How Bridgewater Bank is Growing Deposits with Chief Deposit Officer Katie Klug

speaker-2 (00:19.854)
Well hey everybody and welcome back to the Community Bank Podcast. This is the podcast by Bankers for Bankers. I’m Caleb Stevens with SouthState Bank’s Capital Markets Division. We are throwing it back again today to another conversation that I had backstage at our deposit conference, which we held in Chicago back in early October. And in this discussion, I sit down with an actual or real-life chief deposit officer, Katie Klug.

Katie is the chief deposit officer of Bridgewater Bank in the Minnesota, Minneapolis area, about a $6 billion bank. And this is a great example of a bank that is really taking deposits seriously and dedicating not only a time and resources, but a real dedicated leader who’s on the ground leading the charge.

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speaker-2 (02:02.974)
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speaker-2 (02:32.832)
Now let’s jump into my conversation with Katie Klug.

speaker-1 (02:36.12)
Well Katie, welcome to the Community Bank Podcast. We’re sitting here backstage at our deposit conference in Chicago. So thanks for coming on. Talk about yourself and Bridgewater Bank.

speaker-0 (02:43.672)
Thanks for having me. Super exciting.

speaker-2 (02:45.475)
Tell us about

speaker-0 (02:48.204)
Okay, great question. Bridgewater Bank is we’re based in Minneapolis, so we’re just a close to a six billion dollar publicly traded organization just in Minnesota. So we have nine locations in Minnesota. We’ll travel with our clients throughout the country, but we’re headquartered and based in state chartered what I always say supersized community bank in the Minneapolis area. I am the chief deposit officer, so I have the privilege of working with our treasury management and our branch network. Okay. So really focused on growing our client base.

growing our deposits and focusing on that client experience throughout that network of the bank.

speaker-1 (03:23.974)
Well, you’ve actually come to the deposit conference keeping with the theme of your role. Talk about your role. You know, one of the themes at the conference that we’ve been talking about is there’s not often a exclusive, you know, executive focused on deposits. You many banks don’t have a chief deposit officer. They just sort of think, well that’s isn’t that the lender’s job to help bring in deposits and doesn’t you know but to have someone solely focused on it is kind of unique. So talk about the role. Is it a newer role to the bank? Have you guys had this for a long time?

Yeah.

speaker-0 (03:56.846)
It’s I would say industry-wide as you mentioned before and I think we’ve had a lot of conversation here at the conference about the role and the importance of deposits and it’s it’s newer in the financial institution industry. Bridgewater’s had it actually for probably six or seven years now. I’m the second chief deposits officer at Bridgewater Bank, which has been very exciting, and I think for institutions to call out the importance of deposits and formalize it in an actual role has been something that I think we’re seeing more across the financial institution market.

is exciting because deposits are obviously very important. And so having some strategy and making it a known role and title has been has been very important and it’s been very important at Bridgewater formalizing that seat and that title and and having the buy-in across the organization of how important deposits are, not just for the lenders and the bankers, but the entire organization to be focused on that core deposit growth. And that’s really how we’ll continue to grow as an organization. One of the key areas for us to grow

speaker-1 (04:55.0)
Yeah. That’s fantastic. And we we were joking, I we did a podcast yesterday, another backstage interview, and that we were saying how like during COVID people were like, we’re swimming in deposits, we can’t pay people to leave. Like we need to shrink our balance sheet because it’s stressing our capital levels. We have too many deposits. And now the script and the narrative is totally flipped. It’s like we need deposits, we need the chief deposit officer, how are we gonna do this? talk about your philosophy towards how you think about your deposit products.

how you compete not just on rate, that’s been a big theme here at the conference, is how are you adding value beyond just what rate are you gonna pay me? So how do you guys sort of think about that generally?

speaker-0 (05:32.706)
Yeah, good question. You know, rates obviously are an important part of the component and a lot of the conversation we’ve been having here at the conference is how do we differentiate ourselves, especially from the big banks across the country, you know. We’re all here trying to find deposits. We know deposits are harder to come by in this post-COVID world and with fintechs and all the other avenues folks have to send their cash to, it’s getting even harder for all of us community banks to find deposits. So when we really talk about what what is that difference?

