Leading Your Bank Through Uncertain Times

Eric Bagwell: Welcome to the community bank podcast. I’m Eric Bagwell, Director of Sales and Marketing for the correspondent division at the center state. Bank joining me, as always, is Tom Fitzgerald, Director of the strategy here in our capital markets area of the division Tom, you doing all right?

Tom Fitzgerald: I’m doing fine. Erica, hope you are as well.

Eric Bagwell: I’m doing good. We’ve got a neat show today. We’ve got a conversation between Chris Nichols, who is director of capital markets with our division, and Jill Castillo, she is president CEO of Citizens Bank in Edmond, Oklahoma. We’ll get to that in just a couple of seconds. But first, we want to talk about what’s going on October the 15th. We’ve got a live stream event for capital markets. Tom, you won’t talk about it for just a second?

Tom Fitzgerald: Sure, Eric, if some of the listeners out there. Remember, in the last couple of years, we’ve been doing these series of bond schools where we would go out to a local community and get the 2025 bankers together and go over in about a four or five hour period go over the economy go over rates go over investment, portfolio, recommendations, asset-liability, a lot of things in a short amount of time, well, in the age of COVID, that’s no longer possible. But we wanted to still try to get in front of you to give you some of those ideas, recommendations that we have. And so we’re come up with that live stream event, we’ll be doing it filming it live, and condensing down that four or five-hour program that we had been doing into about a two-hour program to give you a little bit of the economic forecast that we see and then kind of building off of that into an investment recommendation session as well.

Eric Bagwell: Good deal, we’ve got an invite going out, actually tomorrow, our first one where you can register. And so, if you’re listening to this podcast, you should have that invite in your inbox. So, Tom looks like he did get a haircut. Maybe in the last day or two. I’ll probably get one tomorrow. And I’ll bet we’ll both be there on October the 14th. Got to look good in front of the camera. So, let’s get really quick to our interview with Chris and Jill. Jill, I think you all know her. She is president CEO of Citizens Bank of Edmond, Oklahoma. And Jill has been featured in Forbes magazine. She just made the news recently, she teamed with Mark Cuban to build a free site for borrowers to apply for PPP, loan forgiveness. So, I heard Jill speak at the Georgia banker’s convention a few years ago in Dallas, she got a great story where their bank how she turned the bank around. And they’re always on the cutting edge of culture and, some neat initiatives when it comes to banking. So, she’s going to be a great guest, Chris Nichols. Chris is, like I said earlier, Director of capital markets with our division, Chris writes, our banker, the banker blog, he is a wealth of information on all things banking, speaks at a lot of banking associations as well. So, we’re excited that they are going to talk and we’re going to play that interview for you right now.

Chris Nichols: Jill, fantastic to see you. How are things going?

Jill Castillo: Good. It’s so good to see you, Chris, I’ve missed seeing you.

Chris Nichols: Has been a long time. Luckily, social media being what it is. I feel like I’m not that far from you. I’m sure many of the bankers out there feel the same way. So, things are going well at the bank?

Jill Castillo: Everything’s going great. It’s a crazy time. And so, we’re being called to do things we’ve never done before. But it’s been good. I think we’ve risen to the occasion in this crisis and keep just kind of leaning forward and failing occasionally and just trying to make progress.

Chris Nichols: So, what do you think about that point? What do you think the future looks like? They’re like 80% back, I think you said, is that?

Jill Castillo: We want to have 95% of our staff offside. Like immediately, we have the embrace technology that we invested in here. So, we were able to make them move slowly. We have curbside banking that we’re doing right now. And so, we have a limited open lobby, but that’s taken off so much that we’re serving customers outside and bringing them on an unlimited basis inside. So, our team when they come back, we’ve been strict about adhering to social distancing and masking and cleaning. And so, we haven’t had any kidney spread Knock on wood on our team. So that discipline is paid off to allow staff to start coming back. And then we also have a good portion is still offside about 25% of the staff, I would say is still offside, there’s only 55 of us. So, when you bring retail back, it’s a pretty big chunk of our team.

Chris Nichols: Let’s back up you said curbside banking, tell us about that. What’s is that?

Jill Castillo: Yeah, about a month into the crisis we started you know, we had the lobby closed just like other branches did. Our drive-through is open but things like notary exchanging paperwork and large coins transactions we were getting we deployed more items and min easy items heavily. So, we kind of chick fil the drive there, we had staff outside with radios directly into my TN. But then we started realizing that we could be inspired by the restaurant industry do curbside services approach customers on the passenger side and notarize documents, exchanged documents do non-trash cash transactions, and then someone needed inside to go to their safe deposit box. And we had more of a structured way to bring them in to keep them safe and ensure that we were segregating customers from one another and then effectively cleaning in between. So, we will likely permanently have curbside. We have cool signs like they do at McDonald’s. We have a really neat integration into our website with camera coverage, and to help remotely observe and our customers love it our older customers especially so it’s been fun to see some of the innovation that’s happened, but I think we’ll stick with us on the longer term.

