Spotlight On: Dan Fagan, President & CEO, Tradition Capital Bank

Spotlight On: Dan Fagan, President & CEO, Tradition Capital Bank

Tradition Capital Bank Dan Fagan2 min read December 2021 — Tradition Capital Bank has leveraged efficiency and a commitment to the community to grow by leaps and bounds since January 2020. From managing PPP loans to expanding hiring to reflect the rapidly evolving markets, Tradition is striving to redefine the role of the community bank. “We have more cash in the system than we ever had before that needs to be put to work. We’re trying to get creative within a regulatory and safe environment,” Dan Fagan, president and CEO, told Invest:.

What have been the key takeaways from the past 18 months for Tradition Capital Bank?

Both COVID and the PPP program greatly impacted community banks.  At the start of COVID, our business continuity plan was put into practice and the majority of our staff were working from home serving our clients remotely using Zoom.  These changes have allowed us to more easily establish a location in Scottsdale, Arizona, having the full support and access to our team here in Minnesota.  

The PPP program showed the importance of having a banking relationship, which community banks are known for.  As a community bank we were able to respond quickly to our clients’ needs and also grow with new clients as well.  We were at $911 million in assets in January 2020, grew by over 50% last year and now have over $1.6 billion in assets. As a bank, our goal is to have all the technology available but also the hands-on service as needed, making sure the protocols are right and that clients’ information is private and confidential. 

How has the forgiveness process gone for businesses that applied for PPP funding?

We consulted an SBA attorney to best understand the PPP process on the front end.  We had all hands on deck to walk our clients through the process and make sure we were doing our due diligence in the best interest of our clients.  We did $176 million of PPP loans in round one, another $50 million in round two.  As of today, we’ve seen over $200 million in loan forgiveness and are down to roughly $23 million. We anticipate being down to less than $5 million by year end 2021.  The PPP loan concept was a very good government program that put confidence in the system for companies to retain their employees when it was needed.

How is the bank navigating the low-interest rate environment?

We’ve never seen these low levels of interest rates. We have more cash in the system than we ever had before and that needs to be put to work. We’re trying to get creative within a regulatory and safe environment. We have to abide by regulatory guidelines to put money in the right places, so we are doing our best to grow prudently and looking at efficiencies that can still be made through technology. We hope rates will rise from these low levels.  With so much cash in the system there is less competition for deposits and much greater competition for loans.  Net interest margin compression is industry-wide and we are doing our best to hold the line. In a year or two, we hope to start seeing net interest margins improving again.

Are you tracking any regulations or legislation that might impact your clients or the local economy?

We are proactive with the Federal Deposit Insurance Corporation and regulators, doing our best to stay apprised of current and anticipated regulatory changes.  Two upcoming banking regulations taking effect in the near future are Current Expected Credit Losses (CECL) and BASEL III.  Both of these regulations have mostly been adopted and should not have a significant impact to the local economy.  Basel III required more capital in the system from the last recession, impacting the return on equity expectations. Our 20/10 initiative has a goal to get a 20% pretax return on our core equity after we give 10% of our net income back to the community, which we were successful with last year.

 What are the positions your company is hiring the most next year?

Our leadership team has planned over 30 new positions through the end of 2022, of which about half are immediate fills and the rest going into next year, including our new Scottsdale location. These positions vary across the board and include: HR coordinator, manager for client experience reps, coordinators to assist relationship managers, operations treasury support, wire support, fraud support, security engineer, IT support, treasury officer, compliance specialist, junior analysts, relationship managers and bankers, processors, analysts and loan administrators.

What is your outlook for your bank and the local financial industry in the next three to five years?

We just created our new strategic plan to double in the next five years. The biggest inhibitor is the ability to attract and train the right talent. Our banking model is to serve our strategic investors, our clients and our community. As shared previously, we believe the outlook for community banks is strong.  My concerns in the financial industry are inflation, margin compression and market valuations. If we can keep those in check, the outlook is very good for everybody. 

For more information, visit: 

https://www.tradition.bank/ 

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