To wrap up 2020, we take a look back at some of our favorite moments and guests on the podcast this year!

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Intro: Helping community bankers grow themselves, their team, and their profits. This is the Community Bank Podcast.

Eric Bagwell: Welcome to the Community Bank Podcast, I’m Eric Bagwell being joined today with my fill-in for quite a few times, Caleb Stevens. Caleb what’s going on, man.

Caleb Stevens: Hey, what’s up Eric? This is the first time we’ve been on a show together, it’s kind of weird, I’m used to talking to Tom and teeing it up myself, so it’s good to see you on the show, on the air for the first time.

Eric Bagwell: Yeah, it’s awesome to have you here and appreciate everything that you do for us. Caleb is our producer and obviously a very capable fill in, he does a great job for us and we’re excited that he is with us. Today we have actually made it six months into the podcast world, this will actually be our 23rd show, which means it’s the end of the year and we have a Best Of Show. We actually think we have a Best Of Show, we weren’t sure if we’d have one of these when we started.

Caleb Stevens: The greatest hits.

Eric Bagwell: Exactly.

Caleb Stevens: For the past six months.

Eric Bagwell: This would be our greatest hits for the past six months. Caleb, why don’t you talk a little bit about what we’re going to play today and how it’s going to flow?

Caleb Stevens: Yeah, so I went back and just looked at what were some highlights from this past year and really tried to take a segment, five to 10 minutes of something that stood out to our listeners, things that we got, great feedback on things that we heard on LinkedIn, and then just things that me and you and Tom just really enjoyed segments that we really enjoyed guests that we love talking to and try to just take really the heart of each of those conversations and boil it down to what were some of the best eight to 10 minutes or so of each of those and I’m really proud with what we have so excited for folks to listen to it today.

Eric Bagwell: Yeah. I think this is going to be really cool cause we’ve really have had some really good guests. I think we’ve gotten better since we started and I think we’re also excited with some guests we have coming up for the next year. So, I guess we’ll tee this first one up, its way back in June, Billy Bowie with Elevate Experiences, Caleb talk about him, you actually have known him from the past.

Caleb Stevens: So, Billy is a mentor friend of mine for a long time, probably 10 years or so, he has a company called Elevate Experiences. They work with some of the biggest brands in the country, Chick-Fil-A, the Atlanta Falcons, Home Depot, all kinds of brands, helping them put on great events and obviously with COVID and 2020 that has been totally turned upside down the event world. And so they had to pivot and he had asked himself this question, is who I am, what I do? And what he realized is, as great as live in person events are, that’s not really the heart of their company. And so they said, “How can we still live out our mission and accomplish our vision with virtual events.” And so we had a great discussion, you did actually a great discussion on how do you build culture virtually, how do you lead virtually and what are some ways that we need to be navigating as leaders, in this new world that we’re in. So, that was a great discussion in a really great way I think, to kick off the podcast.

Eric Bagwell: Good deal, let’s go to that right now.

Eric Bagwell: Let me ask you this, let’s talk about culture real quick. How do you continue to build culture in an environment like this when we’ve still got, I know in our office personally, we’ve got probably five people in the office every day and there’s phone calls that you have with your folks and everybody’s talking over each other and, and it’s just more difficult. How do you build culture in an environment like this?

Billy Bowie: Yeah, so good, I wrote my first book that came out in January 2020, titled Culture Reconstructed. And if you would have said, many years ago, “Billy you’re going to write a book.” I would have said, “There’s no way,” but it was really fun to actually release a book about this topic and then COVID-19 happened soon after. And I think the book is super relevant, even now than was before the virus. It’s reconstructing of culture, boiling it down, I like to say this, like boiling it down to this lowest common denominator so you can really understand it. And for me, the definition of culture is just what you allow, it’s just what you allow. And so a culture can allow a lots of different things and when you’re building a culture virtually, for me I boil it down into a Venn diagram of everything that you do with your team is going to do one of three things; it’s going to inspire, educate or entertain, inspire, educate, entertain.

And I think when a leader can make a list of those things that you can do in person, and then ask yourself, how could we do that virtually? I know that meetings together more often than you did before is important, I think holding people accountable is important. There’s a great website called Virtual Events Secrets. Today, where I do a one hour webinar training on how to lead your team over the internet. And I give you the four key principles of how to do that, it’s to do something intentional, do something fun, do the work and do something personal, do something fun, I’m trying to get all four in a row. I’m thinking about the training here, but for me when I put that training together, everybody wants to do something personal. And the phrase I use a lot is you don’t have to be in person to do something personal but zoom calls and screen fatigue is a real thing, did you say you were going to do this, and I thought you said you were going to do this. And even now more than ever confusion and communication is happening in businesses, it just is. But now more than ever, if we get intentional about how we lead, I think we can go faster, I’ve seen it in my organization, goodness, we’ve gone so much faster on things because we have a call in the morning, that’s a 45 minute call every morning at 9:00 AM, Eastern standard time and then at the end of the day, we share our wins. And if we say something on the morning call, we share wins in the afternoon, it’s been amazing to say when I said I was going to do that, did I actually do that because I know they’re going to hold me accountable later.

So, I don’t like micromanaging and I don’t enjoy standing over people’s shoulders, but I do like personally saying, “Hey, I want to be held accountable to what I said I was going to do.” And as the work changes, I’m learning how to change with it. So, that’s just a couple of things and I think that list of inspire, educate, and entertain and having space for all three of those, I think now, I’ve got to educate and I’ve got to do work, that’s that’s all we do, we’re virtual, we got to go fort. So now, we still need to inspire your team, there needs to be moments of you’re reading something cool or watching a video or attending a virtual conference or entertaining them with a game. You can go to our YouTube channel at Elevate Experiences, we have a ton of free videos you can watch that gives you ice breakers and games that you can do with your team. And we do that because we know that’s such an important part, so that’s just some keys that I’ve learned in leading a virtual culture.

Eric Bagwell: Man, that’s awesome. I’ll tell you, even with us, this whole thing has pushed us out onto a ledge, we knew we needed to get out on, but it’s been amazing to see how, when something like this happens, I mean, it really does force you, if you don’t change, then you are getting past no doubt. And so, we have started down the road, obviously with this podcast being one of them, that that we need to change and adapt how we do business as well. Let’s stay with culture real quick because I know a lot of banks out there listening to this, have probably been involved with, M and A stuff in the past. Maybe they’ve been a part of a bank that’s bought another bank or there’s a lot of bankers that have been at banks that have been purchased. How do you merge two cultures? I know that’s hard and we talked offline about the BBNT SunTrust and the issues they’re facing. And I know there’s been in the past, I want to say two years a M and A transaction that actually fell apart because the cultures, they just basically got into the nitty-gritty of trying to get the banks together and they figured the cultures were not going to work. What are the key factors when you’re trying to get two cultures together?

