Donald Mindiak, President & CEO, First Commerce Bank

One key challenge for financial institutions has been maintaining profitability amid high interest rates, but Donald Mindiak, president and CEO of First Commerce Bank, anticipates a “little bit of relief” from the Federal Reserve’s actions, particularly on the short end of the yield curve.

What changes or milestones have most impacted First Commerce Bank in recent times?

In 2020, the pandemic caused a dramatic surge in unemployment, impacting the entire world. This led to significant drops in employment and government intervention, which provided resources to help people cope. Once the initial shock subsided, a market reaction to this assistance emerged: many people found themselves with substantial cash. This influx of money fueled a heightened degree of inflation, which ran hot for a considerable period. Initially, the administration and Wall Street suggested inflation was transitory, believing it would self-correct once supply chain issues were resolved. Unfortunately, this proved incorrect. The Fed even acknowledged being somewhat late in assessing the impact of the stimulus provided, which contributed to inflation soaring as high as 9%.

How are banks responding to this economic reality?

Financial institutions have recently faced challenges with margin compression and profitability, particularly last year. Bankers are hopeful for a normalized yield curve, which has yet to materialize. Pundits on CNBC suggest potential rate cuts in the latter half of the year, with the Fed meeting at the end of July. As a banker, I anticipate the Fed will remain cautious but hope for some relief, especially on the short end of the curve, which the Fed directly influences. Two potential 25 basis point cuts could reduce the Fed funds rate by approximately 50 basis points, from the current 4.30% to around 3.80%. Whether the rest of the curve normalizes remains to be seen, but it’s a key hope for bankers. Additionally, we’ve observed regulatory relief from the current administration, particularly regarding M&A activity. This deregulation could lead to increased M&A activity in the second half of this year and into 2026.

What would you say are the opportunities that First Commerce Bank sees for community banking and supporting small businesses in New Jersey?

A significant advantage of community banking is the direct impact it has on the communities it serves. First Commerce Bank, a smaller institution with approximately $1.6 billion in total assets, focuses on reinvesting deposits back into these communities. A prime example is Lakewood, New Jersey, where the Bank is headquartered. This rapidly growing community has seen substantial population increases over the past 10-15 years. First Commerce Bank is well-positioned with two branch offices in Lakewood, including a recently opened new office building. Another successful venture is the Jackson office, opened in September 2023. Within two years, this office has accumulated $60-$65 million in total deposits, demonstrating significant growth.

The Bank actively supports local entrepreneurs by providing various loans, including those for office buildings, housing projects, and construction lending. With a high loan-to-one-borrower ratio of approximately $28 million, the Bank has the capacity to fulfill substantial loan requests. For larger requests, First Commerce Bank can collaborate with other local community financial institutions, forming partnerships where they participate in a portion of the loan. This strategy allows the Bank to continue financing projects while also assisting other community banks in expanding their loan portfolios. The growth experienced in Lakewood has presented First Commerce Bank with numerous lending and growth opportunities within this market.

What sectors or industries have shown the strongest demand for commercial banking services recently?

To mitigate risk, we prioritize investment diversification across various industries rather than concentrating lending in a single area. For instance, lending to the owner of a strip mall inherently offers diversification. A strip mall owner leases to multiple businesses, providing built-in security through the varied industries within the mall. This contrasts with lending solely to one entity, such as “ABC Corporation,” where the loan’s success hinges entirely on that single entity. If that entity falters, it poses a significant problem for the lender.

How are you trying to leverage technology to improve decision-making and client services?

As a smaller bank, we rely on a core service provider for the technology that enables us to serve our clients, along with various other plugins. We are currently migrating to Verifin, a new BSA technology favored within the industry. This software package will enhance our BSA and compliance staff’s ability to adhere to all government and regulatory requirements. Implementing this technology will help our firm safeguard our customers and keep the government informed about financial transactions. We are committed to protecting our clients and the country by complying with all regulations. Cybersecurity is paramount for financial institutions, given the vast amount of personal identifiable information we collect, such as addresses, social security numbers, and driver’s license numbers. We are dedicated to maximizing the protection of this data to prevent our systems from being compromised.

What will be the key priorities for First Commerce Bank in New Jersey over the next two to three years?

First Commerce Bank is in a strong capital position, which allows us to pursue organic growth. Currently, our total assets stand at approximately $1.6 billion, and we project to leverage this to reach around $2.2 billion, representing an additional $600 million in growth. This growth will be achieved by attracting deposits from and lending to the communities we serve. While mergers and acquisitions may see increased activity, our primary focus remains on organic expansion to maximize our capital utilization. A significant challenge we face in New Jersey is the state’s high tax burden. Governor Murphy recently approved a $58.8 billion budget, which is $25 billion higher than the final budget of the previous Christie administration. This makes New Jersey one of the least competitive states from a business taxation perspective.