Chris Nichols: And your employees more universal bankers that go out and can handle everything from the transaction to account opening Is that right?

Jill Castillo: Yeah, but we don’t have the universal banker’s concept that we have more segregation in our total Our team is we have a different teller set up and he can visit us some time because no one has real access to cash. It’s all electronic and what how that’s managed with the recyclers, but also like coin dispensary, and there’s no particular drawer. And so, they’re able to do some of those functions. But then we have our bankers traditionally inside the bank, so there are more complicated transactions, and they’re able to door account openings, which put all that lesson should do online as well. And then they’re able to serve the customers that way. So, we have our kind of frontline team that’s kind of acting like chick fil, where they’re that high interaction with the customer. And then we have a second team to help them with more complicated situations.

Chris Nichols: How’s the small business doing in downtown Edmonds? And what’s your view on what’s going to happen with the local economy there, and how are you going to handle that as a bank?

Jill Castillo: Initially, it was just devastation it was like a nuclear bomb went off. And, we were hurrying to the side can be the economic first responders to the situation. And since then, we’ve had some that just have record sales, and they’re doing better than they’ve ever done before. And then we have others that may be employed the same tactics as the two barbecue shops one, both of them have curbside both have a great barbecue one is killing it and has three times the sales that they normally did, and the other one is devastated. And it doesn’t seem to be any rhyme or reason about who’s winning and who’s losing. But there are those in our area that are and then like some of the large venue spaces or businesses that are dependent upon gathering of folks, they’re going to have a longer runway out of this, then just 2020 we’re looking into some of these are going to be more sustained economic stress through 2021.

Chris Nichols: So, I know you did PPP. And so, I partnered with Mark Cuban, and you’re doing some things there. But how else? Are you helping to help that small business customer? And what’s the head? What do you think’s going to happen? I’m sure you didn’t forbearances so you have some forbearances going, what’s going to look like after that?

Jill Castillo: So, before we get [inaudible 8:25], the regulars came out and gave the direction that she should be flexible for that to happen. We contacted every single one of our business customers and suppliers to all our consumer borrowers. And offering to it we wanted to first understand what their cash flow situation was, and then what we could do to help. So, we had widespread forbearances and well over half of our portfolio, we deferred payments or modified payments to some degree. And when that 90% day is up, we revisit, and probably about 75% of our business customers, we’re able to go be restored to normal payments and about 25% were still having to linger through to have some accommodations to them. So, with the care side this is some umbrella for some short-term modifications, and then till the end of the year, so we’re kind of working towards making sure we’re good for 2020 advocating for some more relief and coverage so that you don’t have to count those as TDRS going into 2021.
But knowing that as long as there’s a willingness to repay, and we have good businesses that, maybe had six months of operating expenses in a savings account as the rainy-day liquidity, now that’s been exhausted. And so, what do we do now? We also have been involved in like EIDL and making sure our customers know about resources the SBA has available the seven-day disaster bridge loan, we’ve been heavily engaged with ensuring were deployed that appropriately when the idea was a brooklet. Reduce the cap from $2 million to 150,000. We’re raising hell.
[inaudible 10:00] that to try to get that raise nine that liquidity is imperative. So, as we are restricting what type of impact, we make on those cash flow problems that customer has, or trying to find other ways in which they can get access to liquidity, for those that are committed to long term success.

Chris Nichols: Tell us about I know lots of bankers are out there trying to figure out what to do with ITMs. And does the COVID experience the pandemic experience kind of influence more ITMs? What’s your advice out there for the banker that’s just thinking about it to start?

Jill Castillo: ITM sounds sexy, but they’re the farthest thing from sexy that you can imagine. So, it’s just a souped-up ATM, just how we’re able to continue to serve our customers remotely. And so, would the having the law be closed, it is the next best thing. And to help the customer where we were relying, I think more on the functionality of an ITM. This is allowing there to be a dialogue and questions with a teller or someone with personal banking skills, and to be able to help the customers or a variety of issues. So instead of being something to supplement early at branch traffic to conduct a transaction, I do think it’s starting to replace more what a branch experience can be. And it’s interesting to like, we have two in bank items, but they’re in our remote area where you can access via phone, 24, seven, but those drive-up ITMs, I think are the ones that have proved most beneficial, and replacing one ATM is expected to perform.

Chris Nichols: And you think when we come out the backside, we get back to normal with the vaccine, you think the average bank customer that you handle will tend towards more remote more mobile banking, overall, within the branch.

