Encore Bank of Little Rock has been a quiet regional success story. Its chapters for growth in 2022 and beyond are likely to shine more of a spotlight on the rapidly expanding, privately-held financial institution.
In 2019, three experienced Arkansas bank professionals moved to Capital Bank, renamed it Encore Bank, and reset its agenda. Chris Roberts is Chairman and CEO, Phillip Jett is Vice Chairman & Chief Banking Officer and Burt Hicks is President, Chief Strategy & Growth Officer.
Encore Bank has grown to $1.74 billion in assets, $1.23 billion in loans and $1.45 billion in deposits in three years. It has completed two capital raises to the tune of $196 million. The bank has grown to 16 markets in seven states: Alabama, Arkansas, Florida, Missouri, North Carolina, South Carolina and Texas.
“Our approach to recruiting new leaders and new markets is truly market agnostic,” Jett said in a recent Talk Business & Politics interview. “We really look for the right leader, and those leaders come to us with people that we know and people that we have been in contact with for years. We have brought great leaders to the table in what we believe to be some of the best markets in the country. So we’re continuing to go into the Southeast and the Midwest with open eyes and with our eye on good talent.”
“Good talent” is the key to Encore’s success and future growth. The blueprint for a new market is pretty pure:
· Identify experienced and talented bankers in urban/suburban markets that have enough capacity to support $400-$500 million in loans.
· Make them shareholders and encourage recruitment of business to the bank.
· Be sure to have quality loans, deposits, and other banking business.
“It’s important for us to have scale in every market that we’re in as we build out a very valuable franchise across the Southeast and the Midwest,” Jett said. “You’ve got to have loan volume in each market. You’ve got to have a great deposit franchise in each market, and you have to have scale from an asset size standpoint. We will roll this roadmap out to each and every one of our markets as they enter the company, and we show them what they need to do in each one of those categories.”
There are four financial building blocks that Encore’s executives strive for in each market with their commercial and consumer lending. They include treasury management, SBA lending, mortgage activity, and specialty financing, such as heavy equipment or franchising needs.
Those pillars have led to impressive growth metrics in 2021. For the year, Encore Bank reported:
· 95% asset growth
· 119% loan growth
· 107% deposit growth
· 1,276 new loans worth approximately $740 million
“Across all boards and all markets, we’ve seen really, really strong growth, and we’re excited about the diversity of that loan portfolio as well,” Roberts said.
CULTURE & TECHNOLOGY
Two advantages of the Encore model include corporate culture and technology. On the culture front, the refresh in 2019 allowed new leadership to reset the mentality. Hicks said the emphasis on attracting and developing “elite banking professionals” added momentum to its internal and external banking efforts. There is also an emphasis on engaging employees as investors in the company.
About two-thirds of the bank’s employees are shareholders in Encore Bank, according to Hicks. Last year even with all of the expansion, growth and infrastructure investment, Encore recorded close to $700,000 in net income, Roberts said. No dividends have been declared yet, as profits have been reinvested into growth, but the day will come.
In hitting the reset button in 2019, Encore has also capitalized on the explosion of financial technology (FinTech) products and services that have catapulted into the market. They are sponsors of FinTech accelerators in Tampa and Austin, and several FinTech founders serve on the bank or holding company boards.
“We think that technology is certainly here to stay and is going to continue to provide us an opportunity to do more with less, but also provide a better client experience,” Hicks said. “We had the benefit of starting from scratch and also not doing it in reaction to COVID and other things that have happened over the last couple of years.”
“We’ve built a banking platform partnering with two dozen, maybe three dozen financial technology companies that are helping us deliver our products and services in an efficient and friendly way, but also we believe meet the expectations of clients today and will continue to meet the expectations of clients tomorrow,” he added.
One of those products is a partnership with a company called MANTL. It allows a customer to fund a new deposit account at Encore in three minutes or less from a smartphone or desktop. Another product comes from Hawthorn River. It serves as the bank’s loan origination system and is faster and easier to use than older, more antiquated legacy systems in the marketplace, according to Hicks.
“That was something that we made a priority a couple of years ago, and we got it to the finish line in 2021,” Hicks said.
Roberts, Jett and Hicks said to expect more market growth across the Southeast and Midwest in the coming years. While they’re not tipping their hand, it’s clear they know where they’re heading in the short run.
“In 2022, I believe that we’ll enter two new states, which will put us into nine states, and we’ll enter four new markets, which would give us about 20 markets across the Southeast and the Midwest,” Jett said. “That will happen in the first half of 2022 more than likely based on what we’re seeing today, and again, great regional growth markets and great leaders that we’ve been very, very fortunate to attract.”