056: Why Community Banks Matter with Fred DeBiasi of Valley Central Bank
Oct 29, 2021
Today, we’re talking to Fred DeBiasi. He’s the CEO of Valley Central Bank, a community bank here in Ohio. Since the onset of the COVID-19 pandemic, he’s shifted his business model and worked to deliver a different kind of consumer experience in the face of a wide array of challenges.
In his words, Valley Central experienced a triple whammy: an intense merger in August 2019, the COVID pandemic, and the PPP lending rush. Throughout all of it, they were able to continue serving their clients and emerged in great shape on the other side.
In this conversation, we’re talking about why community banks matter in 2021, how Fred shifted operations to keep his employees safe and his customers afloat, and what he’s doing to keep relationships alive in the era of digital banking with less foot traffic in his lobbies than ever before.
Here are just a handful of the things that we'll discuss:
- How the pandemic drove Fred to reassess how his bank delivers products and services.
- The biggest challenges Fred’s customers have seen over the course of the pandemic.
- Fred’s philosophy when it comes to investing–and how he talks to customers about keeping their money safe.
- How Valley Central kept their corporate culture intact through a merger.
- The reasons why this is a great time to borrow money.
- “I treat everybody’s funds on deposit like it’s my parents’ money because my parents’ money is at our bank, and we’re not going to be reckless with it.” – Fred DeBiasi
LeAnne Siddell: It's The Retirement Trainer with Ed Siddell, a podcast about finding ways to help you become financially fit for your future no matter what financial shape you're in now. Today, we have, joining us, Fred DeBiasi. He is the CEO of Valley Central Bank, a community bank or regional bank here in Ohio. And I'm LeAnne Siddell. Here to help us with all our questions and to give us some guidance to stay in the best financial shape possible, The Retirement Trainer, Ed Siddell.
LeAnne Siddell: Hi, Ed. Hi, Fred.
Ed Siddell: Hey Fred, how are you?
Fred DeBiasi: Hi, Ed. Hi, LeAnne. How are you guys today?
Ed Siddell: Doing good. You know what? I really appreciate you, being on the podcast today. You and I had a very interesting conversation, just kind of shooting the breeze a couple of weeks ago. And I just thought it'd be a really good idea for you to share kind of, from a business perspective, what you guys have gone through with COVID over the last 18 months or so, and how you overcame, how you kind of changed your business model, and also maybe kind of talk about the consumer end and lending and interest rates, and until LeAnne tells me that we have to stop. How's that sound?
Fred DeBiasi: Sounds good, Ed. I'll try to give you the abridged version as much as I can. As we all know, the last eight months have been quite, how I want to say it, unique, to say the least.
Ed Siddell: Yeah.
LeAnne Siddell: Nice life.
Fred DeBiasi: For sure. And quite honestly, overall, I think we came out of it pretty well. I mean, it's hard to imagine, it certainly could have gone a different direction, but right now, we're certainly, as an institution, doing well. Of course, there are still some lingering effects of the pandemic.
Ed Siddell: Sure.
Fred DeBiasi: Quite honestly, we have reevaluated, during the process of reevaluating our delivery channels. And does the old model in banking really make sense? So, I think we've learned that through the pandemic that we can deliver products and services in all sorts of different ways. So, we're exploring what's most efficient, and as far as what would work best for the customer, certainly, first and foremost, it’d also make sense for the bank as well.
Ed Siddell: Yeah, absolutely. And you guys were in a very unique situation because you were in the throes of a merger, and then, compounded by COVID. And so, you had a lot of balls in the air you were juggling, you had to kind of come out with different ways to serve your clients, major customers, yeah. And so, kind of go through with that and explain because really, what we're trying to do is help some of the small business owners here in Ohio learn what works, what didn't work, and maybe they can kind of learn from it and do better with their own situation.
Fred DeBiasi: Well, absolutely, I mean, I can tell you really quickly, we had really what I would call a triple whammy. We did merge in August of 2019, and shortly thereafter, we did embark on a pretty large core processing conversion as a result of the merger. So, it was difficult. It was challenging. We got through it and just seemed like just as soon as we were able to kind of catch our breath again, long about March of 2020, we all know what happened and we got hit again. So, we had some people really through all of that. Staff members were really going through some PTSD. I mean, we've been through a lot with the merger and then the core conversion and then COVID, but through it all, we were able to service our clients. I don't think we missed a beat in terms of delivery of services and taking care of the needs of our customers. And I apologize, I don't know off the top of my head, but we did quite a large amount of PPP lending during that time. The number escapes me at the moment. It was in the millions, I can tell you that as far as…
Ed Siddell: Wow! That’s fantastic.
