Spotlight On: Greg Larson, President & CEO, Drake Bank

Spotlight On: Greg Larson, President & CEO, Drake Bank

2022-12-13T11:37:39-05:00December 13th, 2022|Banking & Finance, Economy, Minneapolis-St. Paul, Spotlight On|

3 min read December 2022The economic impact of a community bank is huge. In an interview with Invest:, Greg Larson, president & CEO of Drake Bank, is convinced that community banks play an integral role in growing local businesses and increasing financial literacy. “We think that money recycles in our community through Drake Bank eight to 12 times,” he said. 



What have been some of the biggest milestones and achievements for your organization during the last year?

The highlight for us is that in 2020 we were operating with government assistance distributed by all the infrastructure spending that was going on, including the pandemic relief from the Main Street loans and the PPP programs.

Now in 2022, we haven’t been relying on those programs whatsoever, and we focused more on our base of business and normal operating procedures. Even though in 2021, we had artificially low-interest rates — now they’ve almost tripled. A current concern is the amount of volatility in the last three years, which makes it hard to plan and project out, but our team always rises to the challenge.

Where are you seeing the most demand for services now?

Because of the rising rate environment, we are seeing many opportunities. As consumers and businesses had a lot of access to cash during the pandemic, that cash didn’t have any place to hide. If people held it in cash, it was for safety. They weren’t as worried about the return.

Now people are coming out of their foxholes and evaluating what kind of returns they’re getting on their excess cash. We see a lot of interest in our money market product on the deposit side. We continue to see demand as it relates to loans. 

We technically believe we are in a recession right now. I’m not saying that as a political statement. Having been in the banking business for so long, we’re always operating in a little bit of a cycle of fear and some of that is healthy. It keeps us from experiencing severe problems. So, we’re in that mode right now. You’ll see us tighten the loan standards, testing cash flows at higher interest rates to make sure they do cash flow because we want our clients to build a better future. We’re trying as hard as we can to be prudent and do the right thing and that’s consistent with our mission.

What do you consider the biggest challenge for your institution now?

Access to capital is a big issue for us, but we also see it as a big opportunity. The negative for us is our scale. Drake Bank is a single-location independent community bank in St. Paul. We’re one of two independent charter banks based in St. Paul right now. 

We’re a $200 million bank but we want to scale above a $500 million bank by 2028. That scale allows us to get to the regulatory level where we can handle regulatory issues in an excellent way. That also allows us to operate with the infrastructure and make sure that we have a high level of cybersecurity. All these are very important for us being able to pivot and look more aggressively at new opportunities.

What does the bank do to improve the financial literacy of the community that it serves?

Our primary financial literacy programs are homegrown. It fits with our warmth, competency, sense of belonging, and impact. It’s all organic. And it’s also customized. Financial literacy is hard sometimes and you can lead people to it all day long, but whether they absorb it and add it to their behavior is another question. 

We like to provide customized presentations for underserved groups of businesspeople who need advice and guidance. We show up with six or eight businesspeople, let’s say they’re all African American women, and they have really neat products and services. I show up along with our chief banking officer and spend three hours with them having an authentic conversation. It’s informational and adds value. That is how we try to help our local business community.

What is the impact on the community of an institution like Drake Bank?

I’m a big supporter of community banks. They’re typically privately held. Ours is private and widely held in our community by 60 families. Community banks are unique because you can invest in them, and you can do community good. They’re for profit, so they’re self-sustaining and you can measure the impact that you have in the community. We think that money recycles in our community through Drake Bank eight to 12 times. There’s an incredible amount of good that comes out of that if you think about all the people that you’re helping and the stability and wealth that you’re helping to create. 

How do you see the future of the banks considering all the digital technology that is now available?

There has to be a balance. We need to make sure that we remain relevant and not in a defensive posture, but an offensive posture. One of the big benefits that we have compared to a big bank is that we have the warmth, competency and sense of belonging that a fully digital presence doesn’t offer.

If you think about millennials or Gen Z, they don’t want to see a human being, they want to do everything on their phones until there’s a problem. When there’s a problem, there better be a human being available that can fix it. That’s what we want to try to address. 

How do you see the recession affecting your bank?

The way we look at a recession is different. We are not just going to cut staff from 40 to 30. We want to automate low-level tasks, so we can get those people into higher-level tasks. That means we don’t have to hire the next 10 because we just built capacity. 

So, in the midst of that, our work plan going into 2023 and 2024 is to continue to grow. We might not hire a lot of new people, but we want to reinvent work in our workplace with automation and innovation.

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