2 min read October 2023 — In an interview with Invest:, Harry Allen, co-founder and chief relationship officer of Studio Bank, highlighted their support for small businesses and middle-market companies, how they deploy social capital to foster mutual trust and growth, and how through practicing diversity and inclusion the young bank has experienced rapid growth.
What’s your overall perspective on Studio Bank’s impact and contributions to Nashville?
We celebrated our fifth anniversary in June and it’s truly great to still be serving our community from a position of strength, especially considering the challenges our new bank has faced in its first five years. Locally, here in Nashville, we experienced a devastating 51-mile track tornado that hit our community. Just two weeks later, the global pandemic, COVID-19, struck. It’s important to note that we were only 18 months old as a company when COVID hit. We’ve also had to navigate the challenges of interest rates falling to zero and then rising to over 5% . In short, we’ve encountered nearly every challenge imaginable for a financial services institution, and we’ve not only survived but thrived, forming strong partnerships with our community throughout.
We founded Studio Bank with a clear mission in mind: to empower Nashville’s creators by being a true partner to our neighbors, providing financial capital and meaningful human connections that positively impact our clients, owners and the community. During the last few years and the challenges brought on by the pandemic, small businesses and middle-market companies have faced significant challenges. Our team considered this moment a call to service that perfectly aligned with our reason for starting this bank, and we fully embraced it.
Today, we’re proud to say that we have grown the bank to over $900 million in total assets. In 2022, we became the 20th largest bank based on deposit market share in the market after just four years, starting at 65th. This demonstrates the impact we’ve had and our ability to move the market.
Our approach to banking has been embraced by the community, and our bankers are energized by the positive response. We pay close attention to the community’s needs, and when there was an opportunity to help deploy capital through the Paycheck Protection Program (PPP) we took action. Despite being an 18-month-old bank that had never originated an SBA loan, we decided to participate in the program. Importantly, we didn’t limit this to our existing clients but opened our doors to anyone who came to us.
One issue we became both aware of and interested in was the unique challenge Black-owned businesses faced in accessing capital, often due to a lack of an established relationship with a bank. In an effort to respond to this need in our community, out of this process, we partnered with the Community Foundation to create a program specifically designed to support Black-owned businesses and provide them with much-needed capital. This program has been in place for a couple of years now, and we’re incredibly proud of this partnership. Furthermore, we’re pleased to have Cummins Inc., a Fortune 500 company, onboard, as an additional partner in our effort to support minority-owned small businesses through their Cummins Advocating for Racial Equity initiative. This is all part of our ongoing effort to build trust in the community and demonstrate our commitment to serving the diverse market that is Nashville.
What is your overview of the banking sector now and what opportunities does that present for Studio Bank as you move forward?
Banking, to put it mildly, is dynamic. Our business plan didn’t account for unforeseen events like a global pandemic or the failure of some major banks in the first quarter of 2023. It’s been quite a ride, observing how these events have impacted confidence in the banking system and how the regulators have worked to secure depositors. Throughout it all, we’ve remained committed to reassuring our depositors about the safety and soundness of their funds.
And it is exactly this sense of trust that is at the core of who we are as an institution. Our community knows us, and they trust us. When people reached out to us during this uncertain time, they did so with a baseline understanding that we’re not some faceless institution in Silicon Valley. They know us because we’re the bank of the coffee shop they visit every day. As a result, we actually saw growth in our deposits during the first quarter of 2023, while many other banks experienced a downdraft in deposits due to a general mistrust of the system.
Trust is something you build ahead of needing it, after all. Despite the dynamic nature of the market, we’ve been able to continue serving our community and providing loans when other banks are retreating. We’re sensitive to where the industry is in its cycle, but we’re fortunate to be very well capitalized and have a deep understanding of and relationship with the communities we’re serving. Being only five years old allows us to be agile and nimble in adapting to the needs of Nashville, which has remained resilient even as the country faces economic challenges.
Could you summarize the impact of the Franklin headquarters branch opening on Studio Bank’s operations and bottom line over the past year?
The interest rate environment has had the most significant impact on our bottom line, not the Williamson County branch. However, it has certainly provided us with the opportunity to house an exceptional group of bankers who have been serving Williamson County for years. Our philosophy has always been that we’ll find the space once we find the team that aligns with the culture and purpose of Studio Bank. In that regard, it has met our expectations.
I believe there’s significant potential to further expand our presence in Williamson County through partnerships, and we’re genuinely excited about that. As for our current work setup, we’re still operating in a hybrid mode. Roughly half of our employees are based in Williamson County, and the other half are in Davidson County. However, not everyone is in the office at the same time every day.
This hybrid approach has allowed us to efficiently use our space and accommodate bankers who may need to work from home when necessary. The pandemic has shown us that the traditional office setup has evolved, and we’re adapting to these changing dynamics.
What role does the bank play in supporting new business owners who are relocating or creating their new businesses in Nashville?
We take immense pleasure in welcoming new neighbors to Nashville, and our unique position as a bank with a coalition of local bankers, board members, and investors makes us natural connectors. There’s hardly a person in the area that someone in our bank doesn’t know. Word of mouth has played an integral role in expanding our brand. As newcomers settle in, our clients are enthusiastically recommending Studio Bank as the go-to choice for getting plugged into Nashville.
I’m incredibly grateful for this organic growth. When it comes to serving those creating new businesses in Nashville, we made a strategic decision a couple of years ago to hire a banker who doesn’t come from a traditional banking background but has a deep understanding of the entrepreneurial ecosystem. This individual has experience running a crowdfunding platform and a strong grasp of venture capital. Consequently, even before an entrepreneur is ready for traditional bank debt, we have a banker who can partner with them, regardless of where they are on the startup-to-scale spectrum. We’re committed to helping them by serving as a depository for their start-up capital, deploying growth capital as their business matures and scales, and then preserve the wealth they’ve generated through their successful business exits and or future ventures.
We are well-positioned to initiate a banking relationship as early as when people are still in the dreaming phase of their business endeavors.
What are the biggest challenges that Studio Bank is currently facing?
When interest rates increase rapidly, it places significant pressure on margin, and this challenge isn’t unique to our bank as it affects every financial institution. Moreover, when there’s a demand for housing, but the costs, including the house price and the interest rate, make homeownership less affordable or attainable, it becomes exceptionally challenging to achieve our goals of making homeownership accessible to as many Nashvillians as possible. We are facing a genuine affordability crisis. Even individuals with decent incomes are struggling to find and afford a house in Nashville at the moment, it’s a real hurdle.
In this environment, it’s essential to maintain a sense of agility and internal entrepreneurship to figure out how we can preserve our margin, generate profits, and thrive despite these external headwinds. We’ve encountered similar challenges a couple of times since the bank’s inception, and we’ve proven our resilience.
And what better place to navigate these challenges than in Music City? Nashville continues to be an excellent market to be in, and we don’t anticipate that changing anytime soon. There’s a significant opportunity for us to continue organic growth here in Middle Tennessee. We’re not just deploying financial capital to our neighbors who need it; we’re also contributing social capital. As Nashville grows and evolves, we’re actively helping individuals find ways to plug in and contribute to our shared prosperity.
For more information, visit:
