Today we have the pleasure of speaking with Lauren Sparks, CEO and Founder of Agility Bank. We talk about how she got the idea to start the bank, their status as an MDI, selling investors on the vision, building the team, and how they organized during Covid.

The views, information, or opinions expressed during this show are solely those of the participants involved and do not necessarily represent those of SouthState Bank and its employees.

SouthState Bank, N.A. – Member FDIC

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Caleb Stevens:
All right. Well, Lauren, welcome to the Community Bank Podcast. It’s great to be speaking with a new DeNovo Bank, leader of a DeNovo Bank. How are you out in Houston?

Lauren Sparks:
We’re fine. Fine is a little cool for us today, but we don’t mind that because most times it’s not.

Caleb Stevens:
Alright, well most bankers that I talked to did not envision themselves getting into banking when they were growing up, when they were in college. What’s your sort of story, background? Did you dream of being a banker or how did you land in the industry?

Lauren Sparks:
It’s so funny, I think that I’m actually the black sheep of my family because I didn’t go to law school and didn’t run the family business and wasn’t a CPA. So I ended up being a teller part-time while I was going to college at Rice University here in Houston and sort of just became this accidental banker and loved it. Loved the people part of it, loved being of service, loved what banks did. So no, I never dreamed. I graduated with an international relations and Spanish degree and that really isn’t banking. But… Once it gets in your blood, it’s hard to get going.

Caleb Stevens:
Yeah, well tell us all about Agility Bank. You guys raised a staggering 41 million in

Lauren Sparks:
Good.

Caleb Stevens:
capital. That’s I think that’s well beyond the threshold required today. So congratulations first

Lauren Sparks:
Well, thank

Caleb Stevens:
on

Lauren Sparks:
you.

Caleb Stevens:
that. But tell us about the premise of Agility Bank. There aren’t many new banks getting started today. So how did how did it all come about?

Lauren Sparks:
There aren’t. I think for me it was a very personal journey and being, it really began back in like 17 and 18 watching the bank consolidations going on, seeing that the women I knew that I’d worked with who had helped make other banks successful were sort of being left behind in those transitions, in those consolidations. Those women that made those banks successful were not in the C-suite, not in the equity position and therefore sort of just patted on the head, told thank you and then didn’t have a job. That really made me a little bit crazy. Most of my career has been in community banking in the last 12 years or so, owned my own consulting firm, risk management and compliance for community banks. So I’ve usually been the only woman in the boardroom and you get reflective at a certain point and you say, boy, this isn’t changing. Women are not at the table in community banks and this needs to change. And couple that with all the conversations that were happening with that consolidation that we don’t need community banks, which really made me crazy because… I think when you know community banking, you understand what an integral part they are in the economy. And that whole thing was frightening to me, so I thought, well, somebody needs to start a bank. It really needs to be a woman-owned bank. Somebody needs to do this, and nobody was doing it. So

Caleb Stevens:
Yeah.

Lauren Sparks:
here we are.

Caleb Stevens:
Well, it’s a powerful premise. I’d love to kind of pull back the curtain a little bit. Talk about the process of raising capital, of selling this vision that you had to investors, particularly when you hear in the headlines today, it’s so hard to start a bank because of regulations, capital requirements, hard to maybe sell for the multiple you could have a long time

Lauren Sparks:
Mm-hmm.

Caleb Stevens:
ago.

Lauren Sparks:
Happy.

Caleb Stevens:
Maybe fewer investors that are interested, talk about. you know the process of starting a bank and selling your vision.

Lauren Sparks:
So I think if I had heard you list all those things out to me way back when, I might have been more discouraged. But I think sometimes when you’re passionate about something, you have an idea and you’re willing to see it through or take it as far as you can. I had plenty of people warn me how difficult it would be. But in the same breath, some very, very respected bankers said to me, if you have a niche, you can be successful. And there is such a need for… access to capital and there’s such a need for women to be in financial services as well as at the same table as men. Very clear about our message that it’s not about being a women only bank. That’s not what we are. We are about men and women at the table. Women as equals. There’s great fed data around how banks are more successful when women are in leadership positions and when they’re in equity positions at the bank. They do better in recession. They do better with compliance. They do better in downturn. So All the information was there for me to be able to talk about the vision with people and got together a great group of founders who wanted to work on the vision. Our issue is timing because we only ended up filing our application in March of 20, right in the beginning

Caleb Stevens:
Oh wow.

