In an unpredictable banking climate with a dwindling number of community banks, longevity is something to celebrate. United Citizens Bank and Trust in Campbellsburg, Kentucky, has survived war reconstruction, two world wars, the Great Depression, the Great Recession, and worldwide pandemic, and more. This year, they celebrate 150 years in business. To celebrate with them, we had a conversation with our friend and customer, CEO Matthew Brent, about the anniversary, the future of rural community banking, and what sets them apart.
Madison Caplinger (ICBB): So, you are the CEO at United Citizens Bank & Trust?
Matthew Brent: That’s correct.
MC: How long have you worked for United Citizens Bank?
MB: I’ve been with the bank just over 10 years. More or less right at 10 years. I was named as the next CEO in March and took over in July.
MC: What areas of the bank did you work in before being named CEO?
MB: In my career, I’ve been a teller, head teller, assistant branch manager, branch manager, loan officer, I’ve done all that. But here, loan officer has been my role here at the bank, as well as serving on various committees that we have.
MC: That’s interesting. So, do you think coming in as a teller and then work your way up to CEO, is a common practice in community banks?
MB: I know several people that I worked at community banks that started as tellers and kind of work their way through the system. Off the top of my head, I really don’t know how many conversations I’ve had with people that were CEOs and presidents, but I’m sure there are several of them in the world. In the community banking world, you wind up having those 30+ year employees, and I would venture to say that most of them got their start on the teller line.
MC: Yeah, for sure. I think that’s valuable because Tellers develop the people skills and know the banks inside and out, and they know the communities. I think that’s underrated and valuable.
MB: Yeah, you really do learn a lot on the teller line, just doing the transactions and getting exposed to different areas of the bank. To be completely honest, it wasn’t something I wanted to do. I wanted to get into loans from the beginning. It was just hard to do without getting some experience. But I’m really glad I did. I learned a lot. I think I’m a lot better off starting where I did, versus going straight into loans.
MC: After being involved in this bank and this community for the past 10 years, what changes have you seen in the bank, and in the community banking industry during your tenure?
MB: We’ve seen pretty significant growth in the ten years that I’ve been here. In the grand scheme of things were still a quite small community bank, but we’ve been making pretty good strides in the last few years as far as loan and asset growth. I think last month our past dues are under a half a percent, so it’s a very responsible growth and we’re proud of that. The industry is ever-evolving, and you go through cycles. New compliance measures were on the top of everybody’s radar for a period of time. Then you get the hang of that, and now, it’s hard to mention risk without talking about cybersecurity. Currently the rate environment we’re in and the interest rate risk is going to become a hotter topic as rates keep rising. We’re all trying to figure out what the feds going to do going forward.
MC: What kind of changes have you seen on the technology and customer service side of banking?
MB: Well, it seems like the world is trying to create an environment where you can do everything from home, and obviously that’s a valid goal from a convenience standpoint. But in the rural communities, I can’t say that it will never get there, but I think the bulk of our customer base still likes a little face-to-face time and interaction when they’re conducting business. Of course, we’ve seen an uptick in the online banking, mobile deposit, and all that sort of stuff. But as far as the whole industry’s concerned, I don’t think our markets are quite ready for the ITM teller machines and things like that that more or less replace the personal interaction.
There’s definitely a big push on the technology side. It wasn’t too long ago, our physical work used to be transported to and from each branch. Now you just scan it at the teller station. People can take pictures of their checks at home and deposit them and make person-to-person transfers in online banking. Things are changing quite a bit. With direct deposit and those sorts of things, it definitely can cut down on your branch traffic. That’s something that has to be monitored as time goes on, and it makes you rethink what your branch structure will look like down the road. But right now, like I said, we still feel like a good portion of our customer base still appreciates the face-to-face interaction and will come in and talk to the teller versus machine to do their business.
MC: Yeah, for sure. The leading banking voices are talking about the need to implement new technology, and the need to have a three-minute loan application. But for community banks, do you believe there is a balance you have to strike between that convenience and the sense of community?