Fred DeBiasi: Getting capital, yeah, it is. Certainly, it was needed in getting capital into the hands of our customers that needed it was certainly first and foremost, and we really did make that a high, high priority during the pandemic, as well as granting deferrals where deferrals were necessary to help our customers stay afloat. So, it all kind of worked out. And I think, the biggest challenge that I'm seeing really with our customers, particularly business customers, is just employment needs and people. And it just seems like that’s been a challenge everywhere, finding and retaining good people. And I read an article the other day on what they are calling the Great Resignation, and a lot of people that were displaced during COVID, for whatever reason, aren't coming back, it doesn't appear, at least not right now. So, that's going to be a challenge going forward.
LeAnne Siddell: Well, what I noticed about community banks are the relationships you establish. I got to tell you, how do you feel like that gave you an edge, especially in the communities that you're in? How do you feel that that gave you a little bit of an edge on, I don't know, doing some deep diving, especially when it comes to the PPP? Those, I can say here in central Ohio, a lot of people didn't even know where to go. They banked with the big banks, but they were left with no direction, whatsoever.
Ed Siddell: And left holding the bag. And that's important for it because you are with the merger. I mean, you're a large regional bank, but you still have that small-town feeling, and I mean that as a compliment. I mean that community bank and I think people love that about you guys.
Fred DeBiasi: Well, thanks, Ed. And obviously, not to correct you, but we are not really a regional bank at all. We are truly a community bank. We operate really in only three counties in southwestern Ohio. So, we're a community bank mutual every sense of the word. And quite honestly, to LeAnne’s point and yours as well, Ed, I think what had happened is people during this process with the PPP, they were reaching out to larger banks because they did have the resources and they were getting thrown into a portal and they had no idea if their loan was being processed, approved, denied. And so, fortunately, with us, they reached out to us. And when you have a community bank and you're a relationship banker, literally, you could call the president of the bank. I mean, people were calling me on the phone, and I was responding, and we took a team approach.
And really, I can honestly say, everyone that reached out to us with the need on PPP was taken care of and was served. And again, that's just the nature of dealing with a community bank and having a community banker that you can actually pick up the phone and talk to. And again, I understand, in all fairness, the larger banks were overwhelmed, and they just simply couldn't process everything in a timely manner, just the whole system was getting overloaded, but I apologize that a ring app here that's coming on my phone, but anyway, so with that being said, we were very, very pleased with the way that worked out in our consumers. Like I said, our customer base, we feel we were able to navigate through that, and everybody seems to be, knock on wood, in pretty good shape right now.
Ed Siddell: Well, so what did you guys do? How did you handle it? I mean, what did you do during that time period that you hadn't done before or maybe accelerated, like different delivery channels, as you said earlier, different funnels? I mean, how did you get to people because everyone's kind of locked up?
Fred DeBiasi: Well, Ed, unfortunately, during a good part of that time, we did choose, made the decision to close our lobbies. And so, I hate to say it, but we forced our customers to use drive-throughs, use mobile banking or mobile app. Those things were always there, but I think a lot of people at times had a hesitancy to use those things because we certainly like it when our customers come in to lobby and interact with them, but we do have those other delivery channels. A lot of people just didn't even realize they were out there and they just chose not to go that route, but with the pandemic, we really saw an uptick in again, drive-through activity, online banking activity, mobile app activity. So, it really did force folks to use those technologies that we have in place. So, I think people found that once they started using it, that it does work and it is useful, and they're comfortable using it, but it just took quite honestly, a change in thought process and a paradigm shift to get folks who just maybe were hesitant to use those channels to feel comfortable with them.
Ed Siddell: Since that point in time, now that everything's opened up, have people started to come back into the lobby? And how are you addressing those things?
Fred DeBiasi: Well, that's a good question. I mean, we're looking at transaction counts, and they're certainly up compared to the worst of the pandemic, but I think a lot of people again, are choosing not to come in. They found another means of banking, and we're not seeing the foot traffic that we were seeing before the pandemic. And I think it's probably safe to say that's probably industry-wide. And that's a good thing, but it's not a good thing. We certainly want our customers to come in and to interact with us so that it's easier to discuss their situation, whether it be lending needs or whether it be their investment needs or what have you, in person, but we certainly understand that other avenues are out there and we encourage them to make use of that.
