One-on-One With First Community Bank CEO Dale Cole

Editor’s note: Guest contributor Scott McClymonds, founder of Fayetteville-based strategic consulting firm CEO Velocity, recently interviewed several regional and community banking executives across Arkansas about corporate strategy and their management styles. The following Q&A is with Dale Cole, Chairman, President and CEO of First Community Bancshares in Batesville.

After being laid off during a bank merger, Dale Cole founded First Community Bank of Batesville in 1997 and has grown it to 18 locations in Arkansas and Missouri, 278 employees and almost $1 billion in assets.

Scott McClymonds: Dale, can you tell me how you got started at First Community Bank?

Dale Cole: I started my banking career March 1, 1974, and went up through the ranks of banks in Texas and Arkansas. In 1996, I was terminated when Boatmen’s Bank sold to NationsBank.

There were three people in Batesville at the time who told me I should start a bank, so I decided to do it. Since then it’s been a classic American entrepreneurial story, an Arkansas story.

We started First Community on August 4, 1997 after I had raised $3,452,300 from 150 shareholders going door-to-door. No one held more than 8% of the shares. I’ll never forget that amount of money. When I raised that capital I told each shareholder I wasn’t going to do it better than a large bank, just differently than a large one, and we’ve done just that.

We started with 14 employees, and today we have 278. Right now we have $958 million assets and will exceed $1 billion in 2015. We grew from $822 million in 2013 to $940 million in 2014. We started with one location in Batesville, but now have 18 locations in Arkansas and southern Missouri.

Scott: How did you build out from Batesville?

Dale: We focused on expanding into areas that were growing strong. First, we branched to Searcy from Batesville. We hired the right manager for Searcy, David Wood, and let him run it. We monitored it, provided counsel and David turned it into the second-largest bank in Searcy.

Next, we branched into Bald Knob and Cabot, then Southwest Missouri. We took (that) branch from $12 million to $82 million in about six years. Then we bought a small branch in Mountain Home and grew it from $12 million to $45 million in total assets.

We moved into Jonesboro next, which is another top 10 Arkansas city. Allen Williams manages that for us, and it now has $77 million in loans and $80 million in assets. We’ve become the 2nd largest bank in the Batesville and Searcy area, and about the state’s 9th largest bank in assets.

Scott: To what do you attribute your fast growth?

Dale: We grew because we built relationships with customers, employees, and in the community.

I hired Boris Dover, a Batesville native, and he helped build the bank through his relationships. Along the way we hired six presidents from other banks. Every time the window of opportunity to hire someone great came along, we hired them as long as we had a spot.

Another key was expanding into markets that were growing. We focused on building a great place to work, and that helped us build relationships with customers because our employees were happy. Those relationships enabled us to take deposits and provide the capital our communities needed. That’s the exponential growth available in banking.

Customers want to bank with successful, competent people who take good care of them, and we’ve always taken care of every customer, no matter how big or small.

Scott: What do you see as your most crucial leadership duties?

Dale: The main thing I’ve learned is to hire the right people. As I mentioned, I started with Boris Dover, who had tremendous local knowledge. He had lived in Batesville a lifetime, and is now the president.

I also had to learn to let go and trust my people because I couldn’t do everything. You can’t manage, develop, nurture, and motivate all those employees by yourself. It is important to have the right management team in place, so when the window of opportunity opens you can take it.

It is critical for all of us to be motivating and providing vision, and building excitement for our staff and community.

Scott: What are the greatest opportunities and challenges you see for your bank and the industry in 2015?

Dale: The low rate environment we’ve experienced since 2007-08 has been a huge challenge. Low loan rates don’t let us achieve the kind of spread we want.

Rates are expected to increase mid to late 2015, but will they? Our challenge is to prepare for that in terms of asset and liability mix. We want more assets maturing than liabilities so we can make more money as rates go up. We don’t want to be caught with low rate long-term loans and then have to pay higher deposit rates.

Other challenges are regulatory, audit, compliance, appraisal, and loan review. There’s more and more of that because of the Wall Street banks that created all the problems like the toxic mortgages and sub-prime loans. Congress has put community banks in the same basket of regulations with them, and that isn’t right. It increases our costs to comply with regulations, and we have to pass those costs on to the consumers Congress is trying to protect.

We’ll continue to take advantage of industry problems by focusing on the customer, providing higher levels of service than anyone else, and investing in the communities we serve.

Scott: How can community and regional banks out-compete larger institutions with their expansive technology, personnel, and marketing budgets?

Dale: Like I’ve said, we’ve really focused on building relationships with customers, employees and the community, and on hiring the right people who provide excellent service to everyone, regardless of the size of their account. Bigger banks just can’t do that. They don’t want their people providing the same high level of service because it is too costly in their model.

Scott: What role do community banks play in helping their local economies grow, and is that changing?

Dale: Banks still provide the capital communities need to grow. Where there’s a healthy, growing community you’ll find successful banks and vice versa. They depend on each other. A bank is a representation of the strength of its community.

In banking we get to help people fulfill their dreams by buying a house, or starting or building a business. It’s our responsibility to help those businesses grow. You have to be about more than just profits; you have to invest in your communities.

Scott: What are some ways community banks can best serve small- and medium-sized businesses?

Dale: You have to be a resource to the businesses in your community for both capital and expertise, so in February 2014 we started a Business Resource and Solutions Division for both startups and existing businesses. We help customers and non-customers build and implement business plans.

Businesses always come to us with questions, and we designed the program around what they do every day. So far we’ve had an excellent reception from customers.

Scott: What are you doing to ensure your bank acquires and retains the talent needed to innovate, serve customers well and remain profitable into the future?

Dale: We’ve always focused on making First Community Bank a great place to work, and we have become the employer of choice in all our markets. That has come from building relationships with people, from building what I call the professional family of First Community.

Here are a couple small examples of what we do: In our main office we have a ‘Happy Days’ employee lounge. We have ice cream, a soda fountain, jukebox, booths, tables and chairs, just like the TV show ‘Happy Days’. I also buy lunch for all our employees when we hit our targets.

Scott: What do you think the banking industry will be like in the next 3 years?

Dale: It will be forced to become more efficient, more electronic-based, more digital, more automated, and we’ll see more ACH transactions. We’re moving away from checks and will experience more debit and ACH transactions.

The pathway to high performance in banking is net interest margin. You get that from having quality products and services, the right people, and quality loans and investments. All those earning assets drive the economic engine of a bank.

We’re still going to need to branch, but with smaller offices. People still want to be around other people. They still need to access relationships that aren’t long distance.

First Community is going to reach over $1 billion in assets in 2015, and our efficiencies will be greater. There is always a point that you cross on the stairs where you nurture, stop for a while, and go to the next step to build more infrastructure to take care of future growth. Those are the steps we’re climbing now.

Read more analysis from McClymonds at this link.