With multiple interest rate hikes, average inflation of 8%, a war in Ukraine, problems with commercial real estate and the question of a recession hanging over the economy, this has been a challenging year for both the banking industry and for Carissa Rodeheaver, chairman, CEO and president of First United Bank & Trust in Oakland, Maryland.
The fact that some years throw curve balls isn't new to Rodeheaver. During her more than 30-year banking career, she has survived a number of crises. "I've had the Great Recession, the pandemic and a liquidity blowup," she said. "It's been quite a run."
Rodeheaver started her career in public accounting, then moved to private accounting, first for a large oil-and-gas company and then for the eye health care company Bausch & Lomb. "I found that there wasn't a lot of personal interaction," she said. "I sat in front of a computer and looked at numbers."
An opportunity to take a job with more human interaction came from a surprising direction. "I knew the local bank CEO because I'd grown up with his daughter and we were good friends," Rodeheaver said. After a social visit, the CEO called and asked if Rodeheaver might be interested in becoming a trust administrator. Twelve years later, in 2004, she moved to the chief financial officer role, and in 2018 she became CEO.
First United ended 2022 on a strong note with record earnings and solid loan and deposit growth. This led to an expanding net interest margin and improved efficiency. But 2023 saw Silvergate Bank voluntarily shut down, in addition to the failures of Silicon Valley Bank, Signature Bank and First Republic Bank. Bankers were worried that more consumers would become spooked and move deposits from institutions across the industry.
To manage through the crisis, Rodeheaver and her team tried to be proactive.
"I came in on a Monday morning and looked at the contingency plan," Rodeheaver said. "I said, 'OK, we're going to execute the first part of this plan, based on market turbulence.'"
That meant bringing in additional liquidity through brokered certificates of deposit and borrowing from the Federal Home Loan Bank of Atlanta. The team put together talking points for associates and board members so they were well informed when speaking with any concerned customers. Outreach included calling all of their loan customers to reassure them.
Weekly "be informed" calls were hosted for all bank employees that covered information such as deposit insurance that could be useful in ensuring customers felt confident with their money at the $1.9 billion-asset First United.
"We moved larger customers into insured cash sweeps, which let you trade deposits to get FDIC insurance," Rodeheaver said. She added that the bank can secure up to $100 million through insured cash sweeps. Only about 14% of First United's deposits are uninsured or not collateralized.
First United also beefed up its social media presence, emphasizing that it was financially stable, with strong liquidity and capital. "We have the ability to take care of our customers, and that was the message we sent," Rodeheaver said.
In the end, First United didn't experience widespread deposit withdrawals.
The bank has had strong loan demand — it originated $172 million in loans in the first two quarters of 2023, for net loan growth of about 5% — and so it began lending the additional cash. "We're still in a strong cash position," Rodeheaver said. "We're back to bringing in deposits, lending them back out and pricing them appropriately."
Loan quality is holding up, though First United is watching its credit quality closely. In the first two quarters of 2023, its delinquent loans to total loans was 0.19% while charged-off loans to total loans was 0.10%.
Much of its portfolio is in commercial real estate, but with little office or retail exposure. "We aren't seeing big cracks," Rodeheaver said. "We've had a few downgrades, but not many."
Rodeheaver is confident that First United will see less turbulent years again. "That's banking," she added. "There will be better and more difficult times, and our job is to focus on coming through to the other side. We want to be competitive with our peers and stay in a strong financial position."
