Carlos Fernandez-Guzman, President and CEO, Pacific National Bank

In an interview with Invest:, Carlos Fernandez-Guzman, president and CEO at Pacific National Bank, talked about the bank’s significant growth, having quadrupled to $1.3 billion over the past decade through strategic planning. He emphasized Miami’s resilience in the real estate market and its appeal for business expansion due to favorable tax structures and a diverse talent pool.

What have been some of the main highlights and milestones for the bank over the last year? 

We are consistent in our trajectory because we are fastidiously strategic in everything we do. We plan our corporate direction and memorialize it via three-year plans that are distributed and accessible to all staff. The plans hold us to a set of Key Performance Indicators (KPIs), project targets and deliverables, and mission and vision statements that are firm while allowing flexibility to accommodate changes in competitive environmental factors and/or economic movements. 

The result of this targeted and disciplined approach has been one of the driving factors behind our growth to be one of the most prominent and prevalent commercial real estate lenders in the space. We will continue to focus on commercial real estate lending to grow the asset side of the balance sheet.  Today PN is a $1.3 billion bank.  Over the last 10 years, we have quadrupled the size of the bank organically without mergers or acquisitions.

On the liabilities side of the balance sheet, our deposits grow because of our relationship banking focus.  We also focus on deposit diversification. We have outstanding consumer and commercial deposit teams and complement deposit growth by leveraging indirect deposit conduits as well. We strive to achieve diversification on both sides of the balance sheet to minimize concentration risk.  we emphasize this more so than most other banks. 

We firmly believe the challenge for most financial institutions going forward is going to be Liquidity. This is the reason for our focus on continuing to grow deposits at a pace of about 20% to 25% a year. The driver behind our deposit growth is focusing on satisfying customer needs and remaining laser-focused on maintaining close relationships with clients. Our service philosophy is that a customer should only have to deal with one person to solve any need or problems they encounter. 

What is your overview of the banking and financial services industry in Miami?

We are really an anomaly. Most markets in the United States are having issues with the office sectors but that is not an issue for us as the market has been resilient in retaining high occupancy levels and even when slightly elevated, manageable vacancy trends. Home values have held up nicely as well; driven by a higher-than-normal need for affordable workforce housing. Unfortunately, land is limited and we have developed most of it primarily relying on horizontal not vertical density. From a geographic perspective, our centers of employment are really spread out, so in Miami and Southern Florida primarily you have multiple downtowns or urban hubs dispersed, and traveling to employment is a challenge given limited public transportation options and long distances between residential pockets and employment centers. 

Given the overall resiliency of our Real Estate segments, I can honestly say that there is no specific sector that I am concerned about, but there are things to be conscious of, including what is happening with enterprises coming out of the Northeast corridor and us not having the building inventory that they are seeking. Adjusting to those needs will force slow transformation and realignment of different types of mixed-use buildings with a much heavier focus on vertical density. That in turn will create a need to modify methods of commuting with less reliance on asphalt expansion and automobile. 

From a banking perspective, what makes Miami an ideal location for business expansions and relocations? 

You need to think about the State’s economic environment holistically. Starting with our tax structure. High earners are drawn to Florida because of the no-state income tax element.  Another favorable element is our ability to draw talent from all areas of the World and our proximity markets in South and Central America alleviating dependency on only the U.S. economy, such as Europe, and Latin and Central America as well as If you are on the West Coast of the United States you focus on Asia, we focus on a more diverse source of commerce. Part of the allure is having a population with built-in talent diversity is also an advantage. Lastly, the State’s economy is primarily driven by mid and small businesses, this adds a layer of business resiliency and diversity not common in other markets Larger corporations are like aircraft carriers and take time to turn around, but small to mid-size businesses are able to redirect quickly. They are more optimistic and opportunity-driven, singularly focused on monolithic revenue channels, they are nimble.  

Another characteristic that favors Miami is the growing ability to draw talent from a pool that is truly international. We are not limited to U.S. talent only. It is just as easy for us to recruit in Central and South America as it is in Europe. Our rich cultural mix and diversity make new recruits and arrivals comfortable coming here. 

In what ways has the bank adapted to shifting client expectations?

The biggest challenge has been to add a frictionless digital interaction element to our customer care model.  Introducing technology while not damaging personal client relationships is never easy. Many banks tend to over or under-commit to technology. We think you need to do both technology and the human factor well. We launched a digital bank that caters to clients who prefer minimal human interaction, but not make that interaction impossible when they need it to solve a problem. Our digital platform gives them a choice and therefore allows us to be more flexible in how we offer frictionless services. Technology should be complementary and not a replacement for the human touch. 

What is your outlook for Pacific National Bank in terms of plans and priorities in the next two to three years?

We decided that geographic diversification was necessary so we opened a loan production office in New York. We did that because we found that there was a market segment comprised of borrowers similar to our South Florida clients that were not being taken care of by the banks there. It has been a successful migration for us and we have a strong well-performing portfolio there. The next step will be to introduce the liability side of the bank via the opening of branches in New York. This will happen parallel to additional brick-and-mortar expansion in Miami-Dade, Broward, and Palm Beach Counties. We recently opened in Palm Beach and now will proceed to backfill with branches in lower Palm Beach and Broward Counties We are confident that a distribution network with fifteen branches in the Tri-County will be a strong framework to serve clients well. in South Florida.

We are not discounting an acquisition of a banking franchise in the rural Central Florida market.  We looking to strategically acquire a bank that we can leverage to expand consumer bank service offerings that complement what we do at our other urban locations. 

Lastly, one of our most glaring challenges is the scarcity of talent. Over the years, financial institutions have stopped providing a farm system for training and developing talent. It is difficult to recruit young graduates to the banking sector because other fields appear more attractive, I  would argue that young men and women should actively seek to explore banking as an amazing career opportunity.  We must encourage them to consider it as an option for development and growth as attractive or more so than others. Our hunger for talent is their ticket to career success opportunity.