Lauren Sparks:
of the pandemic. And so the good part about that was we got to go through the pandemic, talking to people about light at the end of the tunnel, doing good business again, the opportunities that come out of disruption. That was the great part of the timing, but it definitely was a difficult time to be trying to raise capital. And in addition to that, we have to be 51% female-owned. So the capital conversation is worth people who don’t normally invest in banks. Most bank

Caleb Stevens:
Yeah.

Lauren Sparks:
investors are men.

Caleb Stevens:
Right.

Lauren Sparks:
So that was a double-edged sword. I also learned a lot about how women invest, which I never knew before, and how we’re more conservative and we… We look at things differently, but the good news there is I think that women understood the message better about change being required and investing in something that you can be a part of and many of men also heard the same message and said, I want to do this. I want to be an investor for my daughter or my grandchild, my granddaughter, who I want the world to be different for them. So it was a great journey, quite a journey, but we did it. Our minimum raise was 30 million. We We’re closer to 44 at the end of the day. And we’re here. We just celebrated our first anniversary.

Caleb Stevens:
So from start to finish, the idea starts to kind of simmer in your head to opening up the doors, open for business. What was the time frame?

Lauren Sparks:
For me personally, four years plus. I

Caleb Stevens:
Yeah.

Lauren Sparks:
also had my business that I had to find, so during the pandemic I had to figure out how to have a succession plan for the business I owned. So finding someone to come and run that business.

Caleb Stevens:
No

Lauren Sparks:
So

Caleb Stevens:
big deal.

Lauren Sparks:
there’s a lot going on, but you know, it all happens the way it’s supposed to. And I think that it was a heck of a journey getting us here, but it also, I think, reinforced the reasons for our founders and for our shareholders of why it needs to change. It shouldn’t be so hard. Women should be more commonly invited to these types of investments that, you know, it’s about creating wealth and generational wealth, and women should be at that same opportunity.

Caleb Stevens:
And talk about your status now as an MDI. How many MDIs are there out there today? And talk about why that distinction is important.

Lauren Sparks:
Well, it’s a good question. So while the number of banks is dwindling, the numbers of MDIs are actually going up. The minority depository institutions really seem to be galvanizing in a call to action after the things that have happened over the last few years. But we were intent on being a women-owned, women-led MDI from the beginning, from before many of the social reasons came about in the last few years. I’m glad they have, because there’s a different conversation around. who should be starting banks, who should be managing banks, and why those banks need to be accessible. But there’s about 150 or so at the end of the last year. If you look at the FDIC list, there’s a different list if you ask the OCC because the OCC also awards an MDI charter to women-owned financial institutions like us. And there’s about 20 of us.

Caleb Stevens:
Well, tell us about the name Agility. I think that’s fitting for the kind of bank you all are trying to build and I’m always fascinated and think it’s cool to see banks coming out with fresh names. No disrespect and much love to our first nationals and first communities

Lauren Sparks:
room.

Caleb Stevens:
and citizens and merchants and all of those great people out there. But it’s always fun to have a fresh name like Agility. We had Keith Costello on a while back, Locality Bank. Tell us

Lauren Sparks:
Bye.

Caleb Stevens:
about the name and how that kind of fits into your brand.

Lauren Sparks:
Well, for us, it’s really about building the community bank of the future. That’s what my fear was. If community banks didn’t start to take pace and keep pace with where banking was going, if community banks don’t start to look at being relevant, then we’re going to have a problem. And so I thought, you know, what do we need to be high on technology? We need to do what community banks do so well, which is relationships, all day long relationships. That’s what community banks, we do as bankers. We know our clients, they come to us. We’re part of their lives. But how do you integrate technology into that as part of the relationship? And so it was about being agile. Agile thinking and the Community Bank of the Future also is more collaborative. It isn’t the bank that people come to. It figures out how to be in the channel where its clients are. And so it was just a kind of an overall approach. It was really just word storming, word smithing. And I did admit to there may be a bottle of wine or two involved during some of

Caleb Stevens:
Yeah

Lauren Sparks:
those sessions. But we came up with several and we really liked Agility Net Stuck.

