Community Banker of the Year: Citizens Bank of Edmond's Jill Castilla
With a down-home yet high-tech approach to banking (not to mention a management team that's predominantly women), Citizens Bank of Edmond is proving that there still are advantages to being small.
A look at how Dodd-Frank has affected the banking industry, and what other forces are at play.
It's fashionable to say that community banks need to bulk up to better absorb compliance costs and compete with larger banks, but not all bankers agree. At a panel discussion at American Banker's Regulatory Symposium Monday, three CEOs argued that small banks can thrive by remaining hyperfocused on the communities they serve, while continually finding ways to grow revenues and control expenses.
Citizens Bank of Edmond Chief Executive Jill Castilla composed her first tweet on the day her bank was freed from a regulatory enforcement action in March 2012.
At the time, any Google search on the bank likely would have turned up articles on its near-death experience following the financial crisis, and now that the bank was healthy again, Castilla, then Citizens' chief operating officer, was eager to "change the story."
Though not active on social media herself, Castilla was aware of Twitter's power to optimize search-engine results. She steered clear of promoting the bank's products and services or touting its quick and impressive turnaround, focusing instead on engaging followers with goings-on in the community, tales of customers' successes and thoughtful commentary on the unintended consequences of new banking regulations.
It worked. Castilla's tweets started catching the attention of the media and, in short order, positive stories about Citizens and Castilla — who was promoted to CEO in early 2014 — began showing up in the mainstream and trade press.
These days, a Google search on Citizens Bank of Edmond will turn up a story about the bank's "cash mobs" — one of its myriad efforts to promote local businesses — or perhaps a video of Castilla appearing on TheStreet.com discussing the cost of complying with Dodd-Frank and other regulations.
The bank's presence on social media — it has also produced a few YouTube videos that went viral — has also been a boon for business. Castilla estimates that Citizens has added $40 million of loans and deposits over the last couple of years as a direct result of its social media presence — strong evidence that Twitter and the like, used correctly, can be powerful business development tools.
"People bank with community banks because they know you, and through social media, they feel like they have met us" even when they haven't, said Castilla, 43. "It's like going to a million chamber of commerce events and shaking everyone's hand."
Castilla's wholehearted embrace of social media exemplifies the type of the fresh thinking she brings to her job every day. While the $253 million-asset Citizens is in many ways a traditional community bank, Castilla has infused it with 21st-century ideas that have transformed the once-sleepy Citizens into a thoroughly modern institution that has become a model for other small banks trying to stay relevant in an increasingly competitive financial services marketplace.
It's for those reasons and more that American Banker has selected Castilla as one of its three Community Bankers of the Year for 2015.
Castilla herself has emerged as a leader in both her industry and the greater Oklahoma City community. On the industry front, Castilla serves on the boards of both the Oklahoma Bankers Association and the Community Bankers of Oklahoma, while holding leadership positions at both their national affiliates, the American Bankers Association and the Independent Community Bankers of America. She also is a much sought-after speaker at industry conferences on retail and small-business banking and is a go-to source for journalists seeking articulate commentary on matters of public policy.
In the community, she is an active member of the Chamber of Commerce and the Rotary Club, serves on the boards of trustees Edmond Public Schools Foundation and the University of Central Oklahoma Foundation, and holds leadership posts at a host of other nonprofits. In 2013 — even before she was promoted to CEO — she was named Woman of the Year by the Edmond Area Chamber of Commerce.
"Jill is clearly the next generation of banking leaders," said Roger Beverage, the longtime president and CEO of the Oklahoma Bankers Association. "She has the ability and the charisma to rally people around her…and she has all sorts of talent to articulate the concerns of community bankers."
At a time when many small banks are obsessed with gaining scale in an effort to stay competitive, Castilla is proving that banks Citizens' size cannot just survive, but thrive, by mixing creative thinking with some serious community engagement. It'll never be the most efficient bank around, but Citizens' returns on assets and equity are significantly higher than most banks in its asset class and problem loans are pretty much history.
You'd be hard-pressed, too, to find any bank that is as revered in its community as Citizens is these days. A monthly street festival it launched last year, complete with bands, food trucks and kids' activities, has breathed new life into downtown Edmond, winning the bank scores of new fans. The "cash mobs," in which Citizens periodically gives its employees fistfuls of cash to spend at local businesses, have been a huge hit, providing local firms with both a quick burst of cash and increased visibility.
C.H. Wyatt, whom Castilla replaced as CEO in 2014 when he took a job at the $2.9 billion-asset InterBank in Oklahoma City, credits Castilla with "moving the bank back in the right direction." Though he served as CEO of the bank during the turnaround, he said Castilla was the one in the trenches "ask[ing] the tough questions and [making] the tough decisions. It was the exactly the mind-set the bank needed at the time."
