2 min read July 2023 — In an interview with Invest:, William Lowe, chairman, president and CEO of Harmony Bank, talked about why the latest merger for Harmony Bank was a great match, how the constant arrival of people to the Dallas-Fort Worth metroplex has helped North Texas withstand an economic downturn and why small banks are key to the U.S. economy.
What are some of the most important contributions of Harmony Bank to the banking sector in North Texas?
Harmony Bank is brand new. We were created through the merger of three banks — the latest with Texas Brand Bank — and we have only been officially established for a short time. However, our predecessor banks go back over 120 years. The primary focuses of Harmony Bank are loans for small business, construction, and commercial real estate. These are the sectors that our predecessors always specialized and concentrated in, so we finance a significant portion of single-family houses, small multifamily projects, condominium projects and small offices and warehouses in the DFW metroplex. We have also been active in the underdeveloped and underbanked regions of this area for many years.
What opportunities has Harmony Bank identified in the banking and finance industry of North Texas?
A lot of people are concerned about the banking system in general, given the current inflation and the banks that failed in California, so a lot of banks have pulled back quite a bit or completely in terms of lending. This opens avenues for Harmony Bank to step in, pick up new customers and expand our loan portfolio. We think Dallas is the place to be and we think business loans still make sense.
What is the strategy of Harmony Bank to navigate the complex economic environment caused by high interest rates and inflation?
We will keep doing what we have always done. The predecessors of Harmony Bank have been in the DFW metroplex for a long time. We have seen the ups and downs of banking in North Texas and we have kept it steady and down the middle of the fairway. Some of the rest of the country is suffering but we are not seeing that in Dallas-Fort Worth. The metroplex is still a boom town, with around 150,000 people moving in every year, which is the equivalent of the city of Frisco’s population coming here every year. This creates an enormous amount of opportunity in terms of the construction of new homes, condominiums, apartments, offices, and warehouses as well as in the sector of lending for small businesses. These sectors continue to boom and we are excited to be a part of it.
What factors make the merger that resulted in the creation of Harmony Bank a good move?
Banking is a business of scale, so players need to be bigger to be able to compete in the marketplace. Having said that, even after the latest merger we are still a small bank with only about $700 million in assets. Compared to other players, such as JPMorgan Chase that manages $3.7 trillion in assets, we are tiny. Nevertheless, the merger made a lot of sense because one of our predecessors had a strong deposit portfolio and small loan portfolio. This was a good match with the tremendous loan demand we are seeing right now despite the fierce competition in deposits. In other words, the merger made sense because it meant that a bank that had a lot of deposits and fewer loans matched with another bank that had a lot of loans and a smaller level of deposits
Does Harmony Bank have any plans to continue acquiring or merging with more banks as it expands its footprint?
We are always looking for additional opportunities for branch location and branch expansion. We are interested in looking at any acquisition or merger that makes sense. Our main focus right now is getting this merger integrated and getting all three banks to operate together in the manner that we want them to, which will take the remainder of this year. In the meantime, we are open to continue growing through M&As. We always keep our ear to the ground for combinations that might make sense for both parties.
What are some of the most important customer demands for the banking sector in North Texas?
Customers are looking for service, which is why there will always be a place for small banks. Smaller players specialize in customer service and, while there is a need for large banks, those larger players focus on other sectors. Harmony Bank cannot make multibillion-dollar loans to multi billion-dollar companies. Nevertheless, we can offer our clients a place to come in, sit down and talk to somebody who will listen, ask questions and offer advice. We offer a hometown atmosphere like what everyone expected a few years ago, with the exception of our digital banking services. Everybody in this bank works on a first-name basis with everybody else. We know our neighbors and our customers and that is what we want to offer them. Small banks and community banks are the backbone of this country as much as the small businesses we support.
What factors or characteristics help North Texas withstand economic downturns?
We have withstood economic challenges since the late 1980s and early ‘90s when the last major crunch here took place. Since that time, the economy has become more diversified. Prior to that, the North Texas economy was focused on oil while now there are many industries in this region that are well positioned to withstand an economic downturn. There are serious events that can hurt everyone, but nothing has stopped the growth of the DFW metroplex in the last 20 years. Even during the Great Financial Crisis of 2008-2009, we had customers who survived and thrived just like our bank.
The fact that there are more than 150,000 people moving into the metroplex every year means things are going to be okay. It creates other issues, such as stress on infrastructure, housing, schools and water, which are challenges that the municipal officials deal with rather than issues that banks get involved in. Despite the challenges associated with growth, the business community and the business experience here could not possibly be better.
What advice would you give someone who is interested in investing in North Texas?
There is not a better place to invest in the United States, probably in the world. Businesses start every day because somebody sees a problem and comes up with a solution. What these new entrepreneurs want to do is work on their business plan, define what their success is going to be and what they are going to do.Once they have that idea and have raised a bit of capital, they should go see their local bank for support.
What is the most pressing challenge that Harmony Bank is facing?
The biggest challenge today is deposit competition. Two or three years ago, when the economy was flooded with money from the pandemic stimuli, banks were basically turning away deposits. Today, it is the opposite. As the Federal Reserve is determined to fight inflation, interest rates are going up, so it is a challenge for banks to bring in deposits.
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