Listen to this article

In 2008, as the financial crisis was picking up speed, Patrick Ryan was just starting First Bank’s engines.Ryan and others from the former Yardville National Bank, which was acquired by PNC in 2007, were looking to start a new bank when the industry began seeing its first apocalyptic headlines. They still settled on investing in a South Jersey banking institution as it weathered the crisis.

Against all odds, it turned out to be a good call.

Hamilton-based First Bank’s ensuing growth story has taken it from basically zero assets eight years ago to more than $1 billion as of last month, following the closing of a successful $23 million initial public offering in late 2013. It was one of only a handful of banks to appear on NJBIZ’s Fast 50 list this year.

NJBIZ spoke to Ryan, the bank’s CEO, about his thoughts on the future of his bank and the industry as a whole.

 

NJBIZ: Is there a particular trend in the industry to which you attribute your bank’s impressive growth?

Patrick Ryan: There has been a lot of consolidation in the banking industry recently, and what has happened is a lot of the true community banks have been gobbled up. But there’s still a lot of small business owners that prefer doing business with community banking organizations, so we’ve been able to grow nicely over the course of the bank’s history by taking market share from the big banks.

 

NJBIZ: You had initially hoped to get your bank started as a newly chartered institution right as heightened supervision clamped down on those prospects — when do you expect the establishment of new banks to make a return?

PR: It was never officially said that new charters would be stopped, but it’s pretty obvious regulators made a shift in their mentality. In the 10 years prior to the recession, anywhere from 60 to 80 new bank charters were being issued nationwide each year. Over the following eight years, two charters were issued in total. The word is they’re going to be willing to accept new applications; the problem is that, unless there’s significant regulatory overhaul, the economics of startup banks don’t really work. The amount of money you need to meet those requirements now means you can’t earn reasonable profits for many, many years. I don’t think a lot of capital is going to be chasing new banks because of the regulatory climate.

 

NJBIZ: With the impending changeover of administration, do you foresee banking regulations being lifted?

PR: If you look at the universe of bank stock investing in the past couple weeks, the industry in total has gone up in a short period of time because a lot of people are thinking that the new administration could be beneficial to banks — that the things (President-elect Donald) Trump or other members of his inner circle have talked about in terms of deregulation could be good for banks. But it may be a little too early for us to tell how much, if anything, they’re going to accomplish and what that’s going to look like. I’m hopeful that the regulatory pressure loosens up, but the truth is that the world isn’t going to change overnight. It’ll be a slow process to reshape that landscape.

 

NJBIZ: And with all the talk of potential increases in interest rates, is that something you expect would be good for your bank’s continued growth?

PR: Rising interest rates can be good news and bad news. From a perspective of overall profitability in the industry, it’s probably going to be a good thing if interest rates go up, because bank profits have been squeezed by the continued downward movement of rates. A lot of banks lowered deposit costs to zero and they got to a point where it couldn’t be grown anymore. That was causing the market to shrink, so, hopefully, if rates do rise a little bit that will give us an improvement in our profit margin. The flip side is, if rates really start to move up significantly, then that could tamper demand for new loans. That could cause a slowdown in the lending business. So, if it’s a gradual movement higher, I think that’s the best case for the economy.

 

NJBIZ: Will the changing face of Washington have any impact on your direction at First Bank?

PR: The answer here may be a boring one — we’re not looking to fundamentally change who we are or what we do. We think we have the right model, and it’s an old-fashioned vanilla bank model. The universe of people who want to deal with community banks hasn’t gotten smaller; our market opportunity is getting bigger as frustration with the bigger banks grows. We’ll be staying consistent by taking advantage of that.

E-mail to: [email protected]
On Twitter: @reporterbrett