Billy Bowie: Yeah, so I’m married to a counselor. So, let me go counselor on you for a second, those that are listening in, just pardon me for a second as I go a little psychological and a little bit more the feelings side of things. I believe the greatest tool we have when we merge two things together is our ears, I just think our ears are still the defining factor of success as a leader. And that sounds so basic that we run right past it, some of the very… somebody wants to lose weight, okay, you got to eat better and you got to exercise. Well, I don’t want to eat better, but I’ll workout harder, it’s just not going to work. The basics of losing weight and staying in shape are to eat better and to get more exercise, same way with leadership and merging cultures. Because if you don’t have the ability to ask the question and then pause and really listen to what someone says then I think it’s impossible, I don’t think you ever have a starting point. So once you get there, then there’s a three-part series that helps people when they merge. And I initially got this from Dr. Tim Elmore with growing leaders and I think he got it from somewhere else, I never quite know where all quotes come from, but I’ll give him credit on this one because it really helped me process how I bring two things together. He said, “All things in your leadership, when you’re merging things together.” And I was actually talking about this today in a talk that I’m giving, I used to talk about road signs and I used the road sign merge and I used the road sign yield, and I used the road sign stop and I used the roadside crossroads.

If you’re listening, you can see those signs as I’m saying them, you can kind of see how those apply to leadership and how they apply to merging things. You’ve got to figure out what the yield and the grid that Dr. Elmore gave me was everything in your business needs three things, a tweak, a facelift, or a funeral. Let me say those again. Everything in your leadership needs a tweak, it needs a facelift, or it needs a funeral. A tweak, when two brands come together, it could be something small, or what color, actually not small, it’s a big decision. It could be the color of your logo or the actual brand, does the color matter to one brand more than the other, do you merge the colors together, does it need a tweak? I love this story about Chick-fil-A’s nose on their actual brand. The nose of the chicken on the Chick-fil-A logo was adjusted in 2014 from the droopy nose to the nose that was straight as an arrow. And I’ve heard several reasons why, but I love the reason of, Hey, we’re moving towards the future and the nose is going straight and that’s where we’re headed, we’re headed for the future. And I love just that slight tweak, they made. Still the same logo and you might not even recognize it unless you really were a student of a brand, that’s a tweak. A facelift could be the bones and the structure look good, but the way it looks outside, we need to refresh all of our documents, our websites, we need to make sure, like all the bones are good, but we need to make sure it just looks good, a facelift is needed.

And then somethings need a funeral and this is where I’ve seen as you mentioned, mergers not work, is if somebody holds on to something so long and everybody else around them, see that thing is just not working. You’ve got to decide if that person needs to go or does that thing need to go? That’s the tough part of leadership, is you got to have that conversation and say, what needs a funeral? And there must be a list, there has to be a list when you merge and both sides have to look at it. No, this is how we do it, this is how we do it. Well, there’s going to be some things we have to give a funeral because both can’t live at the same time. If we’re going to grow this brand, we’ve got to have a tweak, we’ve got to have a facelift, and we’ve got to have a funeral. That is the best grid that I have seen when you’re merging now, much easier said than done Eric, you know this well, is some people they don’t want a thing to go away [inaudible11:25] for so long.

Eric Bagwell: No, you’re absolutely right, that’s great advice.

Caleb Stevens: That was some good stuff from Billy, really loved his three points on making sure you’re either educating, entertaining or inspiring your team and how you can do that virtually in this new world that we’re in. Well, Eric this next guest is one of the foremost experts, I would say on digital banking. In fact, he was named American digital banker of the year by American banker and I remember you and Tom were interviewing him.

Eric Bagwell: I know what you’re going to say.

Caleb Stevens: And every time he would give in a response, I think we had Jason Hendricks on this show as well. You all were like deer in the headlights, looking at each other, like, what do we ask next? This is way over our head.

Eric Bagwell: Yeah, it was.

Caleb Stevens: I just remember being the producer in the corner, laughing, watching you guys try to field this interview, but he had some great content.

Eric Bagwell: Yeah, and it was very interesting to hear Patrick, he was a really great guest, but he did talk about some stuff where Tom and I were just like good night. And Tom is a super, super smart guy and he and I were literally, like Caleb said, “We were deer in the headlights.” But it was a great podcast, if you haven’t heard it, go back and listen to it, he’s got some really cool cutting edge stuff that they’re doing at this bank, the Quontic Bank up in New York city.

Caleb Stevens: Alright, well, let’s go to that right now.

Tom: What do you see know for the 60 year old bank executive, which I’m sure you come across in your business all the time, what do you see as their biggest blind spots still in dealing with the digital revolution that we’re undergoing as an industry?

Patrick: That’s a great question and one that I’ve been spending more and more time kind of reflecting on. I think one of the observations that I have, or the things that stands out to me, is the industry is talking about technology and innovation and digital this and digital that. And yet I think at the same time, there’s this sense that we really haven’t made much progress or we are not making progress very quickly and as I thought about that, it’s interesting to me because the technology exists, there’s technology everywhere, this isn’t a challenge. This challenge we face as an industry, isn’t about access to the tools or super computers or big data, it’s there. It’s so much so that we’re seeing other companies, not in the industry, begin to innovate and get involved in consumers’ financial lives and they’re not banked. And so I kind of like in it, the technology is like seed and we keep as an industry, trying to throw all these seeds down about technology this, digital that, and it’s not taking roots, right. And I think what that’s kind of caused me to realize is the issue in the industry is about the soil, or I think really, it’s more about the culture, the culture of what it means to work at a bank, what it’s like to be a banker, something there’s not right, or not working because it’s, again, the technology is there, it’s just not taking root. And I think to answer your question, now more specifically, I think a lot of, kind of Senior Bank Executives, if you will, they want to start thinking that we need to be digital. Okay, we’re going to go get Dell, we’re going to go get live chat, we’re going to go get whatever.

And that’s the very thing I’m talking about, I think is the problem. And they’re not saying, how do I change the culture at my bank so that innovation can flourish, what needs to happen to the soil so that ideas can come to fruition. That I can’t attract a different kind of person, I can create an environment where people want to try new things and test new things, and they’re not scared of failing. And so I think my encouragement would be to really look at the culture of your organization, your team, how you manage people, what kind of benefits you give, how do you pay people, how do you handle failure? And I think if you can begin to change the soil, the technology piece will happen very quickly and very naturally and Senior Bank Executives will get to understand it more because it will become native in the organization, as opposed to this seed, they just keep trying to plant on the ground, if you will.

Tom: Right, sounds like they’re looking for a plug and play solution and you’re talking something more holistic and more, it’s deeper than that.

Patrick: Yeah, you can’t bring it from the outside because all the technology is there. That’s not where we need to be focused, we need to be focused on the inside and let it take root and then watch that change in organization and change your bank.

Tom: Good point.

