December 20th, 2023
What have been some key successes for Vista Bank over the past year?
While industry-wide earnings have been down slightly year over year, Vista’s revenues have remained on a steady uptrend over the same period. Moreover, despite a general contraction in balance sheets and a tightening money supply due to the Fed shrinking its balance sheet, Vista Bank has experienced growth for a variety of reasons. One significant factor is our recent acquisition of another bank. Operating in thriving markets like Texas and Florida, with high household formation, job creation, and low unemployment rates, also gives us a geographical advantage. Specifically, in places like Palm Beach County, where the unemployment rate is around 2.2%, compared to the national average of over 4%, we find numerous credit opportunities within strong local economies. Being in these dynamic states positions us well in the industry.
Considering all this growth, what are the greatest opportunities for the banking industry right now?
Banks typically follow capital flows, and there has been a notable migration of capital from states like New York and California to areas like Florida and Texas. As clients relocate, they often need financing for homes, businesses, or commercial real estate investments. Unlike the national institutions, being a smaller-cap bank allows us the agility to be more proactive regarding market-specific credit decisions. While others may be pulling back, we see this as a strategic time to selectively invest in the best opportunities and grow our market share, especially in areas like Palm Beach County, which we deem a great market.
What significant trends have emerged in the banking industry over the past year?
One major trend is reduced lending for commercial real estate and construction loans. This pullback is justified, as banks should ideally carry a small concentration of riskier loans. Local banks are like fixed-income investors in their communities, routinely betting on people and assets. Lately, there’s been a noticeable tightening in lending and underwriting standards. For banks like Vista, growing in robust markets like Florida and Texas,I see this as an opportunity rather than a threat. A century-old bank that has weathered the Great Depression, two World Wars, the Great Recession, and a global pandemic, we play our game without being overly concerned about the competition. The lending pullback trend by competitors creates opportunities for banks with agile balance sheets like ours.
What sets Vista Bank apart from its competitors in Palm Beach County?
Having grown up here, our connection to Palm Beach County gives us an edge. My team and I have witnessed the growth of this region since the 1970s. This deep-rooted connection and understanding of the community, coupled with our extensive local network and experience, give us a significant advantage over banks who have transplanted leaders from other regions.
Which of your services has seen the most demand over the past year?
We’ve seen a high demand for our products and services, particularly because of the market’s credit contraction and community bank consolidation. In the last year, Palm Beach County has had less competitive debt capital offerings, creating a gap our team is eager to fill. Additionally, with banks like First Republic being sold off, high net worth individuals are seeking the type of concierge-level service that only banks like Vista, with a private client offering, can provide.
How is Vista Bank leveraging technological advancements to enhance services for clients?
We dedicate significant time and resources to staying at the forefront of technology while not sacrificing security. We continually evaluate financial technology companies to improve how our clients interact with their money. Our core operating system and mobile app offer a digital experience comparable to some of the larger banks. We’re also working on some exciting developments behind the scenes, which we’ll reveal when ready.
What innovations or fintech solutions do you anticipate will significantly influence the banking landscape in Palm Beach in the coming years?
Digital technology and fintech solutions are the great equalizer, regardless of geography. Taking advantage of responsible digital solutions and partnerships will strengthen community banks nationwide. Today’s consumers use their mobile phones for daily transactions like buying a car, applying for a mortgage, placing orders, and managing accounts. We’re working on making functions like account opening and wire transactions more seamless and user-friendly while maintaining security. These advancements will impact all markets, not just Palm Beach.
What have been some key concerns in the industry?
Recently, there has been a perception shift between “too big to fail” banks and regional or community banks. With the failure of SVB and Signature Bank earlier this year, there were concerns about the safety of deposits in smaller banks. In general, this initially led to a shift in deposits from smaller to larger banks. Thankfully, Vista proved an anomaly to this trend, increasing deposits year over year. Over time, I believe consumers will realize the perceived risk with regional and smaller banks was greater than the real risk. Programs like ICS, which allow smaller banks to offer insurance on deposits exceeding FDIC limits, should continue to reverse this trend. I suspect the regionals and community banks will regain deposit share over time.
Where do you see Vista Bank and the banking industry going in the next three to five years?
While many banks have accepted flat as the new normal in today’s environment, Vista Bank continues to expand its footprint in attractive markets like Texas and Florida. I expect more bank consolidation in the coming years for a variety of reasons including succession planning, technological disadvantages, or the inability to attract new capital or talent. As a result, there will likely be fewer banks in the next few years, but those left standing will be stronger. Having completed an acquisition this year, Vista is open to entering new markets as well as expanding within growing communities driven by M&A events or opportunities.