While the bottom line is important, ultimately a community bank is more about people than numbers.
At least that’s the philosophy of Brian Reed, CEO and president of Santa Rosa-based Summit State Bank.
Taking the top job in 2020, the 63-year-old Reed has seen the world of banking evolve through his decades in the industry.
For example, people do more and more financial transactions online. Yet Reed believes there will always be a place for the local bank branch.
“I see banking like retail. You have the internet taking a portion of sales, but people still like to touch and feel what they are buying. I think it is true with banking, especially community banking,” Reed said. “There are relationships there. They like talking to people instead of purely doing everything electronically.”
In 1982, Summit State Bank started as a savings and loan. Today it is a commercial bank with assets of $958 million as of the end of 2021 and more than 100 employees at five branches in Sonoma County.
Here is a conversation between Reed and the Business Journal.
What is your opinion about the future of the national economy? And how will that affect your business?
There is a heightened level of uncertainty in the future brought about by the pandemic, which resulted in higher unemployment and supply chain interruptions which have contributed to higher inflation and expected increases in interest rates. We now have a worldwide event, with Russia invading Ukraine, which is expected to further acerbate supply-chain issues and inflation.
The level of uncertainty creates disruptions in the economy, but it also presents opportunities. Summit State Bank has shown that we are able to pivot with market disruptions and figure out ways to help our customers and prospects while keeping our risks low. Sometimes the opportunities occur as larger institutions make broad strategy changes and are no longer able to serve some of their customers and that opens a door for us.
If you could change one government regulation, what would it be and why?
I would like to see the tax-exempt status for credit unions change. The law is over 100 years old and much has changed since then. It provides an unfair advantage as they are able to offer customers the same products and services as banks with the competitive advantage that they don’t pay taxes.
What are the benefits and drawbacks to being located in the North Bay and doing business here?
We have consistently good metrics in terms of our local economics compared to state and national numbers. We are somewhat insulated from the problems that larger communities have, as we haven’t overbuilt or overburdened our infrastructure.
Recent fires and power outages have displaced people and could be an issue in the future. However, the pandemic created an influx of people to Sonoma County from higher density areas.
What are the advantages and disadvantages of being a local bank compared to a national bank?
The advantage is that the customer has access to the decision-makers who collaborate and respond quickly to their needs. The disadvantage is that the national banks have the resources to competitively price below what community banks can if they so choose.
Where will your business and industry be in the next five years?
The issues facing the industry are on-going. Fintech (financial technology) is an issue. There is a segment of the population that more and more is looking to things electronically, so you have to do things as an institution to partner with fintech to provide that or figure out how to do it on your own to some degree.
How does a community bank incorporate technology as part of our product offerings and can we do it effectively or do we succumb to the big banks?
There are many unknowns like cryptocurrency and how it will impact our business should we decide to engage in that line of business. What I believe we have done well to survive different trends is to address our customers’ needs and not address every industry issue.
What concerns do you have for your business and industry looking out five years?
The lack of young adults who are interested in the financial services industry. In the Great Recession there was negative press on the financial industry as a whole and a lot of people could not differentiate between Main Street and Wall Street so all institutions got lumped into this bad group.
As our employee base matures and people retire, the solution is to foster a culture that is attractive to young talent. What I am really pointing out is what everybody is going through, not just banks. It is hard to find and keep good employees, so your critical pathway is not just compensation related, it’s offering career growth, intellectual growth, a good cultural fit, something where they enjoy coming to work.
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