Eric Bagwell: Patrick, I read a quote that you had, that was really good. I thought it was really good, you said, “The thought of making a mistake was almost paralyzing,” when you got the Quontic and I think anybody selling anything, the challenge is you’re selling something to someone and it’s going to be, probably a change in a process for whoever you’re selling to. And you had to kind of fight through some barriers at Quontic and I know Stephen Shaw, the CEO that you’ve mentioned, he was ready to adapt it. So, you kind of had the backing from the top, talk a little bit about that and the things you had to kind of fight through to get some of those changes made.

Patrick: Yeah, I was very fortuitous in that Steve was wanting to evolve and wanting to change and I think more so it wasn’t just lip service for him. He truly wanted for this to be… it was authentic, even like when he and I were first talking about Bitcoin, he wanted to understand that and he and I actually, before I even came over to work at Quontic, we went and built Ethereum Mining Briggs, right. Not because we wanted to be into that business, but he wanted to learn like, what does mining mean, how do I understand this? And so he very much, kind of created the space for, I think what we did at Quontic and it was very authentic, he wanted to evolve. And that permeated through the culture and I think people were open, but of course they were very resistant at first. And I think a lot of that and I’ve talked about this before, bankers you’re not supposed to fail, you have regulators and we have internal auditors and then regulators who audit the auditors.

And so, there’s so much that this sense of, I have to be perfect, I don’t want to try new things, this has always worked for me and we had to change that, right. And even like, for example, okay, someone may be messed up on a project or we picked the wrong technology, but there’s a few times that we had to be symbolic in what we were doing. And so I still gave that person a bonus, I still gave them a raise and they were shocked, like, what do you mean it didn’t work. But it wasn’t about whether it worked or not, it was about, can we become a digital bank, can we become innovative and almost having to intentionally reward the wrong behavior to change the mindset. Now, obviously we’re not going to do that all the time now but those are some of the things I think we had to do to really get the culture, to change and people to understand that we were going to do something different here.

Eric Bagwell: Patrick had some good stuff to talk about and one of the keys, he mentioned that I remember thinking this applies to us as technology is there. He mentioned some cutting edge stuff, it’s just, do you have the culture at your bank to actually implement it? And that’s something that we are actually doing now, I know a lot of banks struggle with that. So, go back and listen to that full podcast, if you can, it’s got a lot of good stuff. Caleb, let’s go to our next one, now this was the first one, I guess I missed you all probably thought I was chickening it out and wasn’t going to be a podcast guy.

Caleb Stevens: This was when I made my cohosting debut.

Eric Bagwell: I don’t even remember the reason, but Caleb this is Kevin Scott, tell us about Kevin.

Caleb Stevens: So, Kevin is the co-founder of [inaudible19:37] worldwide, fairly young guy, mid-thirties or so, he is a speaker and author, a leadership expert, and a mentor to me. And he has great content on millennials and culture and how do you connect millennials to banking and how do you make banking an inspiring place for millennials as an industry to want to be part of? We also had my dad on this show as well, so if you want to hear him, give his thoughts as a bank CEO and how to attract millennials and built culture and cast vision, I would highly recommend you check out that show. But Kevin had some great thoughts on what does it look like to inspire millennials in your bank with a vision and a purpose that they can rally behind, so let’s go to that right now.

Tom: Kevin, it was kind of funny, we were talking before, we started recording and Caleb sort of is at the leading edge of the millennials, I’m sorry, the tail end, you’re at the leading edge, I’m sort of at the tail end of the boomer generation. In fact, I’ve just kind of, you can see, I kind of succumb to reading glasses during this quarantine. So it’s interesting, we sort of kind of cover several different generational aspects in this conversation today. But you when you speak to bankers, what are some of the common mistakes that you see them, making in terms of culture and trying to attract millennials into their organizations?

Kevin Scott: Yeah, it’s interesting because there are a lot of stereotypes, people think of Tom, when they think of millennials. They think of people that they’re driven by purpose, which is true, they think of a group that can often be entitled or have these high expectations. They also think of people that want a ping pong tables and beer fridges, and these kinds of elements in an office. But it’s interesting, the UNC Kenan Flagler school of business studied millennials and they asked them, “What is the number one thing you’re looking for in a job?” Number one thing and it’s not flexible time, it’s not more money, it’s not a lot of things you’d expect. 67% said, “The number one thing they’re looking for is the opportunity for personal development.” Meaning when they’re looking for an employer, they want somebody that’s going to invest in them, that’s going to pour into them.

Now Tom, I know you’ve been in banking for a while, but for those who’ve done that let’s go way back. Traditionally, the bigger larger banks used to have these very robust training programs, they offered. A lot of things, you come out of college, you go to the big bank, you go through the program and through different downturns and also the fact that, they were training bankers who ended up going to competitors. A lot of those programs have gone away and I believe banking has lost in a lot of ways that competitive edge, because as individuals coming out of school are looking for somebody who’s going to develop them. Most of the time, they’re not seeing that at a bank, they’re looking at somebody who may give them a good check, make them some good opportunities, but they really are starving for that development.

Tom: Right, and I kind of wonder when you’re recruiting millennials, obviously the banking industry is not one of the sexiest ones out there. And so you’re sort of trying to kind of compete with more of those high-tech industries, some of the more… more of those industries that are kind of really more relevant to a millennial. So do you see bankers sort of, kind of struggling to bridge that gap to try to make their industry a little bit more enticing to a millennial versus that kind of that stereotype of the stayed working environment that banking seems to have?

Kevin Scott: Yeah, I’m going to be a little bit bold here now, but I actually believe that bankers have too quickly thrown in the towel and raise the white flag and said, “Well, banking is just not going to be exciting, we’re just not going to make it exciting that people want to do it.” Okay, let’s use a company that we’re all familiar with, Chick-Fil-A how many people are really excited about working in fast food, how many people want to go fry chicken? Yet I know a lot of colleges specifically around the Southeast, if you’re in a business school around the Southeast, like the ultimate job is move to Atlanta and get a job at Chick-fil-A corporate yet they’re in an industry that really shouldn’t be exciting, but what they figured out how to do is to connect often mundane activities to more meaningful outcomes. And I think for bankers, they just have to do a better job at connecting the dots. Banking, well, number one, it’s a really important industry, but it matters, everybody has to have a bank. Everybody is trying to build wealth and prosperity and they want to do it for their families and bankers have the opportunity to participate in that. They just aren’t really good at telling that story, they’d much rather show you a spreadsheet than tell you a story about life they’re impacting. So it’s a mentality shift that bankers have to go through to try to remake that image to recruit top talent.

Caleb Stevens: I remember Kevin hearing you speak last fall at one of the GBA events here in Atlanta. And you made this analogy, you said to a group of CEOs, “Alright, how many of you guys, when you were in college, took a class that you thought was a waste of time.” And everyone’s hand went up because we’ve all had that one class that would just like, man, why am I doing this? Like, this is not related at all to my major or what do I want to do with my life? And so this is just silly, I’m wasting my time here. And then you asked a follow up question, you said, “How many of you guys pass the class?” And pretty much everybody’s hand went up again and you made this example of you pass that class, not because you were passionate about it per say, but because you knew there was a bigger meaning envisioned to why you were in that class.