Caleb Stevens:
Yeah, well I think that’s probably a good segue into hearing more about your plan for technology. You know, you hear all today about how it’s hard to win the arms race of technology as a small community bank. You’ve got to be thoughtful, you’ve got to leverage fintech partnerships, but you also want to stay true to your core DNA of being a relationship focused bank. But to your point, we’re not living, you know, in the past. We want to be forward thinking. We want to be… be serving the next generation of consumers that are using digital platforms. Talk about how does a brand new De Novo leverage technology in ways that are cost effective but also meet your customers’ needs.

Lauren Sparks:
Well, certainly we had several people say, why don’t you just buy another bank? And we could have bought another charter and that’s always an opportunity. But for us, it really wouldn’t have been fitting with what we were trying to do, which was redefine what that community bank of the future looks like. We didn’t really want to deal with legacy technology. We wanted a fresh start. We wanted to build our own technology stack. And we’re primarily commercial bank. And that was our focus on how do we become more than just an account for the commercial customer, for the business owner. And it’s about assembling the right tools and elements for the right technology stack, the right package for our clients. But so much of that has to be based on user experience. So we talked a lot about what does this all look like and we have this whole formula where we say that the UX plus the CX is the AX. So the user experience plus the… Client experience is the agility bank experience. So the user experience of it, literally how the technology works, how it feels to the client is really where we wanna be in providing, rolling out this sort of relationship-based, this relationship cognizant type of interaction with our client. Now, it’s a work in progress every day. And we chose vendors that would be more like partners with us and we chose… to implement things single-handedly or not in packages and trying to create step-by-step what we wanted to create. So it’s definitely a lot of work, but in the end of the day, it’s rewarding. When a client says, wow, I can’t believe that was so easy, we’re like, yes, that’s how it’s supposed to be. Supposed to be easy. And there’s so much more that happens on the consumer side. And again, as a business owner myself, I was like, why do I have to drive across Houston to sign paperwork on a loan? This is silly. Why do I have to go to the bank? So we just really wanted to create a very seamless channel specific approach for business owners who are ready for that.

Caleb Stevens:
And starting in the market of Houston, was there a specific need within Houston that you saw for a new bank? Was it just, it’s always, it’s been home for you for a while now. Is there something special about the city that kind of comes to mind?

Lauren Sparks:
Well, we’re so lucky. I mean, even during the pandemic, they were building restaurants around us. So, I mean, it’s just we’ve been we’re lucky to be in this sort of economic environment that doesn’t get pummeled the way it used to for oil and gas prices. It’s always a growing environment, as long as my time here since the early 80s. And even though there had there had been a decline in the banks, a lot of community banks had consolidated. And that’s really part of what drove my decision to want to start a bank. because there have to be choices, there have to be opportunities. But I think the other driver around Houston was it’s such a diverse city. And if you’re gonna build the Bank of the Future, look at all these people and look at all this representation that’s possible here, not having a bank that looks like every other bank in town. So we’re just excited to really, we believe, be the bank that represents Houston in its modern form and where it’s going. both by who works here as well as who banks here.

Caleb Stevens:
Yeah. As you kind of look back on your career, were there any formative experiences that you feel like prepared you for what you’re doing now? I heard someone say one time that, you know, when you’re a CEO, you spend 80% of your time in areas where you’re not really an expert, because as the CEO, you’re responsible for it all.

Lauren Sparks:
for him.

Caleb Stevens:
Loans, operations, deposits, the financial side of things. You’re dealing in areas where I mean there’s so many specialties and rabbit holes in banking. I mean we have an army of fixed income bond salespeople in our division and I mean you could spend years learning just about the bond market and that’s one small slice of a bank’s balance sheet. Talk about, are there any things that you feel like gave you sort of a solid banking acumen to do what you’re doing now?

