Jason Watson, CPA sits down with Quentin Leighty, President of First National Bank in Monument, Colorado, to discuss the pros of small business owners utilizing community banking vs. going to the "big banks" to finance a business and the perks of relationship-based models for banking.
In this first segment about Business Banking, Jason Watson, CPA sits down with Quentin Leighty, President of First National Bank in Monument, Colorado, to discuss the pros of small business owners utilizing community banking vs. going to the "big banks" to finance a business and the perks of relationship-based models for banking. Special thanks go to Axe and the Oak Distillery for graciously hosting our Bourbon and Business podcast series!
This material is based on content from our website and our book, Taxpayer’s Comprehensive Guide to LLCs and S Corps.
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00;00;14;18 [Jason]: Well welcome, my name is Jason Watson. We are here
with Quentin Leighty, First National Bank of Monument and this is
our Bourbon and Business series of podcasts so, very exciting.
We're here at the Axe and the Oak, they're very gracious to open
up early for us so we could film and record our, our podcasts here.
I'm the Managing Partner for Watson CPA Group, now we're called
the WCG, incorporated.
00;00;42;16 And again, this is our Business and Bourbon series. Quentin
Leighty is the Vice President of First National Bank. Is that correct?
I don't have your whole bio memorized. [Laughter]
00;00;55;00 [Quentin]: [Laughter] President.
00;00;55;17 [Jason]: President, oh, I just down graded you.
00;00;57;18 [Quentin]: Skip the Vice there. [Laughter]
00;00;58;08 [Jason]: Yeah. [Laughter] So, tell us a little bit about what First
National Bank does and
00;01;05;00 [Quentin]: Sure, I'd be glad to. Thanks for
00;01;06;11 [Jason]: Yeah
00;01;07;02 [Quentin]: Having me, this is pretty cool. We're a Colorado based
community bank. We've got about 22 Shareholders, so we're
privately held. And we've been doing business since 1901, so since
before the Federal
00;01;18;09 [Jason]: Right
00;01;18;25 [Quentin]: Reserve existed. So then doing it a while, but we
specialize in small business lending, agriculture, consumer lending
we do as well. We got six offices, soon to be seven
00;01;29;14 [Jason]: Yep
00;01;29;24 [Quentin]: With Flying Horse going strong right now. So that should
open in in January. And I'm the CFO for the whole bank. And then
the Market President for Monument and Flying Horse. So, I do bal,
Balance Sheet management for the whole bank, Risk Management,
pricing strategies, all that good stuff.
00;01;44;26 [Jason]: Great. And for those who who are listening or don't know
where Monument is, that's just north of Colorado Springs.
00;01;50;29 [Jason]: So, and Quentin and I are going to be, be neighbors. We're
gonna be what, a quarter mile
00;01;54;23 [Quentin]: Quarter mile, yeah.
00;01;56;14 [Jason]: [Laughter] That was accidental. So tell us a little bit about
the community banking. Of course, we have the big banks so we're
familiar with all that stuff. What about the community banking? Why
is that good for us?
00;02;08;05 [Quentin]: Sure.
00;02;08;08 [Jason]: And why is it good for banking?
00;02;09;17 [Quentin]: Sure, and as you can imagine I'm passionate about it
00;02;11;14 [Jason]: Yeah.
00;02;11;24 [Quentin]: Because community banking is what my family's done for
quite a long time and I just think it's a healthy thing for the
community. We've got a multiplier effect. So we take those dollars,
those deposit dollars that come in, and we reinvest them right here
locally, it doesn't go to Wall Street, it doesn't go out of area. It goes
to your neighbors, your friends, other business owners in the area.
And so, we're, we're keeping it local and allowing our local
community to grow as a result of that and keeping those dollars
right here.
00;02;42;03 The other piece is that we're relationship based models.
00;02;44;25 [Jason]: Ah.
00;02;45;01 [Quentin]: So instead of having like a, a matrix that everything
needs to fit in, we really can custom make products and services to
meet the unique needs of our customers. We're a small business,
too. So we, you know, we've get 80 employees and it's taken us
120 years to get there.
00;03;01;10 [Jason]: Right.
00;03;02;12 [Quentin]: And so we understand the unique challenges and so
there is no a one size fits all strategy for, for us. And so even within
CPA firms like yours, you're not going to look the same as one of
your competitors and so there might be a product that is a good fit
for the industry, but then you need some tweaks for your unique
situation.
00;03;19;20 [Quentin]: And so we can we can help with that.
00;03;21;05 [Jason]: Yeah, no, and I can totally attest to that. I'm also one of
your customers.
00;03;24;08 [Quentin]: Right.
00;03;24;16 [Jason]: So yep, I, the relationship is what drew us to you, as well.
And I'm a small business owner as well. We've been in business for
12 years at WCG. We have 27, 28 people who work for us. So
we're both small business owners and yeah, it's nice to be able to
bounce things off and build a relationship from the business
perspective, absolutely.