Differentiator and what makes us unique. And the common theme we’ve been talking about here is really that service and how we’re treating our clients, and that’s really how we’ve all been able to grow in our core deposits. And it’s it’s really about finding that full relationship and working with our clients to solve their needs. I mean, you know, a checking account’s a checking account, right? Right. And so when you when you look at it from a product level, you need to have the products and services to service the clients in the markets that you’re in and the niches that you’re focused on. But then from there, it’s really how do you service those clients? And are

they feeling the value and working with your organization and then when you focus on that the rate becomes, although still important, a little bit less important in that conversation because you’re working with that entire relationship. becomes a little less transactional, more focused on the relationship. And that’s really how and the common theme I’ve heard at this deposit at this deposit conference, how we’re all of us banks are looking to grow that core deposit.

speaker-1 (06:54.53)
Talk about your relationship with I don’t know what you call them. Some banks call them lenders, some banks call them relationship managers. Yeah. But either way, talk about your relationship with those folks and how do you ensure that you guys are aligned and working towards a common set of goals.

speaker-0 (07:11.002)
That’s really important. The overall alignment for the company and the bank and fo what we’re focused on is super important. So my peer, a chief lending officer and I work really closely together. And so we’re constantly working with our bankers and then the treasury management team rolls up into my deposit org. And so having those relationships as close as possible. And what we always tell our our banker lender teams is that when you’re going out to meet a prospect, you should always have your treasury management person with you. And so we’re trying to, you know, build that behavior.

And we have some technology to help us with CRM and some of those things, but it’s really continuing to have those conversations and reinforcing that behavior, getting them out in the in the front of our clients at the same time, having the right conversations, and that’s really how we will see that core deposit growth and that full relationship moving over to Bridgewater.

speaker-1 (08:02.366)
I was talking with a banking leader recently and he said what you just said, he said, I wish my lenders were not so he s he used the word lone wolf. They kind of just go up by themselves and they are just kind of out to make a loan. And they really don’t bring in their treasury management team or an ancillary, you know, team that could add more value to the client, give the client more options, more ideas and show that like there’s a lot of ways that we can serve and add value to you beyond just getting a loan deal done and it sounds like you guys are trying to come in on the front end versus it be sort of just

speaker-0 (08:35.768)
Yeah, that’s always the goal. I mean, you know, it’s it’s never perfect. All of us are are doing the best and continuing to have those conversations. But certainly if you can lead with that deposit conversation, you have more likelihood of obtaining that entire relationship than if you’re coming in on the back end. And oftentimes it is loan driven, but sometimes it can be deposit driven. And when you really start to think about instead of just the loan and the deposit as separate entities, what we’re trying to do is really have our teams focused on the full relationship and what’s that profitability of that relationship. Yeah.

And if you look at it holistically, that’s how you can factor in the treasury management fees, the deposit rates, the loan rates. And if you’re looking at it holistically and more of what’s the best situation for the client and the bank, we’re seeing more success when we’re all working together with that same goal in mind. Yeah.

speaker-1 (09:21.894)
One of the themes kind of touching on that is we’ve been talking about here is the importance of incentivizing deposit growth. You may you’re probably not gonna get much if you don’t incentivize, you know, di if you’re not if if your lenders aren’t motivated or your team’s not motivated to bring in deposits. And so talk about how you guys sort of think about that. I think you mentioned before we started recording, you guys really incentivize the whole the whole suite, the whole bank. How do you s any broad stroke principles for the banks out there who are thinking like we probably do need to put more weight on our incentive grids towards deposits?

speaker-0 (09:51.358)
Yeah, absolutely. Of certainly the the banker teams, the lenders, they all have deposit goals and will have incentive components to that on their year-end bonus. But the unique thing that Bridgewater did, and we’ve been doing this for a long time, we started this back in 2018. So even before the pandemic, but just having a bank wide initiative around deposit growth and incentives. So anybody in the bank, any of our three hundred and fifty employees are eligible to be paid on the deposits they refer to the bank, which is a really unique situation, I think, from what

we’ve seen from our peers. So whether you’re in technology, whether you’re a teller, regardless of the position you sit in, if you come across a deposit referral and send it to the right place, you get paid on that over the course of a couple years. So it’s really lucrative program for a lot of people. And I think what we were quick chatting about before we got started here is what we continue to tell people is it doesn’t have to be a hard press. It’s not we’re not requiring people to do it. We don’t force them to you know dial for dollars. Right. But if they’re sitting at your example was great sitting at the little league gate

next to somebody and they ask what you do and you say hey I work at Bridgewater Bank, I’ve been thinking about moving banks. That’s the perfect opportunity to go let me introduce you to somebody. So we don’t expect everybody in the bank to be deposit experts. We hope they know enough to be dangerous and know enough about the bank having worked there and then we give them that the right avenues to send those prospects or clients to to have conversations with the banker, treasure management or one of our branch teams.

speaker-1 (11:13.964)
Yeah. And it probably helps broaden someone’s view. So like if I just work in the back office in the deposit ops department or the loan ops department or technology or wherever, everybody to some degree is representing the bank and is in is in sales to some degree. And so it’s great that you guys have come up with a mechanism to reward, you know, representing the bank well, just wherever you are, regardless of what your actual role is on a day to day basis. Yeah.

