From Crisis to Growth: How Montecito Bank & Trust Conquered PPP and Jump Started the Bank’s Digital Future

Sal Trifilio

March 17, 2021

 

It was just about a year ago—almost to the day—when George Leis, president and COO of Montecito Bank & Trust, called the institution’s Senior Vice President and Director of Community Banking, Cari Shore, to pick her brain about a new bill that was gaining momentum in Congress and to make an usual pitch.

“George called me one morning and said, ‘Cari, I’m thinking that maybe we can use one of your branches and convert it into a COVID Relief Center,” she recounted. “There’s a thing called the Paycheck Protection Program and we’re probably going to be working on it for a couple of weeks.”

Roughly 52 weeks later, Montecito’s COVID Relief Center is still active and helping small businesses secure federal aid, but the institution’s future is on a much different trajectory than one might expect after a year of fighting a pandemic.

In the paragraphs below and in the webinar above, you’ll learn about the “once-in-a-lifetime opportunity” George and Cari identified at Montecito during PPP, and how they’re leveraging their success with the program to grow and jump start the bank’s digital future.

Crisis Response is in Montecito’s DNA

Montecito is no stranger to crisis. As American Banker wrote in December of last year, a series of natural disasters that culminated in a January 2018 mudslide prepared the Golden State bank for the worst. Back then, the mudflow devastated the local community by blocking the main highway, cutting off the flow of tourists that was the lifeblood of local businesses.

As victims of the mudslide themselves, Montecito understood exactly how devastating the crisis was for the community and took action—walking door to door, checking in on local store-front owners and making sure they had what they needed financially to get by. As George tells the story, he remembers one business owner’s experience in particular.

“I talked to one client who ended up going with a fintech … this guy set up his coffee shop completely on his iPhone,” George said. “And while that was super easy and great, when the mud flow happened and his revenue went to zero, [the fintech] on the other end of the iPhone wasn’t very helpful.”

The reason the business owner went with a fintech over Montecito?

“He said, ‘I thought it would be too hard to do business with a regular bank,” George said.

That experience forever changed the way George and Montecito thought about business lending and soon after, their relationship with Numerated began. In fact, Montecito had big plans for 2020, in which they would begin using Numerated’s Digital Lending solution. But, of course, COVID had different plans.

2020 Pivot: From Crisis to Opportunity

“For us, we were on track to turn on Numerated’s small business lending platform and we were ecstatic because … we thought this would be a game changer for us,” George said. But, when COVID hit and PPP became law, it wasn’t Numerated’s platform Montecito was focused on but instead the Small Business Administration’s ETran platform.

“We were gearing up to do this through the old, sort of horrible, old-fashioned way,” using the ETran platform, George recounted. It was at this point that he learned of Numerated’s pivot to provide PPP automation to banks and credit unions, and when Montecito’s trajectory began to change.

Securing PPP loans through ETran, according to George, was “like brain torture” and so he jumped at the opportunity to automate most of the complex process with Numerated’s platform.

In a typical year, George estimates that Montecito’s 14 branches will originate roughly 220 loans. By leveraging the Numerated platform, however, Montecito became the No. 1 PPP lender in nearly every market they compete in; originating more than 7X the loans than they do in a typical year.

A ‘Once-in-a-Lifetime Opportunity’ to Expand Relationships

On Tuesday, March 16, George and Cari joined our insights team to talk about the opportunities they’re currently pursuing at the tail end of PPP Round 3.

While the bank continues to take First and Second Draw PPP applications with just a couple weeks left in the program, they’re also keenly aware of the opportunity to expand and grow relationships with PPP borrowers.

When COVID hit their community, Montecito knew they’d do whatever they could to support their local businesses during the crisis. Not every bank was so quick to act—or even acted at all.

“We saw other banks show hesitancy. They sort of stumbled a little bit … didn’t know what to do,” George said. “And we saw this as an opportunity of a lifetime. We saw this as an opportunity to really differentiate Montecito Bank & Trust.”

This sort of mentality meant Cari and her teams were free to get aid to local businesses whether they were Montecito customers previously, or not.

Today, roughly 300 businesses have secured a PPP loan with Montecito without any prior banking relationship. George and Cari see this as 300 opportunities to build and expand new relationships.

“We want to, we have to--we’ve earned the right to ask those clients that are new to Montecito Bank & Trust: Do you want us to be your bank? To ