powerful communications and approval tool for commercial lending.

“The idea is to streamline processes, decrease duplicative work, and move to systems that are more user-friendly, have more functionality, and will help us be more efficient and nimble,” Anderson says. 

While fintech partnerships are one path to technological innovation, Charlotte Green, vice president and residential mortgage sales manager for The Cooperative Bank of Cape Cod in Cape Cod, Mass., is championing a different path. Her mission is to expand the social media presence of the $1.5 billion-asset community bank.

Not only does Green work closely with loan originators to make sure they have LinkedIn and Facebook pages; she has also developed material that lenders can post on social media. Popular topics range from which home renovations best hold their long-term value to financing for accessory dwelling units on the Cape.

Green has also spearheaded the production of in-depth videos that the Cooperative Bank posts on YouTube and 15- to 30-second teaser clips for Facebook and Instagram, which have been a huge hit.

“Customers and users are engaging with the content, and originators have great success stories garnering referrals out of their social media presence,” says Green.

An AI future?

Envisioning how she will create social media content going forward, Green anticipates AI playing a pivotal role.

A task like compiling a list of 10 problems first-time home buyers face is far faster if ChatGPT and other new AI arrivals serve as a source for ideas. “AI can generate a list, and we can use that to build out content to help prospective buyers and customers,” she says.  

Green cautions that it’s in the extremely early days for AI, so human oversight remains critical. 

“If I’m generating a list of ideas on an AI platform, I’m definitely putting my eyes on it to make sure that what it’s saying makes sense,” she explains. “Some of these platforms rely on dated information, but it’s just fascinating the wealth of knowledge you can gather.”

Anderson agrees, noting that Bing or Chat GPT can be harnessed to produce brief synopses when writing commercial lending memos by aggregating public information about a company. Although he says that AI should never replace the critical getting-to-know-you conversations loan originators and customers have, it can “help fill in the gaps.”

Whether it’s AI or innovations that allow lenders to do business remotely, today’s younger community bankers are focused less on a specific toolset and more on ideas that can make the customer experience soar.

“We push ourselves to be ever evolving,” says Choice’s Borchardt. “We’re not going to sit still, because we always want to be on the leading edge of what’s coming next for customers. We want to be the trailblazers.”

Marketers

These winners are boosting their community banks’ profiles through the clever use of marketing, from print products to social media. By William Atkinson

Q: What is important to you in creating an effective marketing strategy?

Carolyn Watson: Keeping the customer experience top of mind when planning all marketing strategy is important. … How will they engage with your campaign? How will they take the next step? How will they get more information on the product or service? 

Victoria Denning: First and foremost, it is about providing our customers with the products and services that meet their needs. It is also important that we stay true to our locally owned community bank roots by ensuring that all of our marketing efforts represent our local community and the people and businesses that we serve. 

Ryan Gerber: Effective communication. I believe in being accessible by phone during all hours of the day. Open communication is essential to landing deals and closing deals and will help mitigate any potential frustration that may happen during a transaction. I also believe simplicity is the answer, especially in banking. I feel bankers can overcomplicate the transaction, and we are straight shooters when it comes to our product. 

Q: What is the marketing accomplishment of which you have been the proudest in the last year?

Watson: I produced my first ever local cable commercials, which told the stories of two small business customers and captured the essence of how community banking is better banking. The videos were something that not only was I proud of but that the customers were proud of, too—that their stories were heard and could be celebrated. 

Denning: I am proud to have spearheaded the efforts to rebrand the bank. This included a refresh of the original logo, which is from 1986. We also updated the exterior of our main office headquarters to reflect our new branding, and we created special branding for our mortgage loan department, which did not exist prior to that. 

Gerber: We have taken our Bank Stock Lending program on the road with fun advertisements in a majority of states’ banking magazines. We like to partner with other great community banks, and I like to think of it as community banks standing together. I also took it upon myself to cold call nearly half of the community banks in the country. 

Q: What effects have your marketing program had on your bank?

Watson: One effect has been increasing our brand awareness and customer engagement through incorporating new tools into our website and advertising, such as call-to-action forms, email marketing and the use of Google Ads. 

Denning: The effects of our marketing program have led to increased brand awareness within our community, increased partnerships with community members and organizations, and differentiation of the bank within our market. However, perhaps the most impactful of our marketing efforts have been the roles they have played in the growth of our net income and return on assets. 

Gerber: Our marketing has attracted a large pool of referrals from accounting firms, law firms, banks and even investment bankers. Our success has increased our earnings and margins exponentially. With our niche, we have been able to take on loans over our legal lending limit by participating great earning assets to our current bank stock clients. 

Volunteers

These 40 Under 40 winners are aiding their communities not only through their work as bankers, but in their own time as well.

Project leaders

By building up and strengthening their colleagues, these leaders are placing their banks in a prime position to serve their communities.

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Beth Mattson-Teig is a writer in Minnesota. Elizabeth Judd is a writer in Maryland. William Atkinson is a writer in Illinois. 

 

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