In other words, your aim was to graduate and to graduate that was one of the classes you just had to make it through. And you said this really, really powerful statement, you said, “When the vision is clear, the mundane becomes meaningful.” And then you said, “Notice, I didn’t say fun.” Every job is going to have moments, days that aren’t fun and millennials, we can often get wrapped up into, well, this just isn’t, I’m just not passionate about this, or I’m just not making an impact. And it’s like, well, yeah you don’t know what you’re doing, you’re still in training, you’re still learning, you’re only a few years into your career. So, talk about the importance of having a vision and, and if you’re a leader and your leading millennials, casting that vision and connecting those dots, like you were just talking.

Kevin Scott: Yeah, I mean, we work with a lot of, specifically smaller banks. We’ve worked with one out of West Virginia that has 13 branches about a billion dollars bank and they’re all trying to come up with a vision. And what happens, this is really bad in banking is that visions are made by committees, who then want to water it down and the IT department wants to say, well, we got to make sure we cover our, we got to include our digital offering in our vision statement. And the marketing group says, we want to do this and the retail groups this. And what happens so often is we end up with a vision statement that is not very compelling. Here’s what I have learned that companies with a clear and compelling vision, they outkicked their coverage, they in a lot of ways end up having disproportionate market share because they have got both their customers and their employees to champion this bank as if it’s their own. And I think, so the first thing you got to do is have that clear vision, the second thing you have to do is then connect the dots. And that’s really the hard work when it comes to leading millennials, it’s not that you have to do everything differently, you just have to say, hey, this is how your task plays into the overall goal of what we’re trying to accomplish here. Yeah, you may be auditing files, you may be cold calls, you may be doing… whatever you’re doing, this is how it plays into our overall vision as a bank and an organization.

Caleb Stevens: Well, thanks Kevin, for being part of that show on attracting millennials to your bank, really good stuff there. And this next show, Eric, this was one of the top listened to shows of the entire year, talk about this one.

Eric Bagwell: It was, we had Jack Hubbard come in Jack has done some training for our bank and has actually spoken at a conference that we put on every year and we thought, man, we just need to talk about sales. And so, I grabbed a couple of my guys, that are salesmen for us and we just kind of sat around and talked about, selling in this virtual world. I mean, so much has changed and we are having to do things different, everybody has to do things different and Jack had some great insight on that, so let’s go to that one right now.

Jack Hubbard: I always like to start training class, with couple of comments. First of all, failing to plan means planning to fail and if anybody thinks that your great community podcast, it was done just on the fly, that’s incorrect, there’s a lot of planning that goes on. The second thing to know is that whether it’s remote or it is in-person, the buyer has the answers and the banker needs the questions. The third thing is what you know about your client makes what you know about your product valuable and the fourth thing I always like to say, it’s better to be interested than interesting. Now those are all similar, whether you are in a 3D mode or a 2D mode, but obviously one of the things that we to consider now is both training remotely and having conversations remotely. And the third thing that I think a lot of people forget, is leading remotely. How does sales managers keep people engaged, there people engaged so that there’s some remote coaching going on.? So, that’s a little bit from me, but you folks are out there all the time. What are you seeing, that’s similar and different to maybe before February of this year?

Chris Wright: Yeah, Jack, hey, this is Chris Wright. I mean, I think I a hundred percent agree, there is a lot of similarities. The things that I guess most challenging for us is, we really enjoy that one-on-one in person meeting with our clients, I mean, that’s how we set up our, a lot of our new business. But we’ve had to rely on more active emailing, we obviously make more phone calls, scheduled webinars with our product experts. So, we’re having to really engage through that. And we do that a lot of different ways, I mean, some of it is through providing a different industry articles that we find pertinent to what’s going on in the industry, podcasts, like what we’re doing here today through our Community Bank Podcast, and then just ideas that we’re using here at our own bank that we can share with our customers and prospects. And then also what we’re seeing out in the field with our customer banks that we serve.

Jack Hubbard: That’s right and I like to always talk about five Cs and you all know this from a credit perspective as bankers, but the five Cs of trust-based selling, which I like to talk about versus consultative selling. I think you made a great point about value and I think that too often, bankers look at themselves as relationship managers. And I think that’s a fine concept, but I like to kind of say, clients want more today, they want that resource manager, if you’re going to be a great resource manager, you’ve got to do the five Cs, which are conversations, curiosity, customization, collaboration, and connectivity. And so again, those are all things that you can do virtually. Now it is absolutely not any fun not to get on an airplane, I mean, truthfully guys, I’ve been on airplanes for 47 weeks a year, since about 1987. So I’ve been traveling a lot, I love to do that and I certainly miss it. Having said that if you’re going to be successful as a bank today, whether it’s a small community bank or a bank like Center State, and now with your new affiliation with South state, you’re going to have to make sure that you have those conversations working out really, really well. And that people on the other end of the line, whether it’s across the desk or across the video camera, they have to feel really comfortable that you really care about them and more care about them than you care about the bank and trying to push [inaudible32:41]

Chris Wright: Hey Jack, to add one more to that, when you’re going through things and you’re having to make changes that isn’t always the most fun thing to do, but I always try to find some benefits. And like you said, not being on a plane or not having to schedule travel time, I found that to be really freeing of my schedule. So, when I’m scheduling these webinars or zoom type meetings, I’m not having to, figure out how far, I have to drive to the next account. So, I’m able to be a lot more flexible and actually schedule more appointments and be more efficient at actually what I’m doing. And it also gives me much more prep time because of that as well.

Jack Hubbard: Yeah, no doubt about it and I think one of the challenges that we have now, and we’ve been virtual for 21 years as a company. So, this pandemic while it’s absolutely horrible, is not unusual for us, we operate out of our houses in any case. But I think the real challenge for the majority of people who have suddenly gone from in the office to in their home office is the inability to turn things off. I’ve talked to bankers who are working very late at night, very early in the morning and because it’s there, because the computer is there, because the technology is available, it’s really kind of hard to turn that off. And to your point, I think we can maximize our time board when we’re on a virtual meetings, the challenge is you don’t want to become a zoombie. We’re trying to be really careful to tell our bakers, do three calls a day, do them at whenever you’re most fresh and certainly when you can get a hold of the buyer, but don’t try to do call after call after call because you don’t want people down the line in the afternoon to become victims or zoombies either. So, you got to be fresh, you got to keep it fresh, but you’re right. you could really match; the pandemic is the greatest time management tool ever create. And that’s unfortunate but it’s absolutely true guys.

