2 min read October 2022 — Greater Nashville’s thriving and diversified economic landscape makes it an ideal launching pad for any banking and finance institution. Republic Bank Tennessee Market President Chad Hart shares his view of the magic that makes the region a great place to live, work, play and do business in. “You get drawn into things here so fast that it becomes your city pretty quickly,” he said.
What strikes you as unique in the Greater Nashville and Middle Tennessee market?
From a business perspective, it is hard to argue against the state still being highly favorable from an income tax standpoint. There are no state income taxes, which is definitely helpful. We are seeing a lot of businesses and individuals moving in from out west, the northeast and other places, and the favorable tax environment is one of the major reasons cited. The region is highly diversified from an industry perspective, from manufacturing to wholesale trade and transportation, to entertainment and hospitality. The location, from a distribution standpoint, is highly favorable. On the people side of things, there is something for everybody here such as arts and entertainment, access to quality higher education, the experience of all four seasons and a great outdoor life. There really is magic to the city. You get drawn into things here so fast that it becomes your city pretty quickly, you just feel like you are part of that excitement. Businesses and their employees all want to be here and be a part of what Nashville has to offer.
What would be Republic Bank’s top highlights from the past year?
The bank as a whole does a great job of investing in its people first and foremost. We are a people-first organization. Our growth comes from hiring great people who are excited about what it is that we are trying to build and the approach that we take at Republic Bank. We are sitting down, rolling up our sleeves, consulting with our clients, understanding their business and helping them understand ways that they can utilize our products or services in their key decisions. It is just a different approach, which has been very welcomed in the markets that we serve. Over the last three years, we have really attracted a lot of highly talented people in Nashville — they are very experienced, have a great following of clients and most importantly, have a passion to make a difference. It is a perfect time for this kind of profile because clients are looking for that kind of relationship from their team of advisors, whether it be their attorneys, CPAs, investment advisors, or in our case, their bankers. It has become essential to have those relationships where you can have in-depth, consultative conversations and have some guidance as they are faced with decision points. It has been a big key to our success.
Further, we have been very intentional about finding ways we can forge key community partnerships and support initiatives that make our community better. We have worked with many organizations in the areas of affordable housing, workforce development, woman and minority-owned business initiatives and others. So I’d have to summarize our highlights as being able to attract great people who are not only good at what they do and excited about what we are building but also passionate about utilizing those talents to make a difference.
Have you seen any significant shift in service demand from your clients?
We have definitely seen an increase in our business owners looking for some guidance to sort out increasing costs and labor shortages. They are figuring out how to make their go-to product, bring it to market and do so at a profit. Now more than ever, they need advice from us to secure their handle on their cash conversion cycle and their operating cycle in ways that help them shorten their receivable turn time and ways that they can better handle things from a payable standpoint to give them more time and working capital. We can advise them on ways to squeak a few more dollars out from their existing processes and better manage some of the increased costs and other uncertainty they may be facing. From a technology standpoint, there is an ongoing shift in the banking industry as to how folks are engaging their banks. With online and mobile banking, clients are looking at new ways to apply for or engage in new services through those channels as well. Factoring in the pandemic and its related restrictions, even slow adopters became accustomed to using those services to access the bank. As we emerge from the pandemic, some of those habits have stuck. Making our digital platform an easy experience for everyone to access the bank continues to be driven by that demand and our desire to bring the bank to the customer. We have been developing a single-signer business account option for business owners that wish to open a small business account through our website. We are also looking at more options for clients to engage in lending solutions online. We continue to leverage the use of our intelligent teller machines, or ITMS, which allow you to have extended banking hours. It looks and feels like an ATM, but when you press the screen, you are talking to one of our bankers who lives on the other end. While demand for access to the bank and its services through technology and digital channels has been on the rise, banking is always going to be a people business, so we are coupling our technology piece with more of that demand for the consultative type of advice that we provide our clients. Banks that are adopting those two strategies at the same time are poised for a lot of success as we work through this current economic cycle and beyond.
What is your take on the ongoing M&A activity in the area?
There are several things happening that I believe may affect M&A activity going forward. When you factor in the regulatory environment and the associated challenges of maintaining a robust compliance program — it is harder for many small banks to make that investment. Another factor is the current interest rate environment, which in a lot of cases is great for business as banks may be earning a higher spread on their loans, but they have got to balance that with their deposit costs. If they are still sitting on a good amount of capital and cash, that is a great place to be, but if they are having to seek out new deposits, now at a higher cost, or go borrow to make loans — margins can be tight. Add that to the increased cost of compliance, and the current economic cycle where demand is lower in certain areas, and you may start to see more folks begin to look for potential partners or suitors. As a result, I would expect to see M&A activity pick up a bit.
Which industries are driving growth in the Middle Tennessee Market?
We have the luxury of a highly diversified industry here in the city. In addition, if you look at the demographics across the country, we’ve got an aging population. Baby Boomers are at the age
Where they are going to need more access to healthcare so that industry is going to continue to grow. There is also a big healthcare technology piece weaved into it all. The manufacturing and wholesale trade that goes on here is bubbling with activity. And as mentioned, the entertainment and hospitality aspect of Nashville’s economy is second to none. And with companies and people continuing to seek out Nashville, the real estate market here will have a bit of insulation as compared to other markets. Even if you go back to the Great Recession, we did not see the
f pricing correction that many other markets across the country saw. So again, we have some diversity, which helps and while some may slow we will continue to see growth based on our continued population growth.
What role are small business contributions playing in the overall economy of Middle Tennessee?
Small business is still the primary driver, in terms of the number of businesses, and their contribution to the local and national economy. We are thankful and glad for the large companies that are here and moving here, they brought some great jobs with them, as well as great opportunities. But even as those come, there are ancillary businesses that also come to support some of those activities and some of that new population. It is a big focus and a big piece of our business. Metro Nashville’s local government has appointed a new economic development chief with a focus on small business, so there is a definite focus on fostering the growth of small businesses in our market because there is a need for it. It is an essential driver that is going to continue to create jobs and create wealth in our marketplace.
What is your outlook for the region over the next three to five years?
As we grow in tandem with Nashville, I hope we hold on to that fabric that makes it a great place in which to live, work, play, and do business. For many of the reasons I’ve already mentioned, we will continue to see our city grow over the next several years. Some of the challenges are going to continue, and they are real. They are challenges that we need to work together as a business community and with our elected leaders to address. For example, we’ve got to address the affordable housing issue in our market. There are increased real estate values, and increasing interest rates; that sweep more and more people out of the market. We have got to be able to ensure that folks who are working in our service sectors, our educators, and our first responders deserve to have an affordable place to live in the city they are serving. Banks need to continue to work with the government and public sector to leverage the programs that are out there to allow us to provide lending at favorable rates for those organizations that are developing affordable housing and leverage our resources on the mortgage side, our neighborhood lending programs and those kinds of things that help first time home buyers. We’ve got some infrastructure issues as well with our roads and with some of our utilities in Greater Nashville. We have got to get that figured out to allow for some of the continued growth.
Even with some of these challenges, the challenge is going to be keeping folks in industries like banking and finance, or other organizations that are providing guidance and capital for folks or helping them in their planning and keeping that positive outlook to continue to grow our clients’ businesses and allow them to make an impact on our economy. The Nashville area is an awesome place to do business and to raise a family — we all need to do our part as leaders to contribute where we can to the “magic” that is here in Nashville.
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