00;03;44;25 [Quentin]: Yeah, and I think hopefully you feel this too. But the quick
decision making. So, I think what I've learned over time is small
business owners and managers, they need real time, quick
decision making and they need to know, even if the answer's "No",
they need to know quickly. And so, that's one of the things that can
separate us too, is we're not going to lead you down a path and
then you know, two months later you're going to find out we actually
can't do that.
00;04;11;18 [Jason]: Yeah.
00;04;11;22 [Quentin]: We're going to make a quick decision and you're going to
know because we are, you are dealing with decision makers at a
community bank.
00;04;17;14 [Jason]: Yeah, no I agree 100%. I've, I've experienced that too, and
seen you've done that where it's "No" with a comma. It's "No, not
today, but someday when these things line up, Yes." And
00;04;27;16 [Quentin]: Sure.
00;04;27;17 [Jason]: I don't think you get that with the big business banking, I
think people just say, "No thanks" and they move on, they share a
page.
00;04;33;27 [Quentin]: Sure, sure.
00;04;34;12 [Jason]: That's awesome. What are some of the community stats?
You sent me a whole bunch of really cool things, and, and tell me
some of your favorites.
00;04;40;20 [Quentin]: Yeah, so it's, you know, it's something I'm proud of as a,
community banking is unique to the United States and so we've got
over 5,000 charters within the country.
00;04;49;22 [Jason]: Okay.
00;04;49;29 [Quentin]: Most
00;04;50;01 [Jason]: No other country does it the way we do it?
00;04;51;24 [Quentin]: No, most countries have 2 or 3, a lot of time state owned
or the national government owns those, like think of China or some
of those areas. We have over 5,000 charters in this country. And so
it allows us to really customize and handle a unique variety of
scenarios, but it also creates a, an industry that's not as
systemically important or challenging and so, you know, during the
downturn, 2008, 9? There were community banks that failed, and
they should have failed because
00;05;23;27 they took too much risk in a certain area or they were just over
concentrated in geography. And it allows for a system where it
doesn't take everyone down, or at least that's, that's the hope,
right? So we would like to see the community banking space grow
more so that that's even a larger piece. But some of the, some of
the stats that we, we are 99% of all charters in the United States.
So community banks make up 99% of that. We do 80% of all
agricultural loans. Our bank started in agricultural markets and so
that's something we, that's
00;05;54;20 continued to be our bread and butter and, and that's something
we're proud of and do a lot of.
00;05;58;29 [Quentin]: We do 60% of all the small business lending in the
country, which is a big deal.
00;06;04;12 [Jason]: Wow.
00;06;04;19 [Quentin]: Over 750,000 employees are employed by community
banks.
00;06;08;23 [Jason]: Okay.
00;06;10;02 [Quentin]: And one of the big things that we talk about, because a
lot of people don't know, we pay taxes. Credit unions don't.
00;06;15;12 [Jason]: [Laughter]
00;06;15;15 [Quentin]: And that's one of those things where, you know, we help
our community but we also help by paying taxes, and that's an
important piece.
00;06;22;01 [Jason]: Yeah, absolutely. What, you tell me, when you tip the scale
from community to let's say a regional,
00;06;28;24 [Quentin]: Sure.
00;06;29;03 [Jason]: Multi state, I mean, are they different like you know,
buckets or gradients you put yourself into?
00;06;35;06 [Quentin]: There, there are some rules, rules of thumb but I've seen
large banks act like community banks and really feel like a
community bank.
00;06;41;17 [Jason]: Okay.
00;06;41;20 [Quentin]: And I've seen little banks really want to be a big bank feel
and so it doesn't apply to everyone. But you know, generally about
10 billion in assets kind of kicks you up in that next level of regional,
and you can follow that up to maybe 100 million and then it's, you
know, it's getting to be a pretty good sized bank on that.
00;06;58;17 [Jason]: Sure.
00;06;58;21 [Quentin]: And then, you know, really there's there's about four
large institutions that make up the lion's share of the asset base
within the country. And those are all over a trillion in assets. So
there's a huge difference in a business model of a trillion dollar
bank than
00;07;12;06 [Jason]: Yeah.
00;07;12;14 [Quentin]: Like in us, in our case where 380 million.
00;07;14;22 [Jason]: Okay, okay. So, does that always, or I shouldn't say
"always", that's a big word. But, do the number of locations affect
how big you are, or could you have one location be a building, a
pretty large bank?
00;07;26;15 [Quentin]: Yeah, I mean that's changing so you can, you can. There
are specialized banks that have, maybe a big office in a large metro
area and, and they can get really large scale out of one spot. Most
need to have a retail base that have offices.
00;07;42;01 [Jason]: Okay.
00;07;42;09 [Quentin]: But with technology changing like it is,
00;07;44;04 [Jason]: Yeah.
00;07;44;07 [Quentin]: You know, bricks and mortar, we're kind of unique in the
fact that we're building an office right now. A lot of, a lot of you'll
read in the paper, a lot of the big banks are closing them down and
scaling them back. I just heard of one today locally that's closing
down just, they, they have enough saturation and they don't need
that location.