Eric Bagwell: Alright, that’s great information from Jack. That’s a popular topic sales, it was neat to hear him talk about the changes that are needed to be done and that’s a topic that we’ll talk about more in the future, because there’s already things that we’re looking to do different, even from what we’ve done this year. So, he’ll be somebody good to have on, on a pretty consistent basis. The next show was a digital banking show and honestly, I was a little bit nervous about this one actually missed this one. But I was nervous because that first show with Patrick, it gets very technical. This one, I don’t think gets as technical, but we had Shirley Fianna from Center State Bank, our bank, and then we had Ruth Erickson and I think on a day like this in Atlanta where it’s about 39 degrees, overcast and spitting rain. Ruth was from bank of Hawaii, so I bet we all wish we were at the bank of Hawaii today, but Caleb, you hosted this one, talk about this one.

Caleb Stevens: This is a fun one and you mentioned Ruth being way in Hawaii. We had to coordinate time zones just to record this, I think it was two o’clock in the afternoon here in Atlanta, and I think it was eight in the morning. So, we appreciate her getting up a little bit early and hopping on the mic for us. But yeah, we talked about how our bank simplifying the online account opening experience. We also brought on our friend [inaudible36:08] from our vendor partner, Tara Feena that helps with that, but we talked really about COVID and what are the trends we’re seeing in digital banking in terms of more accounts being originated online versus in the branch with branch closures being, pretty much unanimous across all banks this past year. And so this was a great discussion, like you said, “Not quite as technical,” thankfully, but Tom and I got a lot out of this one. So we’re excited for you to hear that one now.

Shirley Fianna: Well, a fully automated online account origination platform is new for Center State Bank. We’ve had, more traditional digital services available for years, including mobile banking and mobile deposit. However COVID has forced all of us to shelter into place and therefore the services that consumers previously thought of as a convenience suddenly became a necessity. And there are really some nationwide jaw dropping statistics about the increase in mobile traffic is what they’re referring to it as these days. But we’ve definitely seen that impact at Center State Bank where our new mobile banking enrollments have more than doubled since the outbreak of the virus in March. We’ve seen an increase in mobile deposits of 40% and probably one of the most interesting statistics, for us in particular, is that consumers in their sixties are opening more new accounts online with us than any other age group by decade.

Caleb Stevens: Wow!

Shirley Fianna: So it sort of breaks the stereotype that digital banking is for the new generation and that’s definitely not been the case with us.

Caleb Stevens: And do you think you’ll see any kind of pull back on that, how much of this do you think is permanent, folks continuing to be digital only, do you think we’ll see it scaled back a little bit, what are your thoughts there? And Ruth I’d love to hear your thoughts as well.

Shirley Fianna: I really don’t, I think part of the barrier in the beginning when banks began launching these kinds of convenient digital services is, was the fear of change or the fear of something new. And once people have had the opportunity to try it and see how easy it is, I don’t see us going backwards. I think we’re here to stay we’re digital banking and digital convenience is concerned.

Ruth Erickson: Yeah, I definitely would agree, I think we’ve really see customers get over the hump of digital adoption during this time. And really as time goes on, we’ve those trends continue, in terms of that shift in preference and shifting behaviors. For example, like so we’ve had online account opening for a number of years and we just shifted over to the Turkana platform a year and a half or so ago. But that’s growing over 300% during the pandemic and that’s massive growth really us or on our home lending business side of the business, we’ve seen over 140% growth in online mortgage applications and about 80% growth in [inaudible39:09] applications. And so I think that human behaviors shifted like it’s unfortunately kind of enforced to shift, but it only takes about 60 to 90 days for habits to stick and we’re past that.

Tom: And I’ll throw this question out to both of you, and it sounds like if we’d had talked probably a year ago, I would imagine like getting some demographic groups to sort of adopt a digital account opening platform would have been one of your bigger challenges, as you talked about the environment today has kind of shifted that to where it’s almost forced upon them now, to consider the digital account opening aspect. So, kind of what is your biggest challenges now, as you kind of face the digital revolution that we’re going through it, you know, with the account opening sort of being taken off to the side because of the environment. Is there another challenge that really has risen to the top for you, and that’s for both of them?

Ruth Erickson: So I think to me, I guess if I take a step back, like, I think it’s always hard to change consumer habits and behavior, and for particularly in Hawaii because we’re just not quite as progressive as the rest of the US. We live in paradise and we love paradise, and so we don’t necessarily need to change as much. And people enjoy coming to the branch to visit with their relationship manner or simply do banking the way that they’re familiar with it. And so, for us, the digital account opening experience, I don’t know that that’s actually the most challenging shift that we have to face in the future or now. It’s actually the shift of behavior to online and mobile. So instead starting to experience the branch is way more transactional and able to do a lot of your more kind of relationship oriented banking through online and through mobile.

I think certain technologies have been around for online and mobile banking for a long time, but I think we’re now just on that cusp of breaking through it. And after months of staying at home, we see those new behaviors starting to solidify amongst customers. So really understanding to me and the online and mobile banking space, like, what are…. understanding the data, meeting your customers where they’re at. Who are those people that are comfortable, who are those people that are occasional users and how might I start to engage with them differently? And who are those long-timers who are just like, I don’t want to do this and they’re resistant, but I can pull them along? And so, really understanding the data so you can start to talk to them in their preferences.

Caleb Stevens: Well, I was good to talk about digital banking, that’s something that is obviously going to be just more and more relevant as time goes on. And we’d love to have them back next year as well, to get an update on, you know, post COVID. How are things going on the digital banking front and with the online account opening experience? Eric, I really like this next one because we’re featuring one of our own Patti Gorman from the bond side of things.

Eric Bagwell: Patti, she deals with a lot of banks down in Florida. She’s been in the business for a pretty decent amount of time. She’d kill me for saying that, but she’s really good. She’s got a lot of great information and was great when she came on the show. And Patti, we just have a clip from her, just talking about how banks have so much liquidity right now. And it’s probably not the best thing just to have all your excess cash in fed funds, so let’s play that clip right now from Patti?

Patti Gorman: Well, I think for the most part, I’m hearing that the majority of my customers have excess liquidity. They need to invest, but when they look at the right structure out there, it’s kind of deer in the headlights. It’s like, what do I do? Can I really go out that long? Because you know, the old curve is pretty flat and fed funds is earning 10 basis points. So I think the hard thing to convey is the fed has projected, and I know you’ll talk about this in a minute that they’re not going to begin to even think about raising rates until 2022. And recently, even longer, maybe 2024, but I think more frustrating than that is some of the customers were in the same position two months ago and we were, you know, at 80 basis points on the 10 year. And then we made it all the way down to 50 basis points on the 10 year. So after a day like yesterday, where we get a little bit of a backup, customers can’t sit on the sidelines and not invest. I believe that this is the time that they’ve got to get all cylinders firing on the balance sheet right now. And as hard as it is to invest at these levels I think they have to.