Now, with Castilla at the helm, "it is my strong belief the bank will continue to push forward, challenging the status quo and leading the industry in areas of technology, social media and outside-the-box thinking," Wyatt said.
A Rough Start
It's almost hard to believe that Castilla was once persona non grata around Edmond.
It was 2009, and Castilla was working as chief financial officer at a small bank in Minnesota when her stepfather, Randal Granzow, Citizens' then-chairman, asked her to return to the family bank where she started her career and help nurse it back to health. At first she resisted — the pay was 40% lower than what she was making and her young family was firmly settled in Minnesota — but she eventually relented and in July she relocated to Edmond with her three children. (Her husband, a pharmaceutical sales representative, joined the family nine months later.)
She had no real title but her charge was to find ways to preserve the bank's capital in the face of mounting losses on soured loans. Because an employee stock ownership plan owned about one-third of the shares, the board wanted to avoid raising new capital that would have diluted employees' holdings. That meant Castilla had to some make tough decisions — such as ending an employee pension plan, and taking away company cars and credit cards — that were unpopular with existing and former employees and earned her a reputation around town as a hatchet woman. Even while getting her haircut Castilla would hear salon customers and employees gossiping about the "new woman" over at Citizens Bank who discontinued the pension plan and was taking away employee perks. It got to the point where Castilla said she had to start going to salons outside of Edmond.
"I had all sorts of nicknames during the turnaround, none of them flattering," said Castilla, who routinely worked 16-hour workdays during the early stages of the turnaround. The name that stood out the most was "cobra."
In the early going, Castilla's assignment was made worse by the fact that some longtime employees were less than forthcoming with information and documentation that could have shed light on the cause of the bank's troubles. Eventually, though, she started receiving cooperation from employees who recognized that the value of their ESOP shares was directly linked to the bank's performance. What she uncovered was not just undisciplined lending, but also misuse of bank funds by some people controlling the purse strings.
"The operations officer at the time" — now the bank's CFO — "was my boss in bookkeeping years before and she was my lone advocate inside the bank and gave me the information I needed," Castilla said. "She was a great crusader for finding the truth. Slowly others saw that the intentions were good and they started seeing that this was not personal, it was me trying to correct a situation at the bank."
By the fall of 2009, several of the bank's top executives had resigned and a search for a new CEO began. (That job eventually went to Wyatt.) Even Granzow opted to retire as executive chairman — at a time when Castilla and her children were living with him and Castilla's mother.
"I felt so much guilt, but he has remained supportive of me to this day," Castilla said of her stepfather. "I hope I have that much grace if I'm ever faced with a similar situation."
Citizens was placed under a written agreement with its regulator in early 2010 and over the next two years it methodically shrunk its assets, cleaned up its loan portfolio — at one point more than 10% of its outstanding loans were delinquent — and dramatically reduced overhead. What it didn't do, as promised, was raise more capital. Citizens was released from the enforcement order in March 2012 and to this day remains one of the few banks to have recovered so quickly from the financial crisis without having to raise capital.
Freed from the day-to-day challenge of fixing the bank, Castilla slowly began transitioning to a new role as the face of Citizens Bank of Edmond. She immersed herself in the community by joining boards and taking time to get to know the business leaders and business owners in and around Edmond, an upscale suburb of Oklahoma City. And, of course, she tweeted — often — engaging customers and prospective ones in ways few bankers had ever done. She now has more than 7,000 followers. When Wyatt left for a new opportunity, Castilla was the natural choice to succeed him as CEO, said Roger Webb, a Citizens board member and the CEO of the nonprofit Creative Oklahoma.
"Jill is a bundle of energy. She's not pushy, but she's been aggressive and opportunistic in recognizing that there are new and different ways of doing things," said Webb, who recently recruited Castilla to the board of his group, a nonprofit that encourages innovation in the state through education. "She's redefining the way community banking is done."
As for those critics who once likened Castilla to a cobra, they've disappeared, replaced by admirers who appreciate Citizens' support of the community. Ray Hibbard, a Citizens board member and the founder and publisher of Edmond Life & Leisure, a local newsweekly, said the bank's sponsorship of the street festival "Heard on Hurd" — the event takes place on Hurd Street — has been a home run for downtown Edmond and the mom-and-pop businesses based there.
"The bank has always been a good corporate citizen," said Hibbard. "To say that Jill has taken that to the next level would be an understatement. She's put it into hyperspace."
The Accidental Banker
Though her mother married into a banking family after her parents divorced, Castilla was not considering a career in banking when she entered college. She started out as a chemical engineering major, but money was tight and after her sophomore year she made an abrupt decision to join the Army that wound up changing the trajectory of her life and career.