00;07;59;00 [Jason]: Hmm.
00;07;59;23 [Quentin]: So, that is changing but I think the largest banks that
you'll see you're going to have a lot of retail locations.
00;08;04;14 [Jason]: Okay. So, tell me how do, you know, I meant, so how does
community banking and all that market itself towards business
owners? How do you get out there and get yourself known? And
00;08;17;09 [Quentin]: We just, you know, we get so involved within the
community so we're on school boards, we're involved
00;08;21;16 [Jason]: Okay.
00;08;21;19 [Quentin]: In our churches, we're doing things locally to help the
Chamber of Commerce do better, and really, word of mouth. We
don't have the big marketing budgets like the big guys do.
00;08;31;05 [Quentin]: We don't have all the dollars behind those campaigns
and so really, it's just the being out in the street with our neighbor,
rubbing elbows, and hopefully getting referrals from
00;08;41;19 [Jason]: [Laughter]
00;08;42;07 [Quentin]: good customers and
00;08;42;11 [Jason]: Yeah!
00;08;42;18 [Quentin]: sending people our way. That's not something we try to
take to scale, we're not a Wal-Mart of banks. You know, it's really
customized service so it's slow and steady.
00;08;50;14 [Jason]: Okay. So with that customization too, do you find certain
banks are also specializing in certain industries? I mean you, said
00;08;59;11 [Quentin]: Yeah.
00;08;59;13 [Jason]: You sort of grew up on "Ag",
00;09;00;23 [Quentin]: Yeah.
00;09;01;25 [Jason]: A little bit. You know, do you still specialize in that, is that
still a lot of your bread and butter?
00;09;04;24 [Quentin]: We do, I mean that is definitely our top business line and,
and something that we love doing. Our, our presidents of our offices
are all "Ag" guys themselves.
00;09;13;01 [Jason]: Okay.
00;09;13;08 [Quentin]: They'll have a cattle herd,
00;09;14;20 [Jason]: [Laughter]
00;09;14;24 [Quentin]: Or into horses, or you name it. I have a farm. So it's
important, but I think most the successful community banks that I've
seen, they do pick a niche and they go after it hard and they do it
well. They don't try to be everything to everybody. They try to really
understand the clientele they're going after and, and have the
staffing in place to handle what they're looking for. Versus, trying to
cover everything from wealth management to, you know, small
business, real niche type products, so.
00;09;44;09 [Jason]: Yep. No, it's difficult. I mean, it's, CPA firms are similar.
00;09;48;14 [Quentin]: Sure.
00;09;48;28 [Jason]: We, we specialize in small businesses. We specialize in
people that are under 50 employees.
00;09;55;22 [Jason]: We do have some larger clients of ours but that's just
because they grew up their basement or garage and they kept us
on.
00;10;03;09 [Quentin]: You bet.
00;10;03;14 [Jason]: There's been some people who've just knocked on our
door, never left until we signed the engagement agreement, and
sure we'll be your CPA firm, but no, same thing for us. I think it's for
us it's, it's just good. We'd rather the experts at a couple of narrow
things, than to try to be all things, all people.
00;10;18;21 [Quentin]: You bet.
00;10;18;27 [Jason]: That sounds like you're similar to that as well.
00;10;20;29 [Quentin]: So it sounds like to you, one of your favorite things is
when someone does outgrow your right, I mean they get so
successful and so
00;10;27;12 [Jason]: Yeah.
00;10;27;22 [Quentin]: Huge that they, they need something even larger and
00;10;29;22 [Jason]: Right.
00;10;29;25 [Quentin]: What, what a great story.
00;10;32;02 [Jason]: It is.
00;10;32;08 [Quentin]: I love when that happens.
00;10;32;12 [Jason]: No, it is fun to watch people, and you've seen all kinds of
relationships develop and blossom. Sure, you got some good
stories of someone who came to you a decade ago and you gave
them a little bit over money on a
00;10;43;26 [Quentin]: Yeah.
00;10;44;14 [Jason]: A loan. It was a little risky, let's say, but it fit within the
guidelines and all that stuff, and he took that and they grew it, and it
probably makes you proud in some ways.
00;10;50;06 [Quentin]: It keeps me going. Yeah, I love that.
00;10;51;20 [Jason]: Exactly. Well, this I'm going to wrap up this segment. You
know, next time that we come on we're going to talk about how to
qualify financially. I think that's a big, big deal. We have tax returns
versus financial statements, should they agree, that's a miracle.
00;11;10;24 [Quentin]: [Laughter]
00;11;10;28 [Jason]: We'll talk about some of the basic business lending
options, for our listeners and our viewers as well, and, they're also
going to kind of discuss the comparison to SBA lending as well. So
that's going to be our next segment. My name again, Jason
Watson, with WCG, Incorporated here with Quintin Leighty from
First National Bank of Monument. We're on the Business and
Bourbon series of our podcasts, hosted by Axe and the Oak. And
we appreciate their graciousness. And we'll talk to you guys real
soon. Thank you.