Bob Kottler not only has a full plate as chairman of the Consumer Bankers Association — he also has a challenging day job as the director of retail and small business banking at IberiaBank Corp.
IberiaBank (IBKC) has been an active acquirer along the Gulf Coast in recent years, but when all is said and done, the Lafayette, La., company must still find ways to grow its balance sheet organically.
The company has been able to book loans at a time where other banks are struggling. In this segment, Kottler, who joined IberiaBank in early last year after nearly 30 years at Hibernia Bank and Capital One (COF), discusses what the company is doing to keep momentum going in 2013.
Here is an edited excerpt.
KBW recently included IberiaBank on a list of banks that will grow loans next year at a faster pace than the banking industry and the overall economy. What is the bank doing to make that list?
BOB KOTTLER: We're doing a number of things. We really try to do a combination of commercial, small business and consumer loans. One of the reasons that I came to Iberia is because I thought it was a very well-run company and one that wanted to grow. One of the things that [Iberiabank President and CEO] Daryl Byrd wanted to do was invest in and develop our retail and small business bank.
It has taken a balanced approach. Three years ago we expanded into the Houston market. That has really been a big growth market for us. We've also expanded into other markets like Birmingham and we've also spent a lot of time in New Orleans trying to take advantage of merger disruption that has happened around us. It is a combination of investing in new businesses, really getting out and calling on customers and being the bank that takes care of our customers.
That's the second time you've mentioned bankers getting out and calling customers.
That's one of the key ways to get new business. We're very involved in the communities that we are in. We've spent a lot of time making sure our bankers can spend time out with customers. One of the things that we've done this year in the retail space is that we've spent time training our branch managers to be better salespeople and also making sure that we give them the time they need to get out and call on small businesses.
What are you hearing from small businesses about the fiscal cliff?
There is a still a lot of uncertainty. They are worried about the fiscal cliff. They are worried about health care costs. They are worried about making investments — is the economy going to hold and will they be able to take advantage of those investments. Although I think small business sentiment has improved, there is still a lot of worry out there. We are still seeing our customers horde a lot of cash and still be very cautious.
You mentioned earlier that you're not really seeing small businesses go out and invest in working capital or new people. What must take place for that to happen?
As the economy continues to improve and as we begin to work through some of the uncertainty then those businesses will have opportunities to increase sales and get new contracts. They will take advantages of that and come to the banking industry to help finance it.
A lot of banks are going after the small-business segment. What is IberiaBank doing to distinguish itself from competitors?
One of the things we've always prided ourselves on is strong relationships with customers and making sure our bankers are out in our markets and talking to our customers. Traditionally Iberia has had a lot of focus on commercial banking, middle-market customers, so we've taken the best of how the company does business and really put a concerted effort on the small-business front over the last years. We're adding new bankers and new products.
What are you seeing in terms of loan pricing? Are you doing anything differently now to make those loans?
It's clearly a very competitive environment. Banks are all looking for loans. The industry has a lot of deposits right now, so the industry has become fairly competitive on the loan side.
Having said that, we've had very good growth without having to rely on pricing. We came out with an owner-occupied loan so that our customers and prospects could refinance or buy the building that they are in. That has a little bit longer fixed rate so our customers can lock in their rates and buy their buildings. That is one tool that we have used to bring in new small loans and customers.
That sounds a bit different. Can you tell me a little bit more about that loan product?
Certainly one of the things small businesses work toward is the ability to own their own building. In many cases when they start, they will lease rather than buy it. Other times they will be in one building and then want to go to another building as they expand and grow.
We want to give them a loan that is up to 15 years to able to lock in a rate and know that they will be able to buy and finance that building now with certainty of what their payments will be. Often times as they own their building, they will use that building as collateral for additional loans in the future.
That sounds like not only a strategy for today but also one for the future where you have the possibility of working with the customer in the future.
That's the goal. If you talk to [CBA] member banks and Iberia, we want to do everything and take care of all of the financial needs of our customers, whether it be deposits, Treasury management, loans or the business of the owner and their family.
What do you see as the upcoming challenges for 2013 for IberiaBank?
I think across the industry there are a number of things we have to work through. As an industry there are record low interest rates and that presents some challenges we have to work through.
I think all of us in the industry are working through some of the regulatory issues, the [interchange] fees that we lost from [the Dodd-Frank Act's Durbin Amendment] and some of the [non-sufficient fee] changes. We are figuring out how to grow our retail revenue stream.
It will be a good day when the economy continues to get better and the economy becomes more of a tailwind rather than a bit of a headwind.