Yeah, the other thing too, I can say from a banking standpoint, I may be getting ahead of myself, but one thing we found, which is really, I hate to say it, problematic for the industry, but with the infusion of cash into the system by the Fed in the trillions, those funds had to land somewhere, and they’re landed safely into the banks, in banks like ours and everything. So, we're struggling with what to do with all these excess reserves and cash. And there's really nowhere to go to invest that the lending demand isn't that high. So, I think all banks are struggling from JPMorgan Chase all the way down to Valley Central Bank as hey, what do we do with all this cash that’s in the system? And it sounds like a good problem to have, but it is a problem, nonetheless.
Ed Siddell: Yeah, absolutely. Well, so you have all that cash on hand, those reserves, you guys, it's been all about relationships, right? And you can tell that because everyone on your team, you've got people that have been there for decades. And probably from one generation to another generation, as far as customers and families, now that people have kind of gone more to the digital side and not in person, how are you maintaining those relationships? And it goes, I guess, right to the reserves too, how can you get out the word that, “Hey, we're here to help,” because it's got to be tough. You're in a very unique situation compared to most businesses.
Fred DeBiasi: And what I would gather is that, certainly, maintaining those relationships are key from a generational aspect, and I believe it's important for us, too, as wealth transfers from generation to the next that we're still there. We’re the bank, we’re the go-to place when it comes to your first savings account, all the way to your first mortgage and your first home purchase. And we want to be that that option, that avenue for generations of families that have banked with us, and maintaining those relationships is very important.
LeAnne Siddell: And we have a lot of clients that call us, and they're talking about the volatility in the market. They want their money safe and they will call on a regular basis to say because they don't feel as comfortable not having a face to deliver something that is savings that they want to transfer from what was in the market to out of the market.
Ed Siddell: Yeah, they’re like famous.
LeAnne Siddell: They want to deal with somebody that they can look in the eye a lot of times. So, I get those phone calls, and they'll say to me all the time, “Not the big bank. I want a credit union or a community bank,” and there's a reason for that. So, I think in large part, I've watched a lot of people in this area and I imagine it's the same down where you guys are located, they're looking to go back to that safe relationship banking where they know that trust is there.
Fred DeBiasi: Well, that's a great point, LeAnne. And I let people know that– you're right, people at the end of the day, they bank with people. I mean, it doesn't matter what name is on the sign. It could say XYZ bank. It could say Fred's bank. It could say anything, but you really bank with who you're comfortable with and who you trust. And I tell people, especially when it comes to safety and depositing funds in our bank, I tell them, “Honestly, my parents who are elderly have most of their life savings with my bank, and I will treat you the same way as I treat my parents.” And I will take it. They work all their life for what they've saved. And that's the kind of care and the kind of high touch. And that's the way we operate. I treat everybody's funds on deposit like it's my parents' money because my parents’ money is at our bank, and we're not going to be reckless with it. We're not going to make crazy, wrong decisions because at the end of the day, you're lending out people's life savings, and they want to know that you're safe, secure, and can be trusted. And that's how we operate.
Ed Siddell: Well, so, tell us a little bit about your background and your history because to be in the position that you're in at Valley Central, as young as you are, and I like to say that because we're about the same age.
Fred DeBiasi: It's getting younger and younger.
Ed Siddell: It is. It is. My gosh, a couple more years, I'll be 10.
Fred DeBiasi: Well, I started in this industry, people like you and me were ancient, but now, that’s not the case, I think then.
LeAnne Siddell: A little gray helps.
Ed Siddell: Yeah.
Fred DeBiasi: We’re just getting started, aren't we?
LeAnne Siddell: Yeah.
Ed Siddell: That's right. Yeah, we're just hitting stride right now.
Fred DeBiasi: Absolutely.
Ed Siddell: But you've been doing this for a long time. So, kind of give us a little history on you, how you kind of got into it because you've evolved over the years, and I think you've had just about every position at the bank all the way to where you're at right now.
