Community Banking Perspective - Charles Brown, CEO, Insignia Bank, FL.
In an exclusive interview, Brown discusses:
Brown has over 20 years of banking experience. Prior to joining Insignia in 2006, he was CEO and president of Charlotte State Bank for 10 years. He previously served as the Chairman of Tier II Banks for the Florida Banker's Association and Chairman of the Florida Banker's Education Foundation. He is a frequent speaker on the topic of Disaster Recovery Plans and was a featured panelist as well as presenter at the kick-off of www.Ready.Gov, along with then Secretary of Homeland Security, Tom Ridge.
TOM FIELD: Hi, this is Tom Field, Editorial Director with Information Security Media Group. Recently the FDIC set up an advisory committee on community banking, and we are speaking today with one of the new members, Charles Brown, Chairman and CEO of Insignia Bank in Sarasota, Florida.
Charlie, thanks so much for joining me today.
CHARLES BROWN: You are very welcome.
FIELD: Just for some context for our audience, could you tell us a bit about yourself and your institution?
BROWN: Sure, sure. Previous to starting this organization, I served as CEO over two banking charters for approximately 12 years. And for the last three years I have been focused on growing this organization, which has the reference point of being the highest capitalized bank in Sarasota's history. We have been operating for a little over two years with $131 million dollars in assets.
FIELD: Boy, you picked a great time to start a bank didn't you?
BROWN: Well, it has been an interesting market, but from a timing standpoint it was a little bit better than had we had started a few years ago.
FIELD: Sure. So tell us about the committee that was just named; what perspective do you think you are going to bring to this committee?
BROWN: I think the fact that I have run community banks both in extremely strong economic times as well as these more challenging times. I have been very involved with legislative and policy issues through Florida Bankers and American Bankers Associations over the years.
FIELD: Now what kind of expectations do you have for this group, and what it can accomplish?
BROWN: Well, I think we are going to be serving as a sounding board for the FDIC, and I think from an accomplishment standpoint the most important point will be that we will help the FDIC consider all variables and possible consequences to any [policies] they might be pondering or even have in place today.
FIELD: Now you certainly have got broad banking experience. How would you say that community banking issues, like those you want to be discussing, differ from those that might be facing the larger institutions?
BROWN: Well, while it is not an issue that faces our particular organization because we were so highly capitalized when we started, for most of the industry right now access to capital is a fairly significant issue compared to what the larger institutions are faced with. You have heard it referred to as the Too Big to Fail Doctrine; this type of philosophy definitely has an impact on the smaller community banks.
FIELD: Now, we have just completed a very challenging year. What would you say have been your institution's biggest challenges at a time when certainly the nation's banks have been under pressure in your home state in particular?
BROWN: Well, it's very simple, and the challenge has been the changing real estate values. If we see a point where the market will recognize that we truly have bottomed out or started to see some resurgence in value, I think it would change the entire environment of lending as well as an individual's purchasing property for investment or income.
FIELD: So you talk about the challenges; what would you say have been your bank's biggest successes, especially in such a short time?
BROWN: Our people, starting with the Board of Directors, the management team and the other members of the support team at that bank have just been fantastic. We were very fortunate to start with a really strong core of individuals who tend to always lead to even other stronger individuals, and then secondarily we place a very high premium on communication, both amongst ourselves as well as our shareholders and customers.
FIELD: That communication I am sure has been tested over the past year.
FIELD: Now one of the things that I hear about a lot when I talk with community banking institutions are the security threats. You hear about Heartland, certainly, which has affected so many institutions, what have you found to be the biggest security threats to the institution, to your shareholders and customers and what have you done to counter them?
BROWN: Well, if we are speaking in terms of pure security as it pertains to either data or safety, it still is the good old-fashioned bank robbery. And what we have done to counter those is we have put a lot of other physical controls in place that involve mag locks on the doors, where in order to enter our branches individuals have to hit a button to be buzzed into the office, which has been received very positively from our consumers and our customers.
In a new branch location we built, as part of that process, we built the "man trap" concept where there are two sets of doors that an individual has to go through. Again, both of these procedures have been received very favorably by our customers, as they feel safer in the office knowing that we are taking a look at anyone before they come into the front door.
While data security is always something that is first and foremost, we have been very fortunate, and maybe part of that is due to some of the products that we use and the procedures that we use to secure such data, but we really haven't seen any issues there on our front line. We have been made aware of other banks where there have been security breaches with online cash management, etc., due to maybe less than the multiple levels of authentication that one should be using or that we use, but again, we haven't seen that and we haven't had any issues on that level.
FIELD: Let's talk about customer confidence. How do you assess the level of customer confidence in your institution, and how do you see it now versus a year ago when there was a little bit more confusion in the marketplace?
BROWN: Well, we have seen some increase in customer confidence, and some of that might be due to the fact that we are held in fairly high regard with rating services, and unfortunately some of the other institutions have varied in their ratings, which I guess separates us a little bit from the pack. As a result, and unfortunately due to some of the bank failures in our market, we have seen a fairly positive influx of deposits, as folks tend to rush for an organization that not only on paper looks good ,but they can also speak to the owners an the directors and the management team on a daily basis if needed be.
FIELD: Well, you know you have got a unique challenge there really because you are in an area that has seen so many failures. How do you reassure your customers or new customers that want to come to you that you are not affected by other institutions bad problems?
BROWN: We use--I mentioned communication earlier on -- we use a number of tools. We are using a quarterly newsletter sent out via email to our shareholder group. We are using collateral material at the client service desk that demonstrate the bank's capital level because again, capital is king, and it is the ultimate safety net. It also seems to be the primary differentiator from one organization to the next. So it keeps coming back to the level of communication.
We make sure that there are multiple channels, whether it be email, letters that are sent out to our shareholders, or face-to-face communication at the front line. And then last, but certainly hopefully not least, I myself get very involved on a customer-by-customer basis when needed to talk to them a little bit further about the institution and how it stacks up in this economy versus other organizations.
FIELD: So one last question for you Charlie. As a community institution looking into 2010, what are the trends and the challenges you are going to be most focused on for your organization and for the perspective you will bring to this new FDIC group?
BROWN: Well, and while this isn't a very sexy answer, it comes back to the item we talked about earlier, and that is real estate values. Our business in the State of Florida still revolves quit a bit around the real estate industry, and until there is some stabilization, which of course we are starting to see in [segments] of the residential industry, it will be very difficult and there will continue to be volatility in the banking market.
So as we see real estate values start to stabilize, I think our life will become much simpler and easier to manage, but until that point, it is something that we continue to focus on, whether it be with loan loss provisions, with portfolio diversification strategies, or simple tracking mechanisms to make sure we understand our risk levels.
FIELD: Very good. Charlie, I appreciate your time and your insight today.
BROWN: You are very welcome.
FIELD: We have been talking about community banking, and we have been talking with Charles Brown, Chairman and CEO of Insignia Bank. For Information Security Media Group, I'm Tom Field. Thank you very much.