Writer: Eleana Teran
2 min read June, 2023 — Amid the shifting economic conditions in the Twin Cities, financial leaders shared their perspectives at the recent Invest: Minneapolis-St. Paul 2022-2023 Launch Conference on how community-based financial institutions are adapting to the current market. As made evident by the Federal Reserve’s announcement on Wednesday to pause interest rate hikes in the short term, discussions around banking and business implications have been top of mind across industry leaders.
Moderated by Brandon Koeser, financial services industry senior analyst at RSM US LLP, the panel, titled “Minnesota Money: How values-based banking can withstand economic headwinds and what that looks like in today’s environment,” featured Dan Stoltz, president & CEO of Spire Credit Union, Bryan Toft, chief revenue officer of Sunrise Banks and Damon Jenkins, SVP & Twin Cities regional market president at First Independence Bank. They jointly provided a wide-ranging analysis of Minnesota’s dynamic banking landscape, how it navigates volatility and the innovative strategies employed by their respective institutions.
Despite the economic turbulence of 2020 and 2021, Stoltz explained that Spire Credit Union’s assets expanded by 50%, nearing a billion dollars within two years, a surprising feat given the stagnant lending landscape. “In 2021, credit unions and community banks witnessed a substantial increase in assets. Then, in 2022, as people started feeling more optimistic about the future, lending resumed, particularly in the mortgage sector,” he shared, reflecting on the industry’s adaptability in response to historically low and rising mortgage rates, as well as the unpredicted surges in the value of used cars and real estate.
Adding to Stoltz’s points, Sunrise Banks’ Chief Revenue Officer Bryan Toft focused on the Midwest’s resilience in the face of banking and housing crises. He accentuated the role of a diversified approach in industries, deposits and lending as a stabilizing factor, maintaining that, “Despite facing challenges compared to the coastal regions, we have managed to maintain a level of stability.” His optimism underscored the potential of the local banking sector to weather changing interest rates and financial crises.
Damon Jenkins of First Independence Bank drew a parallel to a personal boating experience where unexpected disruptions necessitated a shift in course, Jenkins likened the recent banking sector changes to unexpected waves, underscoring the industry’s ability to reposition and stay the course.
Despite the economic headwinds, these financial institutions continue to prioritize their customers and communities, providing equitable access to financial resources. Jenkins emphasized the significance of non-traditional banking methods, highlighting how community-based banks can serve as trusted guides for their communities, improving financial literacy and trust in the system.
Stoltz explained Spire’s vision of improving lives and businesses and their core value of ‘caring.’ Despite challenging economic times, their value-based banking model continues to prioritize giving back to the community. On the other hand, Toft emphasized the role of customer education in communicating the value proposition of community-based banks, mitigating the drift towards larger industry players.
Community-based banks, termed by Jenkins as “too small to fail” institutions, offer a comforting sense of security, particularly to underserved communities. He pointed out that the risk is minimal with the majority of depositors at minority deposit institutions having deposits of $250 or less. These institutions play a critical role in promoting equitable access, building relationships and providing resources to protect assets.
Facing economic uncertainty, these institutions have not strayed from their mission of driving activity and making a positive impact within their communities. Jenkins detailed how First Independence Bank is addressing homeownership discrepancy in Minnesota, supporting small businesses, and promoting financial wellness through education.
Meanwhile, Toft revealed that Sunrise Banks, a designated community development financial institution (CDFI), channels 60% of its loans to lower-income communities. This commitment to driving positive change, even amidst regulatory challenges, is a testament to their innovative and collaborative spirit.
In the face of growth and expansion, Stoltz presented Spire Credit Union’s strategy of being disciplined and intentional in their actions, maintaining a focus on their members and communities. This high-touch, high-tech approach aligns with their long-term goals, making a tangible impact on the community they serve.
In the grand scheme of things, the Minnesota banking industry’s vibrancy emerges from its robust community-based financial institutions. They serve as pillars of financial stability and empowerment in challenging economic times, bridging the gap between underserved communities and the banking sector. Through their unique value propositions, commitment to their communities and innovative approaches, these institutions are a testament to Minnesota’s resilience and its potential to weather any economic storm.
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