Lauren Sparks:
Well, I think that the fact that I’ve probably been in hundreds and hundreds of banks over my career as a bank consultant, as a risk management consultant to community banks, so I’ve seen a lot operationally. I’ve seen a lot of good things. I’ve seen a lot of bad things. I’ve helped troubled banks in the past. So, I mean, I had a various background in community banking to begin with. But the whole point of any of this is that you find the right team and you bring the right people to the table with you. And I joke about the fact that it takes gray haired people. like us, to get the bank open, to get approved to be a bank. And then for us, our biggest challenge is taking all these gray-haired people and saying, well, we have to do this differently. And so you know what the end result needs to be, but we are going to do this differently. And that’s a challenge. But the team is what makes it possible. It’s certainly not me. I always said all along, I’ve made the room for this to happen, but it’s all about bringing the right people to the table. And Really fun part of what we’re doing is generational dream teams. I don’t know if anybody has heard about that with us, but we’ve made a conscious decision to pair older bankers with younger bankers so that we are getting them excited about being in banking because young people are not excited about being in banking. And it’s been great to watch and we see fully expected the Greyhards to be teaching the younger ones, but the really fun part is when you see the information or other great skills coming back at you that you’re learning every day as well. So it’s a… It’s definitely every day we do something new that we’ve never done before, but everybody’s learning together.

Caleb Stevens:
What’s your sell, your pitch to a younger person who’s thinking about joining the community banking world? Because I’m an advocate for the industry and I agree with you. Talent acquisition is becoming more difficult and I think it’s on us as bankers to sell the message. What’s your pitch?

Lauren Sparks:
Well, I start by admitting we all know banking isn’t sexy, right? It’s just not. But the point is, especially in a DeNovo bank, I think my biggest sales point is we get to create this bank from the ground up. We’re making it, we’re making it what we want it to be. And for a career path to be in a growing DeNovo or a growing community bank is an incredible opportunity for somebody who wants to have a career because you’re not siloed. You can learn so much. You can move around a bank. You can learn how the whole bank fits together and you can’t do that. at a Chase bank. I love Chase, I love the bigger banks, but you can’t do that there. And so that’s one of our selling points. And it has to be the right person. I think entrepreneurial minded type people and people who really love learning seem to be the fit for us.

Caleb Stevens:
And for the older folks on your team, I mean, they probably had very comfortable careers, probably nice 401Ks and probably could have ridden off into the sunset. What was your pitch to somebody who’s a veteran to say, wow, you know, come leave your comfortable job and come start a new adventure.

Lauren Sparks:
I’m very, very lucky that people came to me when they heard about it and said, oh my gosh, it’s time. I really want to be part of this, especially women. Two, my chief operating officer, Tina Becerra, and my marketing director, Sarah Peterson, both came out of retirement and said, I want to be a part of this because I saw what you’re talking about and I want it to be different too. And so other people have come on board who just said, I really believe in what you’re doing and want to be part of something new and different. It’s when you know, think about it, when you have a skill set and you really enjoy your skill set, isn’t it fun to do it in a different environment or with a different end game? It’s fun.

Caleb Stevens:
Yeah, no doubt. Well, any advice to bankers out there who maybe aspire to start a bank of their own one day? Again, going back to you here in the press, how hard it is, and yet you’re a living testament that if you find a niche, if you find an angle that you’re really passionate about, that you believe in, you can be successful and you can make that idea come to life. What would you say to somebody who’s, you know, you five years ago?

Lauren Sparks:
Don’t do it during a pandemic. That would be the first thing. And if by chance you are faced by an obstacle such as that, realize, as I did, that if the premise is correct, if the premise is real, if the business value is there and the business plan is there, it still works. You just have to find the right people in the right time and it comes together. And anything around community banking, I just couldn’t encourage someone enough to… be willing to continue the cycle of new community banks because that’s what drives diversity in our communities. Diversity of bankers will continue to be a benefit for all of us as we move forward. I just want the next generation to have choices in banks, to have choices in how they run their businesses and have a vibrant economic community like we do. And that’s community banks driving that forward.

Caleb Stevens:
No doubt. I think that’s a great note to end on and just to echo what you said, I think, you know, if we can see more de novos out there, that can only be a positive thing for the industry. You know, it seems like consolidation is going to continue

Lauren Sparks:
Yes.

Caleb Stevens:
and we need more de novos to help backfill some of that consolidation because it really does matter and it makes a difference. And there’s a lot of local businesses out there that are in need of local banking and local relationships.

Lauren Sparks:
Yes,

Caleb Stevens:
So,

Lauren Sparks:
agreed,

Caleb Stevens:
just thank

Lauren Sparks:
agreed,

Caleb Stevens:
you

Lauren Sparks:
agreed.

Caleb Stevens:
for what you do.

Lauren Sparks:
Oh no, thanks, Caleb. Thanks for the opportunity to talk about it, and appreciate it.

 

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