Banking on Creativity with Jill Castilla

Getting social in response to the latest banking crisis? Check.

Getting heard on a national level? Check, check.

Earning a reputation for being responsive and available? Well, that’s a check, check, check in my book, folks.

The business of banking is never boring, something today’s guest, Jill Castilla, president and CEO of Citizens Bank of Edmond, certainly has never been accused of being.

I’m Al Dominick with one of my most creative partners, Steve Williams.

Hey, Al.

And this is Plugged In from Cornerstone Advisors.

Steve, would you like to say hello to our friend Jill?

It’s the legend, Jill.

Good to talk to you again. It’s always great.

Like Al, I feel like I’m in touch with you on social media all the time, but to be talking live is an honor. Great to see you.

So great to see you, Steve and Al.

The team at Cornerstone just thinks Jill is top, top, top of the mountain when it comes to conversation.

We’ve got a big job in front of us. We’ve got to make sure that we keep our colleagues listening to this, and certainly we want to explain some of the things that we find interesting about banking and see if Jill agrees with us.

Like we normally do on Plugged In, we’re going to use some fun musical references to keep our conversation maybe not as centered as you would expect, but certainly moving along.

Steve, you and I have a lot of fun putting these playlists together. Today is no exception.

I think we want to start with something that simply gives our appreciation and thanks to Jill and her family for their service to this country.

Absolutely.

For those who want to read more, and Jill, it’s out there, please do. It’s a fascinating story.

There’s a lot of military service in your family, so we wanted to pick a song by Toby Keith, “American Soldier.”

“I’m an American soldier, an American. Beside my brothers and my sisters, I will proudly take a stand. When liberty’s in jeopardy, I will always do what’s right.”

You’re married to a retired lieutenant colonel, Marcus. Your sons also have military service.

We want to talk about how you bring that to banking.

What has being in the Army and being around a military family given you as a leader and a banker?

Wow, that’s a big question.

And Toby Keith, fellow Oklahoman, so it couldn’t be a better song choice.

That’s right. We had to get some Oklahoma in here, Jill.

That’s right.

I think there are so many parallels when it comes to the military framework, discipline, bureaucracy, some of the progressive nature of warfare, and how you have to stay relevant.

But then you can also get really stuck in the past and not be as relevant.

From a military standpoint, I enlisted as a 19-year-old private, so there are leadership extremes really between my military service and what I get to do in banking.

But there’s the ethical foundation.

That’s the number-one piece of it.

When you’re a soldier, whether you’re a private or otherwise, you’re expected to have very high integrity.

You’re expected to obey orders except for the ones that are illegal, and no one gives you explicitly what “illegal” really means.

The same is true with banking.

Everything in banking starts with integrity.

We’re fiduciaries and custodians of depositors’ money.

If we don’t do the right thing when it comes to lending, then the community fails.

There’s just that foundation of ethics and integrity that both rely so heavily upon, and there are dire consequences if that’s not upheld.

Jill, I worked with some West Point grads who had that discipline and were fabulous, but they couldn’t get creative.

I’ve noticed that you’ve been able to use that as a foundation while still being creative, being a little loose, and taking a test-and-learn approach as well.

I think that’s honestly different between being enlisted in the military and being an officer.

They have a lot more responsibilities and focus on them.

When you’re enlisted, you’re expected to have hip-pocket training.

You’re always maximizing your time and downtime.

If all the officers are planning everything, they can’t have failure. If they have failure, then it’s a poorly planned endeavor or they didn’t adjust appropriately.

Whereas when you’re enlisted, you’re on the ground and you’re expected to adjust.

You’re expected to read the situation, avoid failure, and maximize opportunities.

Where you thought there was exposure, maybe it actually turned out to be something different.

You have to pivot more quickly.

You’re really on the ground.

I think that’s really what being a community banker is about.

You’re in the grocery-store aisle. You’re feeling the economy and what’s happening.

I sit behind the teller line. I can see anxiety or elation in our customers coming in, and you’re able to make those little adjustments.

That really leads to innovation.