Fred DeBiasi: Well, Ed, it has been quite a ride. I graduated a little over 30 years ago from Miami University and the business school, and at the time, my major was accounting and really about halfway through my senior year, I really decided I didn't want to pursue public accounting, but I felt like it would be a good idea just to finish up the degree program and graduate. At that time, First Financial Bank, they were First Southwestern at that time, or First National Bank of Southwestern Ohio was recruiting on campus, and they hired me right out of college. I was in there, of course, loan department, hired as a credit analyst. So, I started with First Financial as a credit analyst and evolved and moved into the retail side for a while. So, I got to cut my teeth on the retail and branch management and learned a lot. I was there for 16 years.
Eventually, I developed into a commercial lender. The last 10 years of my career there, I was a commercial lender and new business development officer, rose to the level of vice president. And then, after 16 years, really by chance, Ed, American Savings Bank, came around and wanted to know if I'd be interested in a position with them. Their CEO was looking to retire early, had some health issues. And it was a hometown bank headquartered in Middletown, Ohio. I was born and raised in Middletown, Ohio, with my whole life there pretty much. And it was kind of a neat story, hometown bank, hometown kid, hometown boy.
At first, I'll be honest with you, I wasn't really looking, I wasn't very interested in the position. Maybe I was too stupid to know what an opportunity it really was, but I was 16 years at First Financial. I was in a pretty good position there and I really wasn't looking to leave, but then I finally woke up and thought, you know what? I want to give this a shot and I want to kind of see if I can't manage my own shop and steer my own ship. And I really didn't know what I was getting into. I'll be honest with you, I knew of American, believe it or not, but I really didn't know much about them. I thought they were fairly insignificant, but again, that was me being naive because at the end of the day, a bank charter is a bank charter, and taking on that position at American, I learned that the doors it opened up for me in the industry were just unbelievable. And the opportunities it provided me not only to serve our community but to get involved in the industry in a lot of different ways, it truly was a tremendous boost to my career.
And then, of course, after about 12 years at American, the opportunity came along with Valley. We started talking and we found that we were too kind of like-minded institutions with very similar histories, and with community bank mutual, nothing happens overnight with those very long histories, very conservative, very kind of plotting. Our courtship lasted about four years, but fortunately, it all came to pass, and we exchanged our vows. And three years later, here we are. It was a very long courtship, but it all worked out. That's about 30 years of my career in a nutshell. And I married with children, my wife and I have been married for 26 years. We have six sons.
Ed Siddell: That's awesome.
LeAnne Siddell: Wow!
Fred DeBiasi: That's a career in and of itself.
Ed Siddell: It is. It is.
LeAnne Siddell: I kind of like that.
Ed Siddell: That's a second full-time job.
Fred DeBiasi: Well, my wife's the same, I'll say that she's kept our household together for 26 years, and managing six boys has certainly been challenging, has been a labor of love, I'll say that. It certainly doesn't come without some challenges. Ed talked about his family as well. So, we all know we’re in the same boat there, I think.
LeAnne Siddell: Yeah.
Fred DeBiasi: And I wouldn't trade it for the world.
LeAnne Siddell: No.
Ed Siddell: So, when you go through the merger and everything else, with the employment issues on both sides, especially early on, I mean, how did you keep the culture the way that it is because it is very service-minded? Every time I go into a different branch, I mean, the attitude is the same. So, how did you keep that in check and help it to flourish?
Fred DeBiasi: Well, you know, Ed, it really wasn't that difficult because during, as I mentioned, the courtship process, we found out culturally, we were very similar. So, there really wasn't a lot of indoctrination that we had to do post-merger because everybody kind of believed in the same philosophy, had the same value system. Now, there were some procedural things, obviously, that we had to line up and those type of things that you're always going to run into with a merger, but as far as customer service philosophy, the way customers are treated, that really was the easy part, that really didn't have to be changed or tweaked, or it was pretty much just turn everybody loose and just keep doing what you're doing. But like anything else, when you have two different institutions come together, you're always going to find there's some, “Well gee, we do it this way” and “well, we cross the T this way and dot the I this way”. So, those things have to get worked out. And quite honestly, we're still working through some of those things, but as far as how we do business or how we operate with respect to our customers, that's really been pretty easy.
LeAnne Siddell: And I think the last thing, as I'm going to bring this to a little bit of a close here, I want to make sure that we focus a little bit on small businesses that you have under you and those that are looking for a place to go to. What would you say makes you different?
