Matt Reddin is managing principal of community banking for DD&F Consulting Group of Little Rock. Reddin has more than 23 years of commercial banking experience with regional banks including U.S. Bank, Regions Bank, Bank OZK and, most recently, Simmons Bank. During his time at Simmons Bank, his roles included serving as EVP/chief banking officer/executive officer.
Reddin received his bachelor’s from Ouachita Baptist University and graduated from the Graduate School of Banking at Southern Methodist University.
What’s the biggest challenge facing community banks?
As Arkansas Business readers know, it’s difficult to choose just one. I would point to deposits, capital and talent. In today’s interest rate environment, community banks need more deposits and access to additional liquidity sources to maintain and expand their tightening net interest margin. To fuel growth, they need access to new capital sources when historical efforts are limited. As in any industry, even with inventory and capital you still need talent to be successful.
What are the best community banks doing to stay ahead of the pressure to consolidate?
High-performing community banks have a clearly developed growth strategy and the discipline to stick to it — it can’t just be growth for growth’s sake. To use a baseball metaphor, you’ve got to know the pitch you want, and don’t take a swing at the bad ones.
What regulation would you like to see? What regulations would you like to see relaxed?
As the industry has consolidated, regulation has trended toward a one-size-fits-all formula, creating unintended but costly consequences for community banks. I would love to see a more tailored approach. Safety and soundness should look very different for large complex institutions versus small banks supporting their local communities. Community banks need transparency, healthy collaboration and clarity from regulators. Specific areas that could help community banks are upholding the 2020 brokered deposit rule, raising consolidated asset threshold under the small bank holding company policy, and not including owner-occupied real estate in CRE concentration limits. U.S. Rep. French Hill’s Make Community Banking Great Again agenda is focused on these efforts, and I encourage all our community banks to support it.
Will there ever be an appetite for new bank formation like there was about 20 years ago?
I hope so. The current challenges to raise deposits and a one-size-fits-all regulatory environment create significant hurdles for new banks to raise capital. However, with Congressman Hill’s agenda, there is cause for optimism for potential new banks, specifically improving access to funding and capital, and a tailored regulatory approach based on the institution’s size.
What are your thoughts on cryptocurrency?
It is here to stay. The U.S. now has a crypto czar. Due to its high risk and volatility, crypto may never be a mainstream currency in our highly regulated payment system. However, I believe the banking industry will see continued creep into cryptocurrency. I encourage all our banks to include cryptocurrency under their umbrella of “know your customer” as it will become a bigger piece of their client’s assets, increasing liquidity, credit and fraud risk. Additionally, banks do not need to confuse cryptocurrency with blockchain technology. I do believe we will continue to see the financial industry leverage blockchain to enhance their efficiency and customer delivery.
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