speaker-0 (11:38.592)
Yeah, that’s the goal. And we try to give some tips and those conversations. So your example at the little league game, so they they know a little bit what to do and where to go with that, so it’s not not too stressful. Yeah. But just an added benefit if it if it works, right? Yeah.

speaker-1 (11:53.31)
you mentioned CRM a minute ago. I want to get back to that because that’s that can be kind of a four-letter, you know, or two three-letter, I guess, bad word in the in the bank world. but before we get there, talk a little bit about from a marketing perspective, how do you all sort of think about marketing deposits when, you know, you’re you’re not Wells Fargo or you have a gigantic billion dollar marketing budget to throw at it. but marketing’s still a key component in conjunction with the efforts that your sales team is making. So how do you sort of sort of think about that?

speaker-0 (12:23.202)
Yeah, that’s a great question. I think from a marketing perspective, we have an awesome marketing team and we have a really great brand in the Minneapolis market and we’ve done a lot of brand marketing and a little less of individual product marketing. So we typically don’t put out a billboard with a four percent CD offer. so really more focused on getting people to know our brand and hopefully getting people in the door so then we can have that conversation with them on what you know, what products we have and services and what makes the most sense for individuals and companies that we’re working with.

speaker-1 (12:23.264)
Yeah.

speaker-0 (12:53.136)
So but we’re continuing to look at what what is the next product iteration, how do we best go to market in that strategy. So our chief experience officer works really closely with our chief lending officer and I on what that looks like and what some of our opportunities are in the market and how we can best utilize our well-known brand to push some of these other product offerings out to the market.

speaker-1 (13:18.434)
There’s a lot of data in the marketing world. I I saw a survey recently that said this is more in the B2B space, so like if a small business is ready to make a bank change, they often will make a day what what’s called a day one consideration set. Like I’m ready I I’m not happy with my bank, I’m ready to move. They’ll make a mental if I don’t write it down, but they’ll make a mental list of here are the five banks that I would think of. Right. And like ninety percent of the time they end up moving to a company on that day one consideration set. So if they don’t already know who you are, then you’re already at a disadvantage.

So a lot of times brand marketing I think gets a bad rap because it’s like, well how do you measure that? How do you, you know, but there’s a lot of data and scientific data to support. If you’re not in their, I think the word is durable memory structure. If you’re not building durable memory structures in your future buyers’ minds, you’re probably not gonna be successful because they won’t know who you are or they at least won’t trust you or think of you as a reputable bank.

speaker-0 (14:12.428)
Go to. So Yeah, spot on. And we do a ton of marketing and I will do our our marketing team a disservice by trying to talk about all the awesome things they do because they’re they’re they do a wonderful job. And then just being in the community, right? So we host or sponsor a hundred and fifty events a year. And so our business development team and our branch network and others at the bank are constantly out and talking about the company and the brand, which just to your point helps that’s what we want to be. We want somebody to think about if they have if they have an issue and they’re banking at one of the biggest

Banks and something happens and they’re upset, we want them to think about us first. So exactly what you’re saying. We’re hoping that we’re their first call. Yeah.

speaker-1 (14:49.782)
So going back to this CRM, I I’ve heard of stories where bankers have said, I’ve actually left my bank to go to this community bank because I’m not asked to log stuff in a CRM. Why should I why should I log stuff in a CRM? That’s busy work, that’s extra time. I’m I’m a sales guy. I need to be out in the community calling on companies. Why am I, you know? And what we’ve said a lot on this show is if that’s your perspective, you probably are not understanding the true value that a CRM can unlock in career.

You sh you sh you should think say, wow, this is actually an advantage to me. It’s a competitive advantage. I get better insight, I can do better call planning, whatever. How do you guys you mentioned it so I assume you have one. How do you feel about it? I’m sure everyone always feels like they’re not using it to its fullest advantage and there’s still some people that could be better adopters of it, but how do you all sort of think about it? Yeah.

speaker-0 (15:40.31)
I would say we’re in the we’ve moved from infancy to baby steps in the CRM world, which I don’t think is uncommon. and I personally, you know, ten years ago when I had to use a CRM for the first time prior to Bridgewater, I was guilty of that. Why do I have to do this? And I would wait until the end of the month and enter all my calls for the month. You know, it was it was a tracking mechanism for me. Yeah. Right? I was not seeing the value at the time. Now, fast forward.

speaker-1 (16:00.821)
What did we talk about?

speaker-0 (16:05.656)
fifteen years and they’re that’s the messaging that we’re sharing across the bank is there is value in the system and so what you put into it you’re going to get out of it and so we’re continuing to help show where that value lives and when we can have our treasure management team and our banker teams and others in the organization in there and talking about those relationships and what’s going on and for our teams to really see that holistic, full relationship, all the accounts, all the people, the partners they work with, when everything’s really built in there is when then people

on our teams go, this is really valuable because I can see everything in a quick snapshot. I can see when the last time we’ve talked to them. I know that I need to follow up with them because it’s been a couple of months and so we’re getting there in the in the baby steps. But yeah, it’s an adoption.

