Bridgewater Bank hosts networking events to help its business customers make connections.
Paducah Bank & Trust Co. has an ongoing education initiative to get its staff more familiar with the range of products available and, just as importantly, how they can be used to help solve customers’ challenges.
And INSBANK operates two online divisions to attract customers outside its Nashville market. One focuses on healthcare professionals, while the other offers a virtual private client experience.
With the battle to attract and retain deposits going full blast, community banks across the country are tackling the challenge in many ways. But an underlying theme permeates many of the efforts: They aim to play to a perceived strength in building relationships.
“A lot of banks lead with promoting rates to pull in deposits, and we’ve not ever been that bank,” says Terry Bradley, the chief deposit officer at Kentucky’s Paducah Bank. “Our focus is more on how we promote to our customers that relationship management approach and who we are as an organization.”
That’s because “when you strengthen those relationships with clients, then your clients are the ones who actually are out there telling your story for you,” he says.
Other chief deposit officers — Lisa Salazar at Bridgewater in Minnesota and Andrew Smith at Tennessee’s INSBANK — put similar emphasis on relationships when discussing their main tactics for attracting deposits.
All three executives stepped into what had been a newly created role for their bank when they became chief deposit officers — Salazar in September 2019, Smith in October 2021 and Bradley in January 2022. The role is structured differently at each bank, in terms of who they report to and who reports to them. But they are all part of the senior leadership team and charged with bankwide responsibility.
The Financial Brand asked them what strategies they’re wielding in the deposit battle this year, their biggest hurdles, and the metrics their bank uses to measure success.
New Segments Like Cannabis Banking Bring Deposits
Lisa Salazar
Chief deposit officer
Bridgewater Bank
HQ: St. Louis Park, Minn.
Asset size: $4.7 billion
What are the main tactics your bank has used to attract deposits this year?
Bridgewater Bank has been able to generate ongoing deposit growth due to our responsive service model and relationship banking focus. Our teams leverage their vast networks across the Twin Cities to make connections and build relationships. We also host frequent networking events in which we bring current and potential clients into our corporate headquarters to foster mutually beneficial connections, while engaging with and learning more about Bridgewater. It is not an accident that many of our new clients come to Bridgewater through referrals.
Over the past year, we have continued to build on our current segments, including commercial real estate, professional services, and traditional commercial and industrial. We have also begun focusing on new verticals where we have developed expertise, such as affordable housing, female entrepreneurs and business leaders, and cannabis banking.
What do you see as the biggest challenge right now in terms of bringing in deposits?
At Bridgewater, our deposit growth tends not to be linear due to the nature of our deposit base, which includes higher balance relationships, longer client acquisition and lead times, and timing of larger inflows and outflows. As a result, it is not unusual for us to see quarters with more robust growth and quarters with net outflows. This means we occasionally supplement our core deposit growth with brokered deposits or other wholesale fundings, which can increase our cost of deposits.
Our goal is for core deposit growth to align with loan growth over time. We have been pleased with our ability to execute on this, even in a more challenging environment. Given our vast networks and relationship focus, we continue to get in front of new client opportunities. We feel good about our core growth pipeline and ability to grow core deposits going forward.
How is your success measured? And how often?
My success is evaluated based on my overall contributions to the bank. Key performance metrics include gross loan/deposits, core deposits/total deposits, year-over-year and year-to-date deposit growth, cost of funds, net interest margin, new relationships established, net account production, product implementation, and fee income. These metrics are measured monthly and annually to track progress toward set goals.
Are you more focused on consumer or commercial deposits?
Both! I oversee all client-facing deposit channels, including retail, treasury, and digital. Although I am not responsible for wholesale funding, I work very closely with the corporate finance team.
How did this role come about?
This role was created in 2019 to elevate the focus on core deposit generation.
Read more: The Toaster Effect: How Free Gifts Boost Account Openings
‘It’s Never About Rates’ for Paducah Bank
Terry Bradley
Chief deposit officer
Paducah Bank & Trust Co.
HQ: Paducah, Ky.
Asset size: $953 million
What are the main tactics your bank has used to attract deposits this year?
Paducah Bank’s success can be attributed to a robust strategy implemented across its entire operational footprint. This approach ensures that all team members are aligned with our growth objectives and provides a framework for measuring our achievements.