MB: We’re always going to tell you that we’re going to give you better service. When you do a three-minute loan application, if you can hop online and complete it that quickly and without having to talk to anyone, that’s a convenience factor, but you’re not getting any service out of that. So, in those situations when everything runs smoothly, it’s great. But if you have an issue, that’s when you’re either talking to a recorded message or getting transferred four or five times and sitting on hold. I can’t argue the fact that some of the technology doesn’t add some convenience, but I don’t believe it’s ever going to match the level of service that community bank and our staff to give to someone. That’s where the consumer has to make the distinction: what are they looking for? Are they looking strictly for convenience, or are they looking for good customer service as well?
MC: You guys just celebrated your 150-year anniversary, and it’s incredible to think about all the things that you guys survived: the Great Depression, and a pandemic and everything in between.
MB: You know, the country’s recovered from a Civil War, two world wars, a pandemic, Great Depression, the Great Recession. When we were doing research on this 150th, they found records of checks written on corn husks. When you think about the nature of the banking industry, the amount of bank charters in the last 10-15 years has decreased substantially. There’s just been a continual chain of mergers and acquisitions. It’s definitely amazing from a longevity standpoint. But, also, one thing we’re very proud of is the fact that we are located and originated in small rural communities, and even back in 1870, when they were beginning to work on putting the bank together and getting the charter, the focus was a hundred percent on providing the services that communities needed. We feel like, 150 years later, that’s still our backbone. To be able to fend off any mergers or acquisitions, the board and the leadership of the bank made a commitment that we have no interest in being that type of institution. We want to provide the services our communities need and do it at a fair return for us and a fair rate for the customer.
MC: Do you think that customer and community focus is the thing that you have done differently to outlast your competitors and avoid a merger or acquisition?
MB: I definitely think that mindset has helped be a successful member in this community and in the banking industry. It’s allowed us to stay relevant and even grow. But I have to give credit to the leadership of the bank over the last 150 years. They clearly made it part of their mission and vision statements that this wasn’t a ‘let’s grow it and sell it and profit’ type situation. It was developed to be a community bank to help and serve our communities. The various board members throughout the history of the bank have stuck to that. I have to give credit to them for creating that mindset upholding it. Otherwise, I would say there would be a very good chance that, at some point, there would have been an acquisition or merger
MC: How have you seen that mindset translate into the concrete, the day-to-day operations of the bank?
MB: At the bigger institutions, you are more or less a number. That’s not really a dig at them, but if you’ve got 100,000 customers, it’s pretty hard to be able to call them all by name. We just had a situation yesterday where someone was dealing with a larger institution and had a fairly simple situation to resolve. But at the larger institution, they couldn’t find anyone to talk with them about how to resolve it. So, we get the call and they were ready to move everything if we could help them with this. Being locally owned and all our management being local, made it pretty simple. It was maybe a two-phone call situation. “Here’s what we can do, and this will get your where you need to be.” That’s just the kind of service that you’re flat out not going to get at a larger institution.
MC: What kind of Unique value, have you seen come out of having a correspondent relationship with us at ICBB?
MB: We use the bank for our wire transfers and the handling of our Fed Funds and that sort of stuff, which has been very convenient. I just talked to another community bank yesterday, I think in Manchester, that is slightly larger than us but still under $200 million. In their market, they have a ton of liquidity but it’s hard in rural areas to get enough loan demand. So, the participation loan program is very valuable to community banks because of the struggle to find loan demand. So being involved with ICBB gives us the opportunity to participate in really good deals and make a better return than we would if we were to, say, put that into an investment. That’s a pretty valuable part of our relationship.
MC: We get a lot of good feedback about our participation loan program and quite a bit of question and demand for that. So, I see how that’s valuable to you guys too.
MB: It’s a tool that allows us as the bank to keep our customer relationships and keep their loan in-house by selling a portion and not necessarily to our competitors.
MC: So that’s really all the questions that I had for you, but is there anything that you’d like to add that I haven’t touched on?
MB: Our 150-year anniversary is something that we’re really proud of, and we were able to have a nice celebration this month. For me, being a lifelong member of this community and an employee of the bank now, it’s a proud moment for me on both levels. The world can be tough on a small community bank, and it can also be tough on a rural community. So, to me, the success that we’ve had is a direct reflection of the strength of our communities, and in a lot of ways, it’s tough for one to exist without the other. Achieving 150 years is a reflection of the strength of our communities, the employees, and the management we’ve had in the past. It means that, not only are we doing the right thing but that we’ve helped our communities be in a position to do the right thing. We were both able to make it through the last 150 years together and we’re looking forward to being able to continue that.
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