Friday, May 27 2022

Since the acquisition of Clearwater-based USAmeriBank in 2018, Florida, and in particular the Tampa Bay area, has become a critically important market for Valley Bank, based in Wayne, New Jersey. So much so that Joe Chillura, a former Tampa-based USAmeriBank executive, was recently promoted to senior vice president and head of commercial banking for the entire organization.

It is somewhat unusual for such a position to be awarded to someone who is not based at the head office. But Chillura, 55, says it makes perfect sense in the context of recent market trends.

“Florida accounted for half of our growth last year,” he says of the bank, with $43.42 billion in assets and some 240 offices. “It’s just over a third of our balance sheet. So that’s significant, and it’s clear that Florida has a lot of momentum. Tampa, in particular, has perhaps as many as anywhere.

“Technology can take us to a certain point, but at the end of the day, you have to have someone behind the wheel.” — Joe Chillura, Senior Vice President of Valley Bank and Head of Commercial Banking

The move also makes sense because of geography and migration. With so many investors, entrepreneurs and companies leaving the Northeast for the Sunbelt (the Valley also has offices in Alabama), it’s only natural for someone like Chillura to have a leading role in corporate banking operations.

“Joe and I have worked together for more than 30 years,” says Chillura colleague Al Rogers, Valley Bank’s executive vice president and chief lending officer for Florida and Alabama, and another USAmeriBank veteran. “He was a commercial banker his whole career and did what everyone tries to do, at a very high level. The empathy that accompanies someone who has done this work is impossible to duplicate for someone who has not been in the trenches.

But with issues such as supply chain chaos, rising inflation, a turbulent labor market and house price spikes worrying and dismaying businesses, Chillura has not received the easiest task – and he will be challenged in unexpected ways.

“Part of the appeal of Florida is that it’s affordable, isn’t it?” he says. “And we still have a favorable tax environment, which is good. But as prices rise, taxes also rise. And so it creates a burden on people moving here and what they can afford. I think it’s become a bigger question mark as to whether it makes sense to move here.

The skyrocketing cost of goods and services has been felt in other equally important ways, according to Chillura.

“The labor issue is a big issue,” he says, “especially at the bottom end. I heard the other day that Walmart was paying people $25 an hour to stock the shelves, and everyone who works in a [restaurant] the kitchen stops and goes to work there, because it pays more, it’s much less stressful, it’s not as hard. But you have to realize that while Walmart can afford to pay $25 an hour, some of these other businesses are going to have to expand, and as a result, you’re going to see widespread inflation for food and drink. .”

Target Acquired

Another trend that is not going away anytime soon is consolidation in the banking industry. Valley Bank, for its part, recently strengthened its presence in Florida with the $113 million acquisition of Bank Leumi USA, a New York-based subsidiary of Israeli bank Leumi Le-Israel BM with offices in Miami. , adding Bank Leumi and its $8.3 billion. in total assets under ownership gives Valley additional market share in South Florida’s competitive and fast-growing business community. Bank Leumi also has offices in Chicago, Los Angeles and Palo Alto, California.

The transaction “solidifies Valley’s position as one of the nation’s premier full-service commercial banks,” Valley CEO Ira Robbins said in a news release about the deal. “We are extremely excited about the new business capabilities and differentiated growth opportunities that Bank Leumi will bring to our combined organization. We look forward to continuing our journey together.

Chillura, however, is quick to point out that Valley doesn’t set out to be the biggest — just the best, especially when it comes to middle-market business lending.

“A lot of banks are doing a good job on the real high end; they cater to companies of $100 million and above,” he says. “And then the smaller community banks have generally filled the void for smaller credit needs. We play in the middle, where we feel like there’s a dearth of banks that are ready to play in that space and have the capabilities to make a difference there.

Rogers agrees, saying the deal with Bank Leumi will allow him and his team to “focus more on businesses with $50 million in sales.” Companies in this segment of the market, he says, are concerned about inflation and interest rates.

“That’s because bank debt has traditionally been so important to fueling growth for many of our customers,” Rogers says, “but the cost of that debt is obviously very significant, and the Fed has started telegraphing the hikes. everyone is clearly on their toes to determine how it will affect them, how it will affect demand for their products and how it will affect their cost of capital.

Rogers, like many of his peers, is on high alert for any Fed moves. “Hopefully,” he said, “they don’t overcook the egg and throw us into a recession.” That’s what we’re all praying for – a soft landing, with just a bit of moderate enthusiasm and demand, would be best. result, instead of overcorrecting and pushing us into a recession.

Technical difficulties

Chillura says the biggest challenge that comes with aggressive expansion is “keeping pace from a technology standpoint…it’s a tough race to run.” Organizational culture, customer relationships and credit decisions are “rock solid,” he adds, “but when it comes to the foundation of the technology platform, it’s always a challenge. for banks and bankers. We’re actively upgrading everything we have now, but that’s how it goes with every organization.

The other side of the coin? With so much emphasis on fintech platforms that use artificial intelligence and big data to automate financial decisions, banks, says Chillura, run the risk of losing the personal touch that fosters customer loyalty.

“If you really know the customer, you can articulate challenges and risks,” he says. “A lot of banks and fintechs think you can use artificial intelligence to make credit decisions, but character is a big factor in whether banks succeed or fail from an asset quality perspective. technology can take us to a certain point, but ultimately you have to have someone behind the wheel.

Courtesy. Al Rogers, longtime USAmeriBank/Valley Bank executive.

In today’s era of rapid inorganic growth, technology can also interfere with the quality of M&A execution. Chillura says it’s easy for banks to lose focus amid expansion.

“Focus on the customer instead of all the other nonsense,” he says. “That’s the key to any acquisition. What happens is you get all these consultants and tech people, they talk about all this other stuff, you know, ‘We’re going to migrate to this new core, we’re going to do this and that and you’re going have PCs running Salesforce.’ It’s all noise.

Rogers shares a similar view, saying technology cannot truly replace the personal relationship between banker and customer.

“Your banker is your advocate, especially in times of uncertainty, when interest rates rise, prices rise and human capital is harder to attract. We always say that a good crisis is the best way to separate the best bankers from those who make a career of it rather than being passionate about their career. When there is a bit of uncertainty, we can stand out from the pack, with empathy, service, accessibility and guidance.

What really matters, adds Chillura, is maintaining contact with customers and ensuring you meet their needs during the transition from one bank to another.

“Make all these other things secondary,” he says. “That’s the key. Banking is a very simple business that many people tend to mess up. They see it as something different from what it really is. We are in the service business. People think we lend money — no, we provide a service.


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