Face Off: Continued growth despite ongoing challenges

Face Off: Continued growth despite ongoing challenges

2022-07-13T09:52:38-04:00November 30th, 2021|Economy, Face Off, Minneapolis-St. Paul|

Writer: Max Crampton-Thomas

2 min read November 2021 — Through the height of the pandemic to the ongoing economic recovery efforts, the banking industry has played an integral role. With Invest:, Jerry Baack, president and CEO of Bridgewater Bank, and Troy Rosenbrook, president of Highland Bank, reflect on how their organizations have continued to grow despite ongoing challenges, how they are leveraging technology, and the current low-interest rate environment.

How has your bank continued to grow over the last year despite the challenges?  

Jerry BaackJerry Baack, President & CEO, Bridgewater Bank

Similar to other banks, we’ve grown substantially in the last year. We benefited from an influx of deposits as consumers and businesses preserved liquidity from government stimulus efforts. What makes Bridgewater stand out from other Twin Cities’ banks is that we were able to continue lending during this period and significantly increase our loan portfolio, even without PPP loans. Also, when other banks were on hiring freezes, we continued to add top local talent to meet the demands of this growth.

Troy Rosenbrook, President, Highland Bank

The early part of 2021 was all about PPP and other governmental programs and once we put the bulk of that behind us in terms of the administrative side, we worked on other areas of the business. We’ve had strong growth on an annualized basis in our commercial loan portfolio, north of 13% for the year on a year-to-date basis and that has come from our ability to get out and see people. I think that benefited us. The crystal ball is not very clear on the COVID side of things but we anticipate good growth in the second half of this year as well. It’s all down to people and we have a good staff. We’re in the process of adding to our staff to help support that growth, which we expect to carry into 2022.

How is your bank leveraging technology to improve its business?

Baack: The banking sector has been moving in the direction of adopting new technologies, and the pandemic only accelerated it. At Bridgewater, we recognize that to grow, we need to keep pace with technology and anticipate the client’s needs. Our investment in technology has intensified in recent years because the client base demands it. We want to be able to meet the evolving needs of our clients through whichever channels they prefer, whether that is simply getting back to face-to-face interactions, especially post-COVID, or having the technology in place to provide the latest tools to enhance their banking experience with us. 

Rosenbrook: Before the pandemic, all of our commercial bankers already had Chromebooks and they were mobile to begin with. The capability was already there. What has changed is the usage and its frequency and acceptability. Regarding the delivery of our products, mobile and online banking have been around for a while. The death of branches has been talked about for decades but when you see a new competitor coming to a market they still invest in branches. To me, those delivery channels will continue to be important and will continue to expand. The delivery channels are more focused on what customers want. We want our customers to interact with us in the manner they want to interact with us, not in the way we want to interact with them.

How have you responded to the low interest rate environment?

Baack: Although the low interest rate environment has been a challenge, we’ve been fortunate that we have not seen the margin compression that our peers have. We’ve been able to take the liquidity and put it to work funding our strong loan growth.

We are unique in that we don’t offer mortgage services or investments and we don’t have a trust department. We stick with what we do best and that’s lending. Life insurance companies, wealth managers and mortgage companies actually serve as significant referral sources because we don’t compete with them on the products they sell. Strong referral sources have made this environment less burdensome.  

Is banking growth driven by low interest rates or has the appetite for lending increased in recent years?

Rosenbrook: I think it’s both. There is a component that is the result of banks having significant excess liquidity driving the need to deploy that liquidity but it’s not just that. There’s good activity and a desire among people to borrow in longer-term settings, like commercial real estate, to lock in a longer-term fixed rate while they can.

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