Who were ICBA's Top Lenders of 2022?

AGRICULTURE

Ag lending in the South: Relationships matter

When the owners of a small family dairy asked The Peoples Bank in Marion, Ky., for funding to reopen the business after years of inactivity, chairman, president and CEO Terry L. Bunnell listened. He sensed the family’s passion and liked their idea of starting with selling milk at farmers’ markets, roadside shops and small grocery stores. Another bank might not have taken a chance on them, but The Peoples Bank did. That was about four years ago; today, the dairy is successful and growing.

“We worked with them with loans to buy equipment and vehicles for delivery and the beginning operational cash needs of the business,” Bunnell says. “The passion they brought to the business is what we’re all about. We want to help people succeed and grow a business, help them accomplish what they’ve set out to do.” Bunnell’s relationship with the dairy owners is not unusual. He attributes the agricultural lending success of The Peoples Bank—a $114 million-asset institution with a loan portfolio that is about 25% ag related—to its one-on-one connections with borrowers. Those relationships show the borrowers that their bank cares about their businesses and wants to help them succeed. In return, those relationships help the bank grow.

“I believe you have to interact with your customers on a regular basis,” Bunnell says. “You’ve got to engage with them to understand their needs. I believe a mistake that is often made is that we assume all farming is the same, and it’s clearly not. Our customers have different needs, and we have different ways to solve those needs.”

Terry L. Bunnell of The Peoples Bank worked closely with Doug and Ally Jones of Legacy Dairy.

Close-knit relationships

Connections with borrowers has also played a key role in the success of $457 million-asset First Southern Bank in Florence, Ala. However, First Southern’s ag lending also benefited last year from the addition of three loan production offices, says Joe Beaver, the community bank’s president and CEO. The bank, which attributes 31% of its loan portfolio to agriculture, opened loan production offices (LPOs) in Mississippi, Florida and Alabama.

“We identified areas that we feel like are a good fit for us and what we do, and we identified the right lender in those areas,” Beaver explains. In each new market opened in 2021, the community bank found an experienced ag lender who was seeking a new position.

Another element to First Southern’s ag lending success is its robust crop insurance business. The bank provides crop insurance to farmers in 11 states.

“Being in the crop insurance business lends significantly to our understanding of ag lending,” Beaver says. “It also indirectly benefits our lending business. Because of our crop insurance business in Florida, I met an experienced ag lender, and circumstances worked out that we had an opportunity to bring him on board. And in New Albany, Miss., the person who led our crop insurance group had previous experience as a lender, and he moved back into that role when we opened the loan production office there.”

First Southern’s new LPOs have pumped up the community bank’s ag portfolio, but, like Bunnell, Beaver knows that it’s ultimately the relationships with farmers that lead to lending success.

“It’s about understanding what the farmers need, building those relationships, building that trust and standing by them when the times get tough,” he says.

Lead Bank takes the lead with, from L to R, president Greg Bynum; VP and associate general counsel Shakita Miller; EVP, general counsel and chief risk officer Julie Pine; CEO and vice chairman Joshua C. Rowland; and EVP and chief technology officer Mike Beattie. Photo by Steve Puppe

CONSUMER AND MORTGAGE

Helping consumers get ahead

One of the missions of Lead Bank in Lee’s Summit, Mo., is to help consumers who have difficulty accessing the financial system, especially those who have been historically marginalized. So, when the community bank’s leadership learned of a fintech that needed a bank partner to launch a credit-building tech product, they were intrigued.

“Our CEO, Josh Rowland, went to a meeting of the Financial Health Network, an organization that helps consumers improve their financial health, and they said, ‘We should introduce you to this fintech who has this product and needs a partner,’” says Greg Bynum, president of the $738 million-asset bank.

That meeting four years ago led to the launch of Lead Bank’s Credit Builder Account program, which is accessed through an app developed by Self Financial, a fintech. Self Financial handles the technology, including access to online accounts and an app, as well as marketing aspects of the program, and Lead Bank provides the compliance and access to the banking system. It is available to consumers in all 50 states.

Why did this program help propel Lead Bank onto Independent Banker’s Top Lenders list? Because the Credit Builder Account program begins with a $1,000 loan to the consumer, which is deposited into a certificate of deposit at the community bank instead of being disbursed to the borrower. The borrower makes monthly payments over the course of 12 months. Assuming the borrower makes the payments on time, they end the year with an improved credit score and $1,000 in savings.

“In our four-year relationship with Self, we’ve helped in excess of a million consumers establish or improve their credit scores,” Bynum reports. “We’ve been really happy with it. It’s a way to help consumers get access to financial services in a financially responsible way. Some banks see fintechs as competitors, but if you can combine the strengths of the banking industry and the strengths of the fintech, it can really be a win-win.”

Two years ago, Lead Bank and Self expanded the program to include a secured credit card. Since the successful Credit Builder Account participants end the program with $1,000 in the bank, they have the cash to secure the card. More than 500,000 customers have received secured cards through the program.

At left, Lead Bank’s CEO and vice chairman Joshua C. Rowland with Greg Bynum, president. Photo by Steve Puppe

Taking the lead on financial literacy

Teaching people about wise money management is a key part of the Credit Builder Account program, Bynum says. “We do a lot of financial education to help consumers know what behaviors help their credit scores. For example, if their outstanding credit card balance gets above 30% of what’s available, that tends to hurt their credit score, so we send a little notice that says they may want to pay it down.”

Self and Lead Bank will probably add more banking products in the future, but they are not rushing things.

“We’re being very methodical about what products we introduce,” Bynum says. “We’re surveying consumers about what they need; that’s how we came up with the secured credit card. It’s important for us to do it in a financially responsible way so that we’re always helping the consumer develop good financial habits and improve their credit.”