"Street Talk" is a podcast hosted by S&P Global Market Intelligence that takes a deep dive into issues facing financial institutions and the investment community.
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Tales from Top Performers is a series under the "Street Talk" banner that will feature conversations with executives at high-performing banks about their bank and experience in the sector, their view of current issues, and the greatest challenges and opportunities they see ahead.
This episode features executives from three of the highest-performing banks in the country: Curtis Griffith, chairman and CEO of Lubbock, Texas-based South Plains Financial Inc.; Paul Egge, CFO of Houston-based Stellar Bancorp Inc. and Skip Hageboeck, CEO of Charleston, W. Va.-based City Holding Co. The bankers outlined how they have been able to maintain strong deposit franchises in the face of fierce competition, their outlook for loan growth and credit quality, and the greatest challenges and opportunities they see over the next year.
GREATEST OPPORTUNITY OVER THE NEXT 12 MONTHS:
Curtis Griffith, CEO of South Plains Financial — Growing loans at attractive rates
"That's the greatest opportunity I see out there right now, at least in the markets we're in, that you can get some good growth because a lot of banks are going to be constrained. If you can be one of those outliers that can go in and give them good terms and reasonable pricing, you can pick up some great business out there right now. And until we see some softening in rates, I think it's going to stay that way."
Paul Egge, CFO of Stellar Bancorp — Offering local service with scale in a large MSA
"Houston is a market that is incredibly overbanked by out of towners, and there just aren't enough meaningful banks to scale. And for us, leveraging the localness and really that differentiator to pick up great human capital who care about living and being kind of an elevator bank away from the C-suite or alternatively, that decisions are being made in town. We think that's kind of a powerful key differentiator to us in one of the best markets in the U.S."
Skip Hageboeck, CEO of City Holding Co. — Technology driving efficiency
"Branch staffing costs have been an opportunity to lower expense using cash recyclers, reducing brand staff because customers come in less, using managers to manage two small branches instead of just one. Going forward, we're getting rid of all of our ATMs and replacing them with leased ITMs, so that we have the ability to perhaps stick some ITMs in adjacent markets where we may be able to grow customers. Technology is allowing us to hire more smart, but fewer workers. It costs the same, but we're getting more output as a result of that."
GREATEST CHALLENGE OVER THE NEXT 12 MONTHS:
Curtis Griffith, CEO of South Plains Financial — Maintaining credit quality
"I think it is maintaining your credit quality. That's what we're really focused on. Not that it's going to get all that bad. And no, I do not believe we're headed into what we went through in the great financial crisis. But if you have much slippage at all, you're going to find regulatory pressure that's going to hold you back, particularly if your core thing is CRE."
Paul Egge, CFO of Stellar Bancorp — Adjusting to the requirements of the $10 billion asset threshold
"We are sitting uncomfortably above the $10 billion threshold, and we are managing through a lot of forced maturity as it relates to a lot of our risk management, and a lot of that shocker does not bring in revenue. So we kind of feel like from the standpoint of the merger, you got two steps forward, but being uncomfortably close to $10 billion in assets, you take one step back. [The question is how do we] we manage...the imperatives [related]
to beefing up a lot of our internal risk management programs and things along those lines against really the goals of growing in unfortunately a constrained economic backdrop."
Skip Hageboeck, CEO of City Holding Co. — Growing loans, preventing fraud
"Loans are always the biggest challenge for City — commercial loan growth. But I'd add to that. It's not a challenge yet, but I'm really worried about fraud, particularly check fraud, which seems to be growing at a shockingly fast rate. And I'm afraid it could become a real challenge."