First Business Bank is the only publicly-held, Wisconsin-based bank to make money throughout this cycle, so we’ve had a level of success. We attribute that to our niche: business and commercial lending for small- to medium-sized businesses.
Our model is even different than our holding company model in that we are entirely cashless. The businesses that we’re pursuing are of decent size, from $2 million to $250 million in revenues, and are fairly sophisticated. They can do all their banking electronically; they have no real cash needs. They rely primarily on business-to-business transactions for their revenues, and we offer everything a business like that could need, from a traditional commercial lending and treasury management to trust and leasing and asset-based lending.
In the commercial banking world, as long as you don’t deal with retail-type clientele, you can do it. The economics of it make it very advantageous. If you think about the time you spend running to the bank every day, making a deposit, if you can do all of that electronically, it’s just more convenient.
It’s unique to us in that we started with the cashless model in 2006 when we opened the Appleton bank. We timed it right – remote deposit was just hitting full stride. You do away with a lot of costs that are associated with cash. We don’t have a vault, we don’t have tellers and we don’t have the risks. We are an office space, essentially.
From a size perspective, it got us focused on larger projects, larger clients that are able to do without cash. It’s certainly a model for a more sophisticated client.
The annual First Business Bank economic survey we do every fall gives us some instant feedback and allows us to sharpen our tool chest in terms of what we’re able to bring to prospects to help them become a better business.
In the last two surveys in Northeast Wisconsin, I’ve been impressed with the resiliency of businesses – they are very optimistic. They certainly hold out a desire to hire more people, to bring back their workforce when the time is right.
We’ve been buoyed by what’s going on at Oshkosh Corp. and with some of the renewable projects that are going on up here. There are still pockets that are hurting, and certainly if you are in the building industry or an industry that serves that industry, that might be a longer pull.
The $30 billion dollar banking bill that was recently passed has many provisions that will benefit small businesses – there’s some bonus depreciation extensions and increases that may drive some capital purchases. The Small Business Administration increasing some limits will have the biggest impact in the short-term in the economy. An increased guaranteed percent – in this case 90 percent – and an increased dollar amount, for loans up to $5 million, provides a lot of gunpowder for a lot of deals to be done.
We’re about $1 billion overall (at First Business Bank Northeast). We’re a healthy bank. As for our industry, it’s not so clear. There is more regulation coming at us, and with more regulation comes more cost. From a community bank perspective, if you’re under $1 billion, there is a certain level of concern that there might be a tougher row to hoe.
Northeast Wisconsin is a very good place to be. The chairman of our company, Jerry Smith, always likes to come up here to meet with prospects. He’s from Freedom originally and he loves coming back to the area. He’s always impressed with the work ethic and the business minds that are present in Northeast Wisconsin.