Eric Bagwell: And that’s kind of the, you know, it’s difficult obviously with rates near zero to kind of jump up and down and say, this is a great deal, a great yield, because it’s just not. The market is just not giving us those kinds of yields that you want. But again, to your point, it’s not a case of just sitting on your fed funds balances and just waiting because I think that weight is going to be fairly long. I put together a spreadsheet and it kind of shows that where we kind of project what the fed funds rates going to be for the next four or five years. And then compare just sitting in fed funds versus in investment. And in this case, I put together an investment being a 15 year, 2% coupon that was yielding 1%, again, nothing to write home about as far as that yield, but over a five-year period, it out earned just sitting in fed funds by $300,000 and this was on a $10 million investment.

And even that, I kind of projected a few rate increases at the back end of that five-year period, just to be a little bit more conservative. So when you’re kind of put it in dollars and cents, you’re sitting there, you know, if you just kind of sit in fed funds, it’s probably going to be a costly decision in the long run for the bank. And everybody’s fighting net interest margin compression, and so it’s sort of like every basis point is precious and you don’t want to just give that up waiting for something that may not happen for a few years.

Eric Bagwell: That’s great insight from Patti, and those investment shows that we’ve done that information gets dated rather quickly, but they have been really popular some of our most listened to shows. So obviously having our guys here, that’s something that will be for sure, something that we do going forward on a very regular basis. So thanks to Patti and everybody else who took part in those, I think we did three or four of those this year. Our next clip is from Jill Castillo sees the president CEO of citizens bank and Edmond. I think most people know who Jill is. I think she makes the rounds on the speaking circuit as far as conventions and stuff. And this was the first time I think we had Chris Nichols do an interview for us. He set that up for us. Chris works with us at the bank here, and so we will go to that clip right now. This was a good interview.

Chris Nichols: No, let’s back up. You said curbside banking. Tell us about that. What is that?

Jill Castillo: Yeah, about a month into the crisis we started you know, we had the lobby close, just like other branches did or drive-thru is open, but things like notary, exchanging paperwork, large coin transactions, we were getting, and we had deployed more ITMs and were using ITM really heavily, and so, we kind of Chick-fil-A the drive-thru. We had staff outside with radio’s directing to ITM, but then we started realizing that we could be inspired some by the restaurant industry, do curbside services, approach customers on their passenger side and notarized documents, exchanged documents, do non trash cash transactions. And then if someone needed inside, you go to their safe deposit box. And we had more of a really structured way to bring them in to keep them safe and ensure that we were segregating customers from one another, and then in fact, like cleaning in between. So we will likely permanently have curbside. We have the cool signs like they do at McDonald’s. We have a really neat integration into our website. We have camera coverage 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 that I think will stick with us on the longer term

Eric Bagwell: And your employees, more universal bankers that go out and candle everything from that transaction to account opening. Is that right?

Jill Castillo: Yeah. I mean, we didn’t really have universal bankers concept. We have more of a segregation, and our teller team is… we have a different teller setup and you can visit us sometime because no one has really access to cash. It’s all electronic and how that’s managed with the recyclers, but also like coined dispensary and there’s no teller drawer. And so they’re able to do some of those functions, but then we have our personal bankers traditionally inside the bank, so there’s more complicated transactions and they’re able… there were account openings, which all that has been shifted online as well and they’re able to serve the customers that way. So we really have our kind of frontline team that’s really kind of acting like Chick-fil-A where they’re really that high interaction with the customer, and then we have the secondary team to help them more complicated situation.

Eric Bagwell: And so what’s happening with your IT spin? What are some of the projects that you’re maybe moving forward that you had maybe find out, but now you’re thinking about next year? What does that look like for the bank?

Jill Castillo: Well, not much. Just focusing right now on workflow efficiency and how do we automate ourselves as efficiently as we possibly can, having everyone at home. We’ve been paperless for several years, but we realized that we were still quite dependent upon paper and re-scanning items and things like that. So we’re really 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 work flow is as efficient as possible that we’re able to… everyone is really busy during these last few months. And so, how do we decrease these overwhelm of lots of manual and 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.

Eric Bagwell: All right, so more backend; anything new on the customer facing side? Any new technology… you mentioned account opening, are you going to beef that up, or it’s still pretty good?

Jill Castillo: And a lot of this, you know, referred to us as being kind of MacGyvering things up pretty frequently. And so we’ve been using lots of tools. We invested a couple of years ago when in [inaudible49:53] technology that basically is what hospitals and restaurants have when you’re waiting in line. And with that, technology has a lot of different opportunities, like curbside banking type, put people in a queue and have really good communications and allow you to have text message updates about the availability of the bank, via someone’s cell phone number. And then, you’re able to collect that information as well. Our chat system was also outside of the banking industry that we were able to put into place; that’s been exceptionally popular. Optimizing our phone systems so that we’re able to more 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 then of course, we launched ppp.bank partnering with Tesla and Mark Cuban and which is more of a non-bank product, and so then we offered to the nation so that we can help with PPP forgiveness, which has been something we’ve been really integrating inside our bank to try and make that process as painless as possible because it’s a hindrance process to even compare it to the application of the PPP.

Eric Bagwell: That’s right. Yeah. 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, any tips you’d like to give the rest of the industry or is there like one thing that’s really made a difference at your bank over its history?

Jill Castillo: I mean, the crisis has been such a great challenge for us, but it validated this experimental nature that our bank has, in that, whenever you’re in a crisis, you just have to do what you think is right in the moment we use kind of theme from frozen to do the next right thing. And so whenever you’re failing forward, you’re just always with this intention of very customer centric. You know, 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 is all about. And so it really put us into motion. And so it validated a lot of things that we’d already been doing and I think will accelerate going forward. I think for, you know, that experimentation is something that’s pretty foreign in 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 again, if it does work, 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 actually really inexpensive. And the customer acquisition that we’ve seen during this crisis, a lot of it had focuses, hence, you were able to do a PPP loan, and that was an opportunity to get a customer. What we’ve found is that we got our most customers… greatest customer acquisition came from those that saw how we were treating folks during PPP. They got their PPP loan elsewhere, but they ended up moving their accounts to us because they saw how our advocacy, our knowledge, our expertise, and the commitment to ensuring that our communities are taken care of.

So you know, be present, you know, social media for us is such a way to allow that increased accessibility with the customer. I responded to over a thousand small businesses, one Saturday. A DM almost every minute, and all of them, and it just added so much value to our brand and who we were as an organization to know that we were there in 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. We can come back better and stronger, but then, defining what this industry looks like going forward.

Caleb Stevens: Always good to hear from Jill, someone who’s on the forefront of just the banking world in terms of being innovative. So always love to hear from her and what they’re doing out in Oklahoma.

Eric Bagwell: Yeah, it’s always neat to hear what other people are doing. And that’s something we’ve talked about on the podcast is always trying to provide stuff like this.

Caleb Stevens: Share ideas.

Eric Bagwell: What a great example of that. And we hope to have more folks next year and maybe not household names, talk about what they’re doing too.