Additionally, continuous education is always a critical opportunity. By emphasizing the features and benefits of our products and services, we enable our staff to grasp their purpose and the value they bring to our clients. Prioritizing the customer’s benefit remains our focus.
What do you see as the biggest challenge right now in terms of bringing in deposits?
As digital banking continues to evolve, many younger consumers may never visit a physical bank branch. They often establish and manage their banking relationships online, enjoying unprecedented ease in moving their funds. Given the high liquidity of deposit balances and the ease with which money can be transferred, it is crucial for us to maintain close and consistent contact with our clients to ensure we are their bank of choice.
The challenge lies in creating a sense of loyalty when deposit products are not tied to fixed terms. This question is particularly pertinent as term deposits have become less common compared to the past. Many younger consumers are unfamiliar with term products and prefer not to commit to fixed terms due to their flexible lifestyle.
To address this, we offer a diverse portfolio of products and services tailored to meet individual client needs. Our role extends beyond traditional banking; we act as consultants, understanding our clients’ goals and guiding them toward achieving those objectives.
So while we do advertise, it’s never about rates. This year, our theme is “I/We Choose Paducah Bank,” which allows us to share the stories of why our customers choose us.
How is your success measured? And how often?
Our success hinges on how effectively we manage our cost of funds and its impact on our net interest margin. Deposit growth is a key component to our funding strategy. Our deposit portfolio directly impacts many of our key ratios, so success is also measured in how we meet expectations. Analytically, I review balance movements and deposit pipeline data daily to prevent unforeseen developments. This scrutiny drives our success by avoiding surprises.
I’m a member of our executive leadership team, and we meet monthly to evaluate and adjust our strategy based on economic conditions and the interest rate environment. This focus ensures we anticipate changes and refine our approach.
While core providers offer robust loan analytics, deposit analytics have had less emphasis. So I’m also focused on enhancing our analytical capabilities to improve predictability.
Are you more focused on consumer or commercial deposits?
Paducah Bank provides full-service banking solutions for consumers, small businesses, private wealth clients and commercial entities.
How did this role come about?
We welcomed a new CFO in 2021 who had prior experience with the chief deposit officer role and effectively advocated for its significance, leading to its inclusion in our C-suite.
This trend is gaining traction within the industry, as evidenced by the increasing number of chief deposit officers over the past two years. However, in reviewing the attendees at a recent banking conference I attended, I found that, among the 1,100 attendees, I was the sole chief deposit officer present.
Read more:
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Building Relationships Without All the Buildings
Andrew Smith
Chief deposit officer
INSBANK
HQ: Nashville, Tenn.
Asset size: $850 million
What are the main tactics your bank has used to attract deposits this year?
Since the bank’s inception, INSBANK has focused on growing relationships without traditional brick and mortar locations. This means we rely on innovation, technology, relationship banking and efficiency to support key banking niches from two locations in the Nashville market. INSBANK has developed products and services that support the unique needs of businesses and consumers for whom larger financial institutions have difficulty delivering quality services.
INSBANK has generated deposit growth through expertise in commercial banking and treasury management, paired with excellence in private banking services in our local community. There are also two additional divisions within INSBANK that reach outside our primary market: Medquity provides banking services to the healthcare industry, while Finworth provides a national online presence by creating a simple access point for deposit customers to experience a “virtual private client” experience, without the need for proximity.
What do you see as the biggest challenge right now in terms of bringing in deposits?
We have experienced challenges many banks are facing right now with intense competition for deposits, managing deposit costs and navigating economic uncertainty. Without the traditional retail banking model, INSBANK focuses our core deposit growth on driving relationship banking with relationship managers, private banking and treasury management teams.
In the absence of high consumer volume, our strategy to offset these industry challenges revolves around building our core deposit base and diversifying our funding strategy of our niche divisions.
How is your success measured? And how often?
The success of our deposit strategy is measured holistically looking at metrics such as overall deposit growth, cost of funds, net interest margin and deposit fee income. As a data-driven organization, INSBANK is constantly analyzing our key metrics and strategic performance initiatives. We track deposit movements in real time and analyze trends, compare growth to budget and assess progress at minimum monthly.
Are you more focused on consumer or commercial deposits?
We value both consumer and commercial deposits at INSBANK. With commercial, consumer and treasury management teams reporting to the chief deposit officer, we evaluate opportunities that include all deposit types.
How did this role come about?
The role was created in 2021 to place a focus on deposit profitability, deposit growth and to support funding strategies for the bank.
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