speaker-1 (16:49.23)
It’s always a crawl, walk, run, the stages to it for sure.

speaker-0 (16:52.504)
Sure. We’re working on crawling. Yeah.

speaker-1 (16:54.914)
Yeah, I feel like we still are too in some ways. so any thoughts or advice to the community bankers listening who don’t have a chief deposit officer? But maybe they’re hearing you and they’re like, maybe maybe there is some credence to like having a dedicated person who that’s their, you know, their main mission. any thoughts on where they can get started or or or why they oughta think about that? as as an important part of their, you know, team?

speaker-0 (17:19.446)
Yeah, absolutely. And I think there are a lot of institutions have it’s split up between a lot of different roles, right? You know, you have your your finance and treasurer are working on some parts of it. Typically your treasury management group is like you had mentioned before, your bankers will typically have some deposit goals. So you and the branch teams, if your branch network, you’re just focusing on deposits. So a lot of times you’ll see it spread out throughout the organization. And so I think it just goes back to each organization and what’s important and if core deposits and deposit growth is an important part of the longevity and

the growth of the organization and I I think the role does make a lot of sense. And when we were talking about it yesterday, you see a lot of the responsibilities in a lot of different titles across you know institutions.

speaker-0 (18:04.296)
Exactly. So it totally depends on the organization and the size and the capacity and the willingness to, you know, roll out the role and all those things. But I do think as we’ll see this role become more popular in the coming, I would say even the next two years, just given the importance of deposit, core deposits, the deposit strategy, how banks are thinking about working with fintechs and some of those other things and how and where that all lives. And can you have that in one central

role. and I th I do think we’ll see more more of this role pop up throughout our community bank space as we continue to focus on the importance of deposits. So it can look a lot of different ways. We talked about yesterday. Some some of the chief deposit officer roles have product and some have retail and some don’t and some have treasury management. And so I think it it some have risk. I mean it looks very different across the organization. But I do think it’s each organization has to look and be aligned on what their

initiatives and their core focuses for the coming years and if deposits and a deposit strategy is in there, then I do think this role is really critical to having the buy in from the organization and alignment at the leadership level that this is an important piece of the puzzle.

speaker-1 (19:17.804)
Mm-hmm. Almost every bank has a chief lending officer or a senior lender and what you’re what you’re implying is this is important to us as a company. so having a chief deposit officer is it’s the same same thing. This is important. And you know, now with AI and stablecoin and all these all these it it seems like it’s becoming more and more important and relevant. So hopefully banks will take you up on on your advice. Any

speaker-0 (19:41.998)
Yeah.

speaker-1 (19:43.284)
I I any as we wrap up and let you go, any we c you know, can’t end this without talking a little bit about AI. how are you thinking about it from a deposit standpoint? And I know there’s like so many unknowns and the future’s very opaque as far as where this could go, but wha take me into kind of the conversations you’re having with your executive team around what it could mean for the deposit side of the the balance sheet.

speaker-0 (20:06.862)
Yeah, I think that’s a great question. And those are all the conversations that we’re having now too. So I don’t think I have all the right answers just yet, but I do know that it’s either I’m wrong or I should go buy a lottery ticket, right? And then we’re living on an island somewhere. So you know, it’s a topic of conversation just like I’m sure it is everywhere else. But I we have the right people in the room thinking about what AI can look like, not only from

speaker-1 (20:16.428)
And if you think you do, you’re probably wrong, so so

speaker-0 (20:35.458)
The bank’s perspective, from a workflow perspective, deposit generation, and so continuing to focus on how we can leverage the technology as it’s coming out in the coming years and thinking about how we can use that to help our deposit growth and generation. So we’re talking about I don’t have a lot of the right answers yet today. Hopefully in the coming months we’re we’re making some progress on it.

speaker-1 (21:00.582)
Hopefully so. well Katie, this has been great. Any I guess just final words of encouragement. We have a lot of community bankers that listen from all over the country and every community bank is different, in a lot of different ways, but at the same time there’s so many commonalities of they all care about their communities, want to see their communities thrive, are very invested in them. And you know, we just appreciate you being here. So any any final words or of encouragement for the banks out there?

speaker-0 (21:25.748)
I appreciate you having me today. I don’t think I have anything else to add other than we’re all in it together and the community banks are super important to all of our communities and we continue to hear how beneficial it is for the s states and the country to have community bank presence and so continue fighting the good fight and collaborating and working together and

speaker-1 (21:47.321)
Couldn’t have said it better, Doug. Couldn’t have said it better. Katie, thanks for coming on.

speaker-0 (21:51.0)
Thank you, Caleb, I appreciate it.