RankingBanking 26 Digital - Flipbook - Page 10
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Regional Strength
standards, and safe, sound assets.”
The $53.9 billion Cullen/Frost Bankers is similar-
Focusing on safety helped the bank’s margin
ly focused on gathering core deposits across its Tex-
the last few years, Geddes says. Its strategy to
as markets, whether from businesses or consumers.
carry more liquidity gave it more options when
It’s so focused on customer relationships that
the banking industry saw stress in 2023, he notes.
the word transaction gets a “visceral reaction” at
And Cullen/Frost was a similar safe haven when
the San Antonio-based bank, says Chief Financial
banks pulled back on lending after the 2007-09
Officer Dan Geddes.
financial crisis, he says.
“Our bankers don’t get credit for bringing in
“You may lose in the short term,” Geddes says,
a relationship if it’s not their checking account,”
as the full scale of the bank’s balance sheet isn’t
Geddes says. “Because of that, we are able to
deployed in higher-yielding assets. “But when
have what we feel like are, if not the lowest, one of
there are downturns, you’re in a great position to
the lowest cost of deposits in the marketplace.”
not only survive but thrive.”
That fueled a rise in Cullen/Frost’s net interest
margin when rates went up, helping it rank highly
among banks with over $50 billion in assets. Its
NIM ticked up from 2.33% in the first quarter
Finding a Niche
For other banks, the key has been focusing on a
specific industry niche.
of 2022 to 3.47% a year later — and it’s stayed
That’s the story for Esquire Financial Holdings
similarly high ever since, even throughout the in-
in Jericho, New York, which since its 2006 found-
dustry’s mini-crisis in 2023. The bank’s been able
ing has focused on serving the banking needs of
to “maintain a really healthy net interest margin,
plaintiff law firms. It also has a national merchant
despite some challenging interest rate environ-
acquiring platform in addition to offering more
ments that we’ve been in,” Geddes says.
traditional community banking services.
Its Texas footprint opens it up to aggressive
The litigation industry made up roughly 78% of
competition, with big and regional banks making
Esquire Financial’s deposits at year-end, according
a big push in the Lone Star State. Cullen/Frost is
to the bank’s annual report. Much of that is in
expanding as well, deepening its branch network
longer-duration escrow and settlement accounts,
across Texas.
which are far less rate sensitive than a typical
But it’s avoiding chasing larger corporate
business deposit.
clients, which Geddes says is the “easiest way to
CEO Andrew Sagliocca says lending to the
grow a new footprint.” More competition for big
industry — not just taking their deposits — was
clients would mean earning tighter yields on loans,
key to getting started given the expensive nonbank
lowering the bank’s NIM, he notes. Instead, the
lenders that have been traditionally available to
bank is focused on building a large client base of
law firms. It’s a sector that banks didn’t lend to
smaller and medium-size businesses — where the
years ago, given the irregular cash streams for
bank can grow alongside its customers without
plaintiff firms as they wait for case payouts. The
sacrificing margins.
$2.5 billion Esquire landed at No. 3 on this year’s
It all goes back to the bank’s mission statement,
RankingBanking list.
says Geddes, who started at the bank in 1997. He
“That makes lenders nervous,” Sagliocca says.
holds up a copy of the 19-word statement: “We
“Bankers and lenders don’t understand contingent
will grow and prosper, building long-term relation-
collateral. They don’t understand the value of it,
ships based on top-quality service, high ethical
the duration of it, and they don’t like underwriting
