The only locally owned community bank in St. Petersburg has to get creative to grab market share. 'There has to be a reason for someone to change,' says the CEO.
One by one, St. Petersburg-based Freedom Bank has seen its rival community banks fall by the wayside, swallowed up by larger regional institutions like Bank of the Ozarks, which acquired C1 Bank, and Valley National Bank, which bought USAmeriBank.
But rather than be alarmed or threatened by consolidation, Freedom Bank CEO Cathy Swanson sees opportunity.
“Every time a locally owned community bank is purchased by a larger bank, it elevates our presence,” she says. “There are people in the community who still want to deal with a community bank. And so obviously the fewer there are, the more opportunities it brings you.”
“Changing banks is not an easy process these days. There has to be a reason for someone to change.” Cathy Swanson, CEO of Freedom Bank
Despite industry upheaval, Swanson, 63, says it’s tougher than ever before to get customers to switch banks. That’s why Freedom Bank, which primarily handles commercial accounts, takes a long-term, never-give-up approach to poaching customers.
“Thanks to the people we have on our team and our knowledge of the market, we identify customers we would like to steal,” she says. “But changing banks is not an easy process these days. There has to be a reason for someone to change.”
Persistence is key: The bank’s account team will spend months, even years, calling on potential clients.
“What we try to do is present an opportunity for them,” Swanson explains. “So if they're happy in their current banking, but something goes wrong and they get to the point where they want to make a change, we’re the first bank they think of.”
The approach is working. Freedom's assets have grown from $80 million to $300 million since Swanson was named CEO about six years ago, and its gross annual revenue has climbed from $6.9 million in 2016 to $11.8 million in 2018, up 71%.
“We’ve had the capital and we’ve taken advantage of that,” Swanson says. “With growth comes improved profitability and a general sense of wellbeing.”
Another edge for Freedom stems from the lack of new community banks in the past decade, which has created a barrier to entry.
“Regulators want to see a strategic plan and how you intend to grow over the next five years,” Swanson says. “And they want you to have capital in place, when you open, to support that five-year growth. It’s kind of tough to come right out of the gate with $25, $30, $40 million in capital.”
Following that, until Sarasota-based Gulfside Bank came along last year, it had been more than a decade since a community bank had been chartered in the region.
In the effort to secure more business, Freedom Bank also recently added two prominent local businesspeople to its board: Craig Sher, executive chairman of The Sembler Co., a St. Pete-based commercial real estate development firm, and Ron Campbell, principal and CFO at The Seminole Cos., a Belleair Bluffs-based private equity company that invests in renewable energy projects and multifamily housing.
Both have proven to be active and engaged, Swanson says, sitting in on calls, making referrals and reviewing loan requests and bank strategy.
Sher “knows so many people and he’s an influencer,” she says. “He reaches out to people in the community who maybe we haven’t reached out to before.” Campbell, meanwhile, brings much-needed northern Pinellas County connections and perspectives to the bank. “Ron brings a center of influence where we don’t necessarily have a presence," she adds, "but we would like to build one.”
Following a couple of new executive hires, the bank now has 49 employees, split between the main office at 1200 4th St. N. and its branch at 9700 Koger Blvd. in northern St. Pete. “From a physical space perspective, we are beginning to run out of room,” Swanson says, adding the bank’s strategic plan calls for three new branches within the next five years. She expects to have at least one new branch within the next 12 to 18 months.
Like many of her peers, Swanson worries about a looming recession. And recent tax reform measures haven’t sparked a boom in reinvestment. “Some businesses have taken advantage of using their capital to grow,” she says, “but I’m also seeing people who have just grabbed hold of their liquidity … it may be the uncertainty about what lies ahead, but they’re trying to steel themselves, and they’re smarter than they were 10 years ago.”