Community banks have faced many challenges in the past year, including navigating an uncertain economy, higher interest rates, inflation, ongoing digital transformation and regulatory burden. But amid these pressures, many community banks have continued along a healthy growth trajectory.
To discuss growth-related opportunities and challenges, Independent Banker recently caught up with Doug Fish, president and chief executive of $1.4 billion-asset BTC Bank in Bethany, Missouri, and Krista Snelling, president and chief executive of $2.7 billion-asset West Coast Community Bank in Santa Cruz, California.
Q: What are the differences, both operationally and regulatory, you’ve seen as you’ve grown?
Doug Fish: We’ve experienced increased oversight in all areas of the bank, with specific emphasis in audit, compliance, [risk] and lending from the regulatory agencies. There’s been more emphasis on the unknown scenarios, what-ifs and stress‑testing. A really basic example would deal with the rate shock of the loan portfolio. As we’ve grown, regulators want a portfolio-wide shock, not on an individual basis. It’s something we were doing on a loan-specific basis, but they want it on a broader scale. We’re a state-chartered FDIC bank.
Krista Snelling: For us, the biggest operational difference has been the need to rethink all our processes to work at a larger scale and to have detailed procedures documenting those processes. Inefficient tasks that are minor pain points become giant pain points when transaction volume [increases]. We’ve learned that extensive written procedures are a huge help. Additionally, we’ve had to rethink any one-off processes through a cost–benefit lens. When the bank was very small, we would frequently do one-off, specialized procedures for clients, because that was the best way to attract and retain them. We continue to offer such services on occasion, but we do so only after analyzing the overall profitability of the relationship and making an informed decision to continue the services.
Q: What was one unexpected challenge you encountered?
Fish: An operational challenge existed around personnel. We outgrew some people’s abilities, so we needed to bring in more experienced staff to handle the workload for a bank that was three times the size, meaning increased complexity and regulatory oversight, among other things. We went from about $500 million to $1 billion in 24 to 30 months—not overnight, but fairly quickly—and then onto $1.4 billion within a couple of years after that.
Snelling: One unexpected challenge is the toll on the team. Whether working through organic growth or [mergers and acquisitions], the constant change—incorporating new team members and learning new processes—is tough and exhausting.
Q: How did you address the staffing challenges?
Fish: We were fortunate to have perfect timing as we reached a size level that required employees who were experienced at larger, more complex institutions. During the middle of our expansion, there was a large pool of available and qualified employees with the experience we needed.
Snelling: We are hyper-focused on making sure that we have sufficient staffing in all areas and that we are being as efficient as possible in everything we do. We also go out of our way to express extreme gratitude to the team who make it all happen. We bring in lunch every day during crunch times, give away copious amounts of company swag, highlight key individual accomplishments in my monthly CEO newsletter and offer large cash bonuses when milestones are met. We also had a celebratory happy hour after our system conversion was complete. It was super fun.
Q: What’s the biggest lesson you learned as you grew?
Fish: The need to maintain that small-town community culture. Maybe with the first third of our growth, we tried to make changes that probably got us away from that a little bit. We tried to eliminate some of the responsibilities of local managers so they’d have more time to devote to branch personnel and customers. Prior to my joining the organization, there was very little autonomy allowed at the branch level. That was something I implemented relatively quickly. We went through that transition where people suddenly had responsibilities, and then as we added branches seven, eight, nine, 10 and beyond, we tried to give the next six the time to deal with local branch personnel and customers locally. We tried to streamline some processes that, in theory, would make their lives easier, but it took away from the local flavor of each branch being able to make decisions based on individual community needs. The bank had to have some standardization in terms of procedures; you don’t want 23 branches doing 100 different things. But if something is working for one branch and it’s not impacting the overall organization in a negative way, why would we force six or eight people to conform to what another branch, 100 miles away, is doing?
Snelling: The biggest lesson we learned as we grew is that having the right people in the right roles is key, and it requires vigilance to continually assess roles and responsibilities. Being open to evolving as needed is important. It’s also a tremendous amount of work to ensure your overall culture is maintained. Repeating our values and mission over and over again becomes fundamental and may seem redundant, but it actually is not.
Q: What was your biggest success during your community bank’s period of growth?
Snelling: Our biggest success has been in the area of client retention. Our team has done a terrific job of making sure that the clients we gained through the acquisition have stayed and are getting what they need. Our team has also done a terrific job in meeting the projected cost savings from our recent acquisition. Doing so requires extreme focus and sweating the small details, which is tough to do when there is so much going on.
Fish: We have maintained the small community bank atmosphere and culture, serving small rural communities as we did when we were six branches and now soon to be 24 in late 2025. It starts with your staff, the people who take care of the customers and deliver the services. While we have 23, soon to be 24, branches, each branch is its own, individual bank in many ways. Branches have a high level of autonomy to make decisions that are specific to their communities, since no two communities are the same. Allowing that branch to serve the needs of that community, which could be different from the community 15 miles down the road, allows us to continue providing that small community bank type of service that we had provided in the past when we were six branches.
Q: What has been your strategy to raise capital for expansion/ acquisitions? How, if at all, has that changed in the past year or so?
Fish: [Until recently], capital growth was created by income and retained earnings. For several years, we grew capital at a level equal to or greater than asset growth. Over the past few years, that has not been the case, and capital fell below double digits. Recently, we completed a sub-debt offering at the holding company level for a Tier 1 capital injection into the bank.
Snelling: Our capital ratios have historically been on the higher end, so we didn’t need to raise capital for our recent acquisition.
Q: What’s your growth strategy for the next few years, organically, through mergers and/or acquisitions, or both? Is one preferable in this market?
Fish: Over the past several years, we have followed a strategy of both acquisitions and de novo branches in selective markets. Very likely, we will continue to follow that strategy to take advantage of opportunities that present themselves organically or by acquisition.
Snelling: We are equally focused on both organic growth and M&A, as both are great opportunities in our market. On the organic front, our focus has been hiring high-performing teams, while on the acquisition front, we are always on the lookout for opportunities and making sure potential sellers know we are open for business.