"I worked at a grocery store to help pay for school and one night at 2 a.m. I was carrying groceries out to a car when an Army recruiter spotted me and asked why I was working so late," Castilla recalled. "I told him I was trying to pay for school and he told me that if I enlist, the Army will help pay for school under the GI bill. I enlisted the next day."
Castilla was sent to Fort Leonard Wood in Missouri for basic training and then was assigned to work as a construction surveyor, supervising other soldiers as well as a local prison crew that the Army hired to help clear out a section of woods. Castilla said the experience of supervising convicts helped to shape her leadership skills.
"We were out in the middle of nowhere and these guys had chainsaws and machetes, but I related to them and always felt safe," Castilla said. As a banker, she added, "I feel like I can relate to anyone, and gain the trust of the lowest man on the totem pole."
Eventually she re-enrolled in college at the then Texas A&I, and on her first day there she met a fellow ROTC student who, less than two years later, would become her husband. When he graduated, he received orders to report to Hawaii, so Castilla took a semester off from full-time studies and got a job at the t-shirt company Crazy Shirts. Her manager there was impressed with her organizational and interpersonal skills and suggested that she consider a career in business, so Castilla switched majors and schools, eventually receiving a degree in finance from Hawaii Pacific University. Soon after graduating, she and her husband, Marcus, had their first child.
They ended up back in Oklahoma, where Castilla pursued a master's degree in economics at the University of Oklahoma while working for minimum wage in Citizens' bookkeeping department. She was eventually accepted into a management training a program at the Federal Reserve Bank of Kansas City and spent the next nine years there in a range of departments, including human resources and facilities management.
Itching to try her hand at banking, Castilla then took a job as the chief financial officer at Grand Rapids State Bank in Minnesota. She had planned to stay there for five years or so, but wound up leaving after two years to help straighten out the family bank.
"I took the three kids and moved in with my mom and stepdad while my husband stayed behind in Minnesota. We were still paying student loans and we still had a house in Kansas City that we hadn't sold" because the economy had soured, she said. "It really was a leap of faith."
The tough decisions didn't stop after Citizens was released from the enforcement order and started making money again.
A successful social media strategy had allowed the bank to cut its marketing budget, but its higher-than-average funding costs were crimping overall profits so the bank, at Castilla's urging, began gradually lowering the interest rate it paid on deposits. At Sept. 30, its cost of funds stood at just 0.07%, compared to 0.38% for all other Oklahoma-based banks. The bank lost some retail deposits as a result but business customers, by and large, stuck with Citizens, partly because it could now offer better loan rates, but mostly because they believed in the bank's mission.
"Our bank has done a good job of creating the awareness that community banking is like crowdfunding," Castilla said. "Our large depositors know that when they deposit with us, the money it's staying right here in our market."
Castilla's other big decision was selling off two branches that Citizens had built a few years earlier. Some board members and senior executives initially opposed the move, fearing it would alienate customers, but with the branches losing roughly $1.5 million a year and overall branch traffic declining, Castilla made a convincing case for unloading them.
"It was a pretty black-and-white decision as far as I was concerned," said Castilla.
Still, Castilla recognized that shuttering branches would inconvenience customers who didn't want to trek to the downtown location, so she and her team hit upon the idea of building state-of-the-art video ATMs that linked to the main office. Its primary technology vendor couldn't provide Citizens what it needed so Castilla contacted a local technology firm, NueQ, that built the technology for drive-through restaurants, and a partnership was born. Within three months the first video ATM was up and running and today there are roughly 10 of the machines in and around Edmond. The firms are now selling the technology to other banks, creating a nice little side gig for Citizens and a whole new area of business for NueQ.
"We had never performed this function in the banking market before, but once we developed it we started receiving numerous calls from other banks," said Robert Powell, the CEO of NueQ and its parent company, Ordermatic. "Now we are going to banking conventions, meeting with banks in other states. It all started with Jill; she had this incredible idea, and it just blossomed from there."
Castilla loves hearing such stories. She is fully aware that Citizens' success depends largely on the success of local businesses and said that propping them up, in any way possible, is a core responsibility of local bankers.
"The best thing about being a banker is that you get to sit across the table from someone and learn about their business," Castilla said. "You learn about their problems, their opportunities and help find solutions for them. You get to be somewhat entrepreneurial."
Jason Duncan, the owner of Café Evoke, a local coffee shop and wine bar, said Castilla's enthusiastic support of local businesses is a key reason why he's banked exclusively with Citizens since 2012. "She loves spreading the word for people and gets just as excited for the small businesses in Edmond as she does about her own business," said Duncan, whose shop has been cash-mobbed twice.
Castilla, for her part, can't imagine doing anything else. The once-budding engineer is firmly in her element as a community banker and Edmond, Okla., is better for it.
"I'm in my dream job," said Castilla. "I want to be doing this for the next 40 years."