Innovation is really having a good feel for what people want and need before they can tell you that’s what they want and need.

I think there are a lot of parallels that being enlisted brings over.

I love it.

The enlisted is like the community banker on the ground.

We do feel like you’re one of those leaders out there fighting for the soul of banking, and we love what you do.

We feel like we’re trying to build that fight as well.

Now, kind of tied to that, going with change and evolving, you’ve got the next song up for Jill.

I do.

But I can’t miss this opportunity to give you a little grief, Steve, because you clearly haven’t been working with anyone who went to Annapolis.

The midshipmen are known for being creative.

If you’re just watching the Army-Navy game, go Navy, beat Army.

I say that as a son whose dad played football for Navy, and I love watching the midshipmen.

Army-Navy game at Jill’s house must be real exciting to watch.

Got to be epic family dynamics.

Our daughter is at Sheridan in the Navy, and she does all her briefs for anyone.

Well, look, all credit to the Black Knights, but I’m going to be going midshipmen this year and every year in the future.

Anyway, Steve’s right.

We do want to shift away from your background into some of the things that are happening right now to the industry as a whole.

We are still responding to this banking crisis that we’re all a part of in different ways.

Steve was really nice to use Toby Keith.

I’m going to use another Oklahoma-based band, The All-American Rejects, whose song “Move Along” some of us may be familiar with.

I wish my voice was better so I could use these lyrics to say, “When all you’ve got to keep is strong, move along, move along like I know you do. And even when your hope is gone, move along, move along just to make it through.”

In some ways, I just want to start by asking what’s on your mind right now given the really disappointing failures of four banks and all the scrutiny that has been placed by the general public on the business of banking relative to what a community bank like yours does for its community on a regular basis.

I don’t think there’s ever been a better time to tell our story as community bankers.

What is our purpose, and why are we here?

What makes this different?

I wish there were more of us using our voices more broadly to tell the stories.

We talk to our communities and our customers consistently, but we’re not great about broadcasting that message more nationally.

There’s such a great opportunity, with almost 4,000 banks under $1 billion, to say to the country that there’s choice.

There’s technological relevance.

There’s care.

There’s solid risk management that you can find in smaller institutions.

I get a little disappointed, though, because I agree with you, but I feel like we’ve been talking about this unfortunate narrative that bankers have allowed over the years to be defined for them.

I think about the last few years of COVID with the PPP rollout and all the goodwill that was generated by banks of all sizes doing some incredible things for their client base.

All of a sudden, we have this run on trust in institutions that are, for the most part, much larger than most banks in the U.S.

Now we’re right back to square one of, “Well, can we trust a bank?”

That, to me, is really when Steve says we want to fight.

It’s not to get into something nefarious.

It’s more to say, “Hey, let’s not lose sight of the fact that community banks really are fundamental to the overall fabric of a community and can do some really great things.”

I mentioned Heard on Hurd earlier.

Maybe you could explain that origin story because it really shines a light on how a bank like yours made investments before it was cool to do something like that.

Citizens, when I came on board in 2009, was a turnaround situation.

Once we emerged from our turnaround, we decided that we wanted to be around for another 120 years.

In doing so, the branch network wasn’t serving us well to be able to have that long-term success.

We sold all our branch locations, kept the deposits, and didn’t sell the customers.

We decided we were just going to be in our original downtown Edmond home, where we’ve been for 122 years now.

But the downtown area was depressed.

It’s a low- to moderate-income tract.

Lots of empty storefronts.

Historic downtown.

It started before statehood.

We were founded in 1901, and statehood was 1907.

It was this very sleepy, depressed part of our community, which is a very affluent community.

It didn’t really make a lot of sense.

When we did our SWOT analysis, one of our weaknesses was location.

One of the gaps where I think you can find a lot of creativity is by flipping your weaknesses to strengths and your threats to opportunities.

We certainly made that our focus for our location.

How do we make downtown Edmond a destination so that you’re coming to the bank and enjoying a place?

How do you placemake?

We had the largest food-truck festival in the nation just down the street in Oklahoma City.