Fred DeBiasi: Well, LeAnne, that's a great question. You're right. I would like to, as we close, focus on that a little bit. As a mutual, traditionally, our bank is primarily in the one to four-family mortgage loan space, but I will say this my background, particularly in my years of First Financial Bank, was in commercial lending and small business lending. And there really isn't any reason why we can't serve that clientele, and we are. And we do it very well, even as a small bank, and we feel like we can serve a niche, whereas the regionals and the money center banks just don't really want to play in that space. They've decided in their model, it's not profitable for them to manage or to bank a small company that just doesn't fit in their model. So, it does fit in our model, and with my background, being commercial.
And we did a very good job at American, either pre-merger. We had quite a few business relationships and business accounts, though we were just too small to serve even small businesses. So, that part of the reason of the merger was to gain more capacity, more lending capacity to better able better products. And that's been a big, big part of the mergers. We've been able to even strengthen our small business footprint. And again, it's the same philosophy. You're dealing with a local person that understands your business, understands your market, and we want to grow, particularly now with the pandemic behind us. And people are more comfortable now investing again, we want to be that go-to bank for lending and deposits on the business side. And like I said, I'm comfortable with it. That's my background. It’s what I did for half of my career, and I still get personally involved in a lot of lending relationships. That's just how it should be.
LeAnne Siddell: I love that.
Ed Siddell: That's awesome.
LeAnne Siddell: I love that.
Ed Siddell: So, with rates, I mean, the rumor on the hill literally is, November, they're possibly going to announce rate increases and possibly, a couple of increases next year. I mean, who knows? No one's got a crystal ball, but how do you think that's going to impact, especially with the reserves that you have on hand and lending and getting the word out that, hey, now's a good time?
Fred DeBiasi: Well, you know, Ed, we've been at historically low-interest rates for such a long time. I don't know that a lot of folks even remember what it was like. I can remember a time in my career, maybe early in my career, but a commercial loan wasn't that unusual to price a commercial loan at 8% or 9%. That was kind of the going rate. People didn't even blink an eye. So, even if there were to be some rate increases, we're going to be nowhere near that kind of rate environment for a long time, if ever. And so, you're right, I mean, now is the time to borrow. It's still a very attractive rate environment, especially particularly banks like us that do want to lend. We're going to be aggressive in terms of pricing and rate structure. And so, yeah, if you're thinking about buying that new building or investing in that piece of equipment or rolling stock or whatever your needs might be, we're certainly there to take care of you and we'll show you and make it worth your while in terms of pricing. And again, like you said, who knows what'll happen with rates, but I still think we're in a very attractive rate environment, even if there were to be some bumps here in the coming months.
Ed Siddell: You know what? I think people are going to take some comfort in hearing that because you turn on the news chicken little is yelling the sky is always falling. And that's not always necessarily the case. And you guys have locations throughout, from Middletown into Cincinnati. So, where are you guys located so that people can find you?
Fred DeBiasi: Well, we're pretty much up and down the I-75 corridor where we have locations as far north as Middletown and then as far south as Redding. We do have a loan production office in Montgomery. And our headquarter is a full-service branch in Liberty Township. So, we have currently five offices, four full-service and one loan production office. And so, we're really throughout Southwestern Ohio, Hamilton in Butler County, primarily Warren County, is where our footprint really lies.
LeAnne Siddell: Alright. Well, Fred, I want people to be able to get a hold of you, and what is a good way for them to get a hold of you if they have questions or they want to reach out to you guys?
Fred DeBiasi: Absolutely. LeAnne, any number of ways, my email, and I'll say it really quickly, it's firstname.lastname@example.org, and that's F as in Frank, D as in dog, E as in Edward, B as in boy, I as in ice, A as in apple, S as in Sam, I as in ice, the @ sign, and then valleycentral.org. And then, my direct line at the bank, which will ring in my office, is 513-868-5365.
LeAnne Siddell: Great information. I really appreciate it all the time.
Ed Siddell: Absolutely, Fred, thank you.
Fred DeBiasi: Thank you both.
LeAnne Siddell: We are going to make sure that everything is put together nice and neat when you go to this podcast. So, again, we will have that all plugged in. If you have any questions for Ed, if you have questions that you want to learn more about Valley Central Bank, our contact information here is 614-526-4118, or you can reach us at www.EGSIFinancial.com, or give us an email at email@example.com. Thanks, Fred. Thanks, Ed.
Ed Siddell: Fred, I appreciate it. Thanks.
Fred DeBiasi: Thank you both. It's been a privilege, and I appreciate the opportunity. You guys, have a great day.
LeAnne Siddell: You as well.
Ed Siddell: Absolutely. You too.