Jill Castillo: In our market, I would say the expectation now is that you should be able to open a business account online without any physical interaction with your bank and just do about almost everything using DocuSign. And working online and interacting with your financial institution. We’ve always been 24 seven accessibility and so that has the usage of our 24 seven support has skyrocketed as well. So just there’s a lot of anxiety there’s anxiety is only dampened by communication and transparency and accessibility. And so, I think there’s a commandment increase expectation going forward from customers that they can access the bank in a variety of ways. And maybe less than that dependence on the actual accessibility of a branch location was still the number one reason that I think most people are choosing a bank. I think now it’s going to be how accessible is my bank, whether that means it’s physical or there’s ITM or there’s the ATM some way of me and will interact and get access to my information.

Chris Nichols: And so, what’s happening with your IT spend what are some of the projects that you may be moving forward that you had maybe 5000? Now you’re thinking about next year? What does that look like for you today?

Jill Castillo: Just focusing right now on workflow efficiency, and how do we automate ourselves as efficiently as we possibly can have everyone at home? We’ve been paperless for several years. But we realized that we were still quite dependent upon paper and rescanning items things like that. So, we’re focused on the remainder of this year of how do we come back better? So how do we optimize the investments that we’ve made over the last few years to make sure our workflow is as efficient as possible, that we’re able to? Everyone was busy during these last few months? And so how do we decrease these overwhelm? Lots of manual, repetitive tasks, make them automated, so we can allow our team to think more critically and add more value to the process for our customers and internally.

Chris Nichols: All right. So more back in anything new on the customer-facing side, a new technology budget account opening? Are you beef that up or super good?

Jill Castillo: A lot of this, I refer to us as being kind of MacGyvering things up pretty frequently. And so, we’ve been using lots of tools. We have invested a couple of years ago and other technology that is what hospitals and restaurants have when you’re waiting in line. And well, that technology has a lot of different opportunities to like curbside banking, take put people in a queue and have really good communications and allow you to have text message updates about the availability of the bank, and via someone’s cell phone number, and then you’re able to collect that information as well. Our chat system was also outside the banking industry that we were able to put into place that’s been exceptionally popular and optimizing our phone system so that we’re able to move expeditiously answer calls, get calls to where they need to go, and not just falling back on our kind of old hunk groups and really how do you create that customer experience through some of these non-real technical and not real FinTech related tools. And in the course, we’ve launched PPP bank, partnering with Tesla or Mark Cuban, and which is more of a non-bank product that we offer to the nation so that we can help with PPP forgiveness, which has been something we’ve been integrating inside our bank to try and make that process as painless as possible, because it’s a Kendra’s process, even compared to the application of the PPP.

Chris Nichols: That’s right, we’re going through that now. We’re about a quarter of the way through and still processing. And so, what advice would you have for bankers out there struggling to try to figure things out? Is there anything that you might suggest a tip you’d like to give the rest of the industry or is there like one thing that’s made a difference at your bank over history?

Jill Castillo: The crisis has been such a great challenge for us. But it validated that this experimental nature that our bank has, and that whenever you’re in a crisis, you just have to do what you think is right at the moment, we use kind of theme from Frozen to do the next right thing. And so, whenever you’re falling forward, you’re just always with this intention of very customer-centric, you’re forced to be because they were in pain, and you’re trying to alleviate the pain. And that’s all about what innovation and customer experience are all about. And so really put us into motion. And so, it validates a lot of things that we’d already been doing, and I think will accelerate going forward. I think that experimentation is pretty foreign and banking, at least traditional banking, it’s so important to just try something and see if it works. And if it doesn’t work, don’t do it in if it does, works, optimize it and scale it and the more that we can think like that, the more relevant our industry will be. And it’s not expensive to do these things. It’s inexpensive. And the customer acquisition that we’ve seen during this crisis, a lot of it had focused and you were able to do a PPP alone. And that was an opportunity to get a customer. What we’ve found as we got our greatest customer acquisition came for those that saw how we were treating folks during PPP, they got their PPP loans elsewhere, but they ended up moving their accounts to us because they wanted to be they saw how that our advocacy, our knowledge or expertise and the commitment to ensuring that our communities are taken care of. So, be social media, for us is such a way to allow that increased accessibility with the customer. And that was, I responded to over 1000 small businesses on Saturday, a DM almost every minute. And all of that, it just added so much value to our brand and who we are as an organization to know that we were there and the time of trouble meeting the customer, where they are when they are. So, I would just encourage others to do that as well. It’s just such a great opportunity, you can come back better and stronger. But then defining what this industry looks like going forward.

Chris Nichols: How many experiments would you say you’re running right now? And let’s include PPP because it’s an experiment for all of us. But like, is it on the order of three to four? Or is it like five to 10? Or is it 20?