Caleb Stevens: Yeah, absolutely. Well to close us out for today. I can’t think of anyone better than our own David Salyers our board member here at South state and the former vice president of marketing for Chick-fil-A. He is an expert on marketing, branding, culture; he was behind the iconic Cal campaign for Chick-fil-A he’s. The author of the book, ‘Remarkable’. He’s got an online course called Spark, and just an awesome guy to talk to. Full of energy, full of wisdom and he was really gracious with his time to talk to us all about culture and how that applies to banking.

Eric Bagwell: It was really cool that you were able to set that up and sit down with David. What a great guy and very high up at Chick-fil-A and a quick story. I was told to reach out to him and just to see if we can…. I don’t even remember what it was for, but just as to see if we could just pick his brain on something and I emailed him and like within five minutes emailed me back. And I literally sent the email thinking, he’s probably not even going to respond to me. Somebody else is going to have to do that. Don’t even know him, and he just replied right back. I thought that was really cool. And it just kind of shows what kind of guy he is and that what he actually teaches he actually does, so, really cool. So let’s go to that; Caleb sat down with David a few weeks ago. Let’s play that clip.

Caleb Stevens: Well, let’s shift gears and talk a little bit about culture for many bankers, you know, we’re numbers driven, we think quantitatively. Culture, isn’t something we can always put a hard ROI on it, say, that’s my return on these things that I did to invest in my culture. Talk about the value of culture, despite the fact that you can’t always put in ROI or hard kind of return on investment number on it.

David Salyers: That’s a great question. I think all of us are tempted to want to boil business down to numbers on a spreadsheet, numbers in our PNL because that’s the easiest way to keep score. And there’s a lot to be said for that. And there’s some truth to that. But I took inspiration from one of the greatest mathematicians in the history of the world. You know, if you asked me who was the single greatest mathematician in the history of the world; I’d say Albert Einstein. You know what his favorite quote was, Cam? You can see some pictures sometimes with this poster on his wall, it was not everything that counts can be counted and not everything that can be counted counts. So what he realized is we can’t reduce life to numbers on a spreadsheet. There’s certainly a role for that.

He was a mathematician. That’s how he made… he made his living with numbers and equations and spreadsheets and all that kind of thing. But he realized there were things beyond that that counted. And he didn’t assume just because they can be counted that they count. And so, as I think about that, and I think about culture, culture is one of those things. So here’s the simplest way I process it nowadays; if business and banking could be reduced to numbers on a spreadsheet, every bank could do that equally. And with computers, every bank could do that equally well. So numbers on a spreadsheet will make you competitive. They’ll make you competitive. But I felt like my job was to create a competitive advantage. Numbers on a spreadsheet generally speaking, will never make, give you a competitive advantage. The competitive advantages come from things beyond the numbers on the spreadsheet.

And one of the things that true it was so good at is he was really good with numbers. We had a lot of people in Chick-fil-A staff, really good with numbers, but we never limited our thinking to the numbers on the spreadsheet. We felt like that’s 80% of what we do is we’ve got to get the numbers on the spreadsheet right from every perspective, but 20% of what we did had nothing to do with that. And that 20% made up almost a hundred percent of the differentiated results that we got. It’s the 80 20 rule, 20% of what you do 80% of [inaudible57:48]. And if I think about the 20% of what Chick-fil-A did that was different than our competitors, it was almost all cultural related. I consider a culture to be the ultimate competitive advantage. It’s the how you do things. You know, you’ve got the “what” and the “how”, and culture is a lot about the, how you know…

Caleb Stevens: And the why from the heart.

David Salyers: Yes.

Caleb Stevens: And the inspiration to even go in that direction and then lean into culture.

David Salyers: Absolutely. And you can really differentiate yourself in the realm of that, right? Yeah.

Caleb Stevens: One way I’ve heard it put too, I think it’s Jim Collins, who said, you know, you have to have blood and oxygen to survive as a human being. If you got to have a good heart rate, you’ve got to exercise, you got to eat healthy or else you’re going to be sick. But the point of life is not blood and oxygen. The point of life is not to, I’m going to work on my heart rate every day, or I’m going to exercise every day. There’s so much more to life. There’s your family, there’s your faith, perhaps. And so, your oxygen and your blood helps you live out your purpose, but it’s not your purpose. It’s not the end. It’s maybe a means to the end, but it’s not the end, and it kind of sounds like what you’re saying is the PNL, the balance sheet, things you got to have to survive, things that you certainly shouldn’t ignore any more than you should ignore your diet or your exercise, your sleep, but it’s not the primary purpose of why you exist.

David Salyers: Differentiate you from other people. You know, we never go to a funeral and say, “Yep, that God breathed a lot of air and pumped a lot of blood during their life.” You know, it was the things beyond those that make an individual unique.

Caleb Stevens: And you probably don’t talk about his earnings per share numbers were so great, quarter to quarter; you probably don’t hear about that either.

David Salyers: You know, it’s interesting, as you were saying that, I was thinking about Maslow’s hierarchy of needs. You know, the hierarchy of needs; if the foundation you have need for like food, water, air, you know, but if that’s all you ever do in life, you want to have live a very rich life. But you got to have those to enable you to get higher on the pyramid. And I think the higher on the pyramid are the more important things in life, are the differentiating things in life and those are the things we all aspire to in life to make our life richer than just existence.

Caleb Stevens: Well, I think one of the things that made Chick-fil-A unique was your emphasis on creating what you guys would call raving fans. What do you mean by that? What’s a raving fan?

David Salyers: Well, I think most businesses particularly; spend a lot of time thinking about how are we going to create more sales for our organization? How are we going to create more revenue for our organization? And certainly, every organization needs to create more sales and revenue, but how we view things, drives how we do things. At Chick-fil-A, we never really talked about creating sales revenue. We talked about creating raving fans because we felt like if we could create enough raving fans, sales and revenue would never be a problem. So the way we thought about raving fans was three things. Raving fans could be defined this way. They are happy to pay full price. They come more often and they tell other people about us. Those are the three behaviors that raving fan exhibits. So let me unpack that just for a minute. The point of them being happy to pay full price was we’ve got to be good enough as an organization to where our customers are happy to pay full price. And if I asked you to pull out a sheet of paper, write down a list of the companies where you’re happy to pay full price, my guess is to be a very short list, but there would be some companies because they’re creating so much value that you are happy to contribute to their success.

Caleb Stevens: Instead of force my 99 cent kids meal, or force my buy one get one, yeah.

David: The minute you start focusing on price means you’re not creating much value in any other way. Price becomes kind of the handicap; it becomes the crutch for your inability to create value any other way, and that’s all you got left.

Caleb Stevens: And what are you saying about your product if you’re always cutting the price in half?