We were sponsoring that event.

Then Edmondites started saying, “Why can’t we have something like this in Edmond?”

We worked with the city, and the bank, just our 55 team members, planned and orchestrated a local music festival.

At first, it had just a few food trucks and pop-up shops.

We had to guarantee the food trucks that they would have a minimum number of customers.

Then they sold out that first night.

We had 3,000 people show up.

Now we regularly have 55,000 people come to a bank celebration.

We’re in our 10th season.

We do it eight times a year.

Every third Saturday, 6 to 10 p.m., three local bands, 60-plus small businesses and food trucks.

Our team plans and pays for the entire event.

It’s changed our downtown.

We now have $250 million in developments underway in our little downtown community.

The economic impact alone has been over $80 million just for that four hours every third Saturday.

This is the cool stuff that we just need to amplify.

These are the stories that I really hope people take and say, “I want to do something like that.”

Steve, you and I talk a lot about creativity and how you take creativity and monetize it.

I think this is essentially the definition of innovation these days.

You want to pick this up?

I do.

When you say 55,000 people, I start to think about another Oklahoman, Mr. Garth Brooks.

If we headed up to Stillwater, Oklahoma, Jill, and maybe got a burger at Eskimo Joe’s, he’s got a great song, “Standing Outside the Fire,” where he says they’re so hell-bent on giving, walking a wire, convinced it’s not living if you stand outside the fire.

Al and I were joking, you live inside the fire.

You’ve done everything from calling up Mark Cuban for PPP to doing drive-up banking to what you just described in changing downtown Edmond.

What are you excited about right now?

If we were to hang out in your conference room for the next couple weeks, what’s your team talking about next when it comes to innovation?

What kind of fintech partnerships might play into that innovation?

Well, blame it all on my roots.

I showed up in boots and ruined the black-tie affair.

There we go.

You would hear a lot.

For a small bank, just one location, 55 people, been around forever, you would hear a lot of projects that are going on.

We’re launching a military-focused bank, basically a challenger bank to USAA and Navy Federal Credit Union, in the next couple weeks.

I’m really excited about that.

I enlisted at 19, very economically fragile, and a family member stole all my money when I was away at training.

This is going to be a way in which we can set up service members for success no matter where they are in their careers.

We’re also partnering with a fintech company to have a national account opening platform.

Just a top, best-of-breed account opening system.

It’ll take two minutes to open an account.

We’re expanding that into business accounts.

One of the most fun and really reemerging opportunities has been our partnership with the VC community.

When we saw SVB fail, Signature Bank fail, and First Republic, we knew that there were VCs in our community that were banking with these banks.

We reached out to them and said, “Okay, what can we do? What services did they have that you’re missing? These deposits can stay here in Oklahoma.”

We were able to call a few fintech friends and get some really fast implementations completed.

We’re really the only bank in Oklahoma that can serve founders and the VC community in a way that they’re accustomed to.

We were able to do that in a two-week time period.

The team has some longer-term projects, like I mentioned, but we can also hustle and get something implemented in pretty short order.

Getting those deposits in this time when everyone’s looking for liquidity, that’s a big short-term win.

Like you said, it’s that enlisted banker just getting it done.

That’s awesome.

It is.

I think this goes to the credibility that you’ve built as an individual and really the leadership that you’ve exhibited over the years.

You can walk into these conversations and have people say, “Jill’s not going to waste my time. She’s going to be there for me in good times and bad.”

I think that’s a really important leadership lesson that people need to pay attention to.

Steve and I, again, we like to crib off each other and use some Oklahoma bands.

I’m going to throw him a little bit of a curveball because I know he did this with his daughter earlier this year.

He went to a Taylor Swift concert.

I was driving carpool this morning for my 14-year-old daughter and her friends, and we were listening to, of course, a little Taylor.

“Karma” came on.

That song has been stuck in my head the entire day.

“Karma and I vibe like that,” I think is the line.

I think about how Taylor Swift has really just created a brand and this incredible following.

I’m not trying to draw a direct parallel from Taylor Swift to Jill Castilla, but you have developed a national reputation for being available, responsive, and respected.

I remember meeting you years ago when you basically told me, “Why wouldn’t I say yes to opportunities? Why wouldn’t I say yes to speaking? Why wouldn’t I say yes to helping somebody out?”

I’d love if you could take us back to that moment where you realized, as a leader, you could really impact others with your behavior.

It was really lucky.

It didn’t feel lucky at the time, but we were the troubled-condition bank back when I came in 2009.

The only thing that really kept depositors with us was being ever-present, accountable, honest, transparent, and giving them complete access to me 24/7.

Pulling out nonpublic information and sharing it, always protecting customer information, but the bank’s information was basically a free-for-all.

You see how that kind of vulnerability of, “These are our numbers, and they’re terrible, but this is how we’re fixing them,” is really what creates connections and trust.

It wasn’t being perfect.

As I’ve gone through the years, as we’ve had crises, whether it’s COVID or community situations, sometimes not knowing what to do but being authentic and engaged makes all the difference.

The community, being able to tap into Credit Union FinTech or great resources throughout our ecosystem, that’s all only available to me because you showed up for other people.

You consistently showed up without any consideration of what you were getting in return.

You just knew that you were going to be a good friend to the community, to people that maybe you didn’t even know.

Then, in those times of need, what you find is that people are really good friends to you.

It’s a really lovely industry to be a part of.

People are really good, and they want to do work with good people.

Whenever you start chasing your own self-interest, or even profitability first, and profitability matters because we are for-profit companies, but whenever you have that top of mind, it becomes less authentic.

When you can find where you can really help people, it draws good people in with you.

I really appreciate how you invite people into the business of banking.

If you go onto LinkedIn and look at Jill’s profile, you have a video explaining CAMELS ratings.

You have things that are not necessarily what a social influencer would be trying to put up.

But I think you do a great job of saying, “Hey, this is the world that we live in, and we have to help you understand. We get this, and you don’t have to worry about it, but we’re going to be fully transparent.”

It might not knock off a Charli D’Amelio TikTok in the near future, but for bankers, I would geek out on it.

I think it’s good to educate.

Al, one thing I would joke about, and it’s actually not a joke, is Jill’s been very transparent: “Call me or text me.”

If I was a 61-year-old banker with a billion-dollar bank and looking at this, I would call Jill and do a reverse merger.

I’d say, “Hey, we’re bigger, but let’s merge, give you the scale, Jill, and you run the place with this innovation.”

I know you can’t talk specifics, but is there interest in M&A?

I think you would be great on top of an even bigger platform.

Does that not interest you, Jill, or is that something that might happen with this strong team you’ve built at Citizens?

It’s not something that we’ve pursued.

I think it would have to be a really unique situation for us to have that interest.

It would have to be something like what you’re talking about.

We get lots of interest in people trying to acquire us and acquire our team.

That’s not something I would stay here for if that’s the play.

We’re trying to build something special.

If it was something more of a reverse aspect, we’d be interested in that.

We’re limited in our capital, and the team is the largest shareholder through our employee stock ownership plan.

We have to think about scaling profitability, not asset size.

M&A is not something I’m at all pursuing.

It’s something I try to discourage in the industry because there’s such strength in being independent.

But I don’t think that something like what you’re talking about is completely outside the realm of possibility.

Now that’s contrarian.

Could you touch a little on why you discourage M&A?

Because that’s interesting to Al and me.

I think diversity is strength.

It would be different if we were having de novos starting at the same pace that consolidation was occurring.

But when we’re talking about this, we see what happens when we have consolidated larger regional institutions.

If they fall into times of vulnerability, then we’re having not-systemically-important institutions become systemically important.

When you start having multiple of those, it starts making no sense.

I also think, and I’m in love with the community banking ideal, of a George Bailey-type figure who’s a steward of their community.

Someone who is in the middle of being accountable both for the health of the institution and the health of the economy that they’re contributing to.

I think you lose something that’s really precious when those types of individuals go away or whenever they scale so big that they can’t pay attention.

When they can’t sit in the lobby.

When they can’t provide their cell phone number.

It’s really hard to scale that.

People try.

I always joke, when that local president becomes the “market president” of Big Bank Inc., they seem to fade away and disappear.

Or if they show up to the chamber meeting, they have a glassiness in their eyes like they’re not really there.

I do agree with you.

How you keep that engagement and that kind of co-investing in the economy locally is something that’s really interesting.

At what scale? That’s always up for debate.

But we agree with you that diversity and even redundancy are part of a strong system.

I want to keep on controversy because another thing you’ve been writing about, Jill, it’s kind of like my man Springsteen breaking out and saying we were “Born to Run.”

Deposit insurance has been something Al and I have seen you write about.

You’re not the typical banker saying, “Let’s have everything insured. Please come in and give us a subsidy or relief right now.”

You’re saying we can do it right now under the system we have.

Given your size, that’s very contrarian.

Tell our listeners, what are your thoughts on deposit insurance?

Where do we go from here given what’s happened during 2023?

I think if you are confident in the strength and soundness of your bank, then you would not be running toward unlimited deposit insurance.

If you’re not wanting to have difficult conversations that require structuring customer accounts so that you can mitigate any of their concerns through networks that have insurance availability, then I think you’re also not a great banker.

Sometimes, even on the scalability question, I think a lot of people, and even folks within Cornerstone, have a hard time with, “It’s not scalable.”

I have 14,000 depositor customers.

There are $4 billion banks in my community that don’t have that many customers, and their CEOs are up in an ivory tower.

Suddenly they’re “scale.”

Well, they just have bigger depositors and not as many of them.

Tell us who at Cornerstone is giving you a hard time. We’re going to take care of those tools.

Take them out back and rough them up for me a few times.

I do think it is completely scalable to be accessible.

When you talk about the numbers, it is scalable.

I think sometimes as bankers, we want to say it’s easier to get in the ivory tower.

It’s easier to have the gatekeepers and separate yourself from the community because you have less accountability.

There’s less.

I get people who are angry, people who are sad, people who are anxious.

You see the whole realm of human emotion in this position, and it can be really hard, especially when the final answer is you.

But I think it’s absolutely essential for the success of our industry and for that trust.

I think that’s where you do need a government subsidy if you’re not willing to be the person that they can say is accountable.

If you want the government to be the one saying that our banks are safe and sound because of a safety net that we provided, rather than saying, “We run great banks in America, and we also have deposit insurance to mitigate some of the risk of a run,” then you might as well just nationalize banking.

Interesting.

I might fall a little bit more on, “Could we increase it a little and get some small-business coverage?”

But I appreciate what you’re saying.

I appreciate all the hustle around things like IntraFi to build that.

It’s the hard work of relationship management.

It’s a good call to action for everybody right now.

Get out there.

Don’t just let the deposits believe.

Really have the discussions you guys are having.

There’s just no need, with Reg D going away during COVID.

You can sweep to a money market and have that money market sweep to IntraFi and come back.

Customers are earning more interest.

It’s harder on the bank from a spread standpoint.

But before that, yeah, I totally understand why you might want a transaction account guarantee because you didn’t have the ability to sweep back and forth.

You were limited in the number of transactions of a nontransaction account.

But that is existing now.

That’s right.

I think banking has changed and we haven’t realized that it’s changed.

As we opened, banking is never boring.

One of the things I think both Steve and I appreciate is you’re showing that diversity really is the spice of life.

If we can keep fighting the good fight, if we can keep creativity at the forefront of what we do, then I think this industry has some magnificent opportunities for people to do some really cool things for great communities that will appreciate them time and time again.

I just want to say this is a big-time thanks for your service to our country, to your community, to our industry, and really for joining Steve and me today and getting Plugged In with us.

He’s Steve Williams. She’s Jill Castilla. I’m Al Dominick.

I’m signing off from our nation’s capital, but I look forward to our next episode of Plugged In.

Thanks so much, Jill.

Thank you.