Jill Castillo: I’d say the experiments are probably about probably 20. And each of us probably has three to five that we are working on. And that we’re considering and some are, we’re talking about doing a walk-up. So, walk up bank, we used to have one and it closed it but then can we have like a movie ticket, movie, and style kind of check-in where we’re able to do transactions with someone as they walk out. So, kind of taking curbside but making it a little bit more for the customers coming to us but having a barrier. And so, it’s like one more expensive one that we’re considering that we’re experimenting with. And we have an alert since we’re trying to figure out how we can get motion detection on cars coming up. So, it’s not just a visual identification of curves coming in, but that we have someone and then we’re automatically triggering, who should go out there to be able to serve the customer at that time, and how do you keep them safe, so that they’re not exposed? So, there are all kinds of different things. I think it’s an environment here where if you’re coming from a traditional bank, and you’re like, I want my checklist and things are the same every single day.
And it’s not that environment here. Of course, you have that in some roles. But if it’s on a checklist, we plan to automate it. But we want everybody to come up with ideas on what we can try and do better. So as a result, we have a lot of things we’re juggling at any one time because so many people are contributing to how do we incrementally make this place better Patrick Sells mentioned the other day that the purpose is of progress. And it just rings so true with us, because we are that is truly what it is. It’s like you’re not we don’t have an end goal of being this like we don’t know where we’re going but we’re incrementally going to get to someplace great and this experience has shown how that helps you in a crisis to react quickly to have a pulse of your community and what they need, were active in DC during the beginning of the crisis as to what our small businesses need.
There was a lot of people that could speak to that because they weren’t as easy to it wasn’t easy for them to react to what was happening in the economy and how to convey that for our team, it’s way beyond me, the 55 team members we have are all thinking about how can we do what we do better, and then just caring greatly and boldly for our customers. And that level of care helps you understand what their needs are better.

Chris Nichols: Every time I talk to your employees, I get that vibe. So definitely instilled in the culture. And I think that starts with you. How about on the marketing side? Are we seeing more Tick Tock dances in the future? What ahead [inaudible 20:49]?

Jill Castillo: No, I don’t think so, we are kicking around doing something that we have an idea about, so probably not Tick Tock, I want to wait and see how that all shakes out with that move. But we know we lost being able to hear on heard. So, we miss bringing our community together. We usually have 50,000 people here downtown and then once a month and trying to figure out ways to bring our community together and have fun. But there are lots of ideas out there, what we will be doing, we meet every morning as a team. And that’s slow down to now we’re three days a week, we meet every single morning with every team member to talk about where we are and what it is and how we can do better. And we meet every evening as a management team to see what can we do better. And so, there are lots of fun things coming out. You’ll be the first to know I’ll send you the link.

Chris Nichols: Can’t wait to see it. And what those meetings are mostly process meetings, operational type meetings are the span the gamut. When you have these.

Jill Castillo: They’re not planning meetings. So, they’re brainstorming sessions. They’re like more rain sessions like really? Like a situation ram of what happened today. What happened this past week? Where do we feel? Where do we succeed? What should we stop? What should we start? And who’s having trouble? How do we help them? Who’s doing great? And how do we celebrate them, making sure everybody’s taking their vacation that we’re it did level? It’s really hard. I don’t know, if you found this with engagement with a team in a virtual environment, it’s so much more difficult to have that kind of environment as we do here where we’re all in one building, and no one has an office, and we’re all kind of always stirring the pot, how do you keep doing that in a virtual environment. So, the repetition, the accessibility, just like we were talking about what the customer is needed internally, so that you can get everyone’s, opinions that way things are going better, cutting your losses as fast as you can, and then running towards the successes.

Chris Nichols: Alright, well run out of time, as we wrap up, you have all bankers have such a varied experience. I think, the fact one of the fastest bank turnarounds, the industries have seen the military experience. You’re hit by cars. If you had a billboard out there that you could send a message to the millions, even more, what would it say? What would you want the world to know?

Jill Castillo: It’s such a big question. But I think where my joy comes from, and where the purpose of our bank shines is that we’re here to help. And so, I think I would just say here to help. That’s where the great collaboration with Mark Cuban came because there was a collective call to action to help and, there’s nothing more satisfying whenever you see a need in the community or someone is damaged or a business is struggling or they’re looking for opportunities to grow, and they just need someone to be their partner and that walk and that I think they here to help kind of captures that for us. And for me.

Chris Nichols: That sums it up nicely. Jill, thank you for everything that you do for the industry. We appreciate it. Thank you for being on the podcast. We wish you the best of luck. I can’t wait to see you in person when things get back to normal.

Jill Castillo: Thanks, Chris.

Chris Nichols: Thanks.