David Salyers: Bingo! That then undermines trust and the fact that you’re charging them a fair price every day. And then the second thing for our business, the frequency with which they came was important. And we wanted to be good enough to where they would want to come more frequently. We wanted to be an experience that they craved, not just food they craved, but an experience they craved, so they wanted to come more often because that was important to our business model. And it would be a scorecard, so to speak that we’re doing a great job of creating value in the lives of our customers, because they want to come more often. And then finally, tell other people about us. You know, we all know that word of mouth advertising is the best advertising. In fact, it’s never been more true than it is today. In the world of social media, every customer has a megaphone and every customer can broadcast.

Caleb Stevens: And they’re happy to tell you if their experience was negative. And they had a bad experience, they’re happy to say, “Don’t go here, stay away.”

David Salyers: Absolutely.

Caleb Stevens: It’s easy to talk about the bad experiences you have, harder about what the good one.

David Salyers: But we wanted to make ourselves a company that people were so excited about doing this with they would recruit other people. In effect, they become an unpaid Salesforce for us. And so raving fans, you know, our motivation was to be so good that they would be happy to pay full price. So good, they’d want to come more often, and so good they’d want other people that they love, respect, admire to come do business with us as well. That’s how good we wanted to be. So for us, it was a rallying point about how good we wanted to be. But the flip side is, if you flip it around and you look at it purely from a business standpoint, I can’t think of a more profitable customer than the one who is happy to pay full price, comes more often and effectively becomes a free member of your marketing department going out and recruiting other people to do business. I can’t think of three more profitable behaviors than those. Now, our desire, our motivation for craving raving fans was not self-serving. It was a higher calling to be that good, but the result was….

Caleb Stevens: Let’s not look how great we are you all; you guys are fans of us.

David Salyers: An it not we’re only doing this for our own self-interest; we actually were doing just the opposite. But the net effect was that it would then make us one of the most profitable businesses out there, and in fact has.

Caleb Stevens: Yeah. And it kind of ties into that story you told me, again, years ago, were true it was saying, we need to get better before we get bigger. Talk about that story real quick.

David Salyers: Well, in the mid-nineties or early nineties there was a new competitor that came on the market called Boston Chicken at the time. They had like 13 locations in the Northeast, they got a big infusion of capital. They had some venture capitalists get involved, they did an IPO, they went public, you know, all of a sudden out of nowhere, this little 13 unit chain was as big as Chick-fil-A almost overnight. And they were talking about becoming a billion dollar business by the year 2000. So the executives at Chick-fil-A were getting very nervous. It was really the first time we’d had a legitimate high-quality chicken competitor going right after the same audience we were, right up against us. And now, they had a lot more capital and were able to grow a lot faster. So Dan Cathy, Truett’s oldest son decided that he was going to go explore options for us to get bigger, faster, just like they were because I think that’s, everyone’s natural reaction. “Wow. If they’re getting that big, we got to get big too.”

Caleb Stevens: We got to go chase them.

David Salyers: Let’s go chase them, so let’s figure that out. So Dan went to New York, we looked at a lot of different ways to get a lot more capital to grow faster. We looked at IPOs, we looked at borrowing money, et cetera, et cetera. And Dan came back to Atlanta and was sitting with all the senior team, the executive team and talking about that trip and what the possibilities were. So it was a big long room, kind of like the one we’re sitting in now. And at one end of the table was Truett, at the other end was Dan. Dan was up there with fire and brimstone talking about how we were going to get bigger, faster, and keep up with Boston market, et cetera, et cetera. And I was sitting down near Truett, and I could tell during this, he was not happy with what he was hearing. So at one point in the meeting, very uncharacteristic for Truett, he kind of beat his fist on the table and he said, “Ladies and gentlemen, I am sick and tired of hearing you talk about getting bigger.” He said, “We need to get better because if we get better, customers will demand we get bigger.”

So as you might imagine, the whole conversation changed at that point. And we stopped talking about getting bigger. We started talking about getting better. Now here’s where the real payoff came, this is what really marked my business career. Caleb, if you fast forward from the early nineties to the year 2000, you know what was happening with Boston market? They were in bankruptcy. You know what happened at Chick-fil-A? We hit a billion dollars for the first time. We achieved the very goal that they had set out to. So if you unpack it, there are a couple of really… I could spend hours unpacking, but let me just give you a couple high-level lessons I took from this.

We live with the illusion that investors fund our business, like stockholders fund our business, or bankers fund our business. But here’s what I learned. I don’t care how much money investors throw at a business, a bank throws at a business; if customers don’t throw more money at the business, you’ll be out of business. That was lesson number one, is ultimately customers really do fund your business and customers are much more interested in eating better than bigger. Secondly, I watched what happened as this all played out. Sometimes when we’re flushed with resources, flush with cash, we can kind of get wasteful and cash becomes a substitute for common sense and long-term thinking. Just throw money at a problem. So, here’s a typical scenario. Let’s say that Boston market went to Dallas and they decided we’re going to open 60 locations in the next two years.

Well, any of you that know anything about the real estate business know it’s going to be virtually impossible in the course of two years to find 60 A+ real estate locations that happened to be available, that you can get all access to. So what would happen is, they’d start with a few A+ locations and they quickly go to B, B-, C, C-, D, D- locations. So all of a sudden they opened their 60 location; they declare victory in the short run because they got all 60 open, but in the long run, you know…

Caleb Stevens: You’ve cut corners:

David Salyers: A bunch of those are lousy locations. Now, secondly, now they’ve got to staff all those locations. So they start maybe with a few A+ players or whatever, but then they quickly go to B, B-, C, C-, D, D-. So now you’ve got a bunch of B, C and D locations, staff with B, C and D people, and you declare victory after two years because you got them all open, but over the long haul, all that implodes on you, and that’s exactly what happened.

Eric Bagwell: That was the best of, for 2020. And I think starting in June just to get that many clips was pretty cool. Thank you for everything that you’ve done for the podcast. You’ve been great helping set up guests and run this board that Tom and I, if we had to do it today would not be able to do.

Caleb Stevens: It’s been fun. It’s been fun. It’s been an honor to be part of it. And it’s really cool to see, you know, so many people get to share their ideas here with us. And I hope for our listeners it’s been really beneficial. We’re always trying to find new ways to bring value. We’re really passionate about community banks and all the impact that you get to have on your respective communities. And so, anytime that we can be part of that conversation to help you in any way that’s what we’re here for.

Eric Bagwell: Absolutely. And we want it… we don’t do this just to be heard. I mean, listen, there’s not 10,000 people to every one of these podcasts, but we want it to be a resource. We want it to be value or just to bring value to all the listeners, whether you’re running a bank, whether you’re, you know, maybe you’re in the back room of a bank, but we just want this to be kind of entertaining. We want it to be valuable, and we just hope that that you think that it is. I know we’ve gotten a lot of comments from some of our listeners, we actually track, we know who the listeners are and we just think it’s neat that we’ve been able to… that you guys, and we find t’s an honor for you guys to listen to us, so thanks for that. We’ve already got some guests signed or lined up for next year. We’re excited, and we hope you guys have a great new years and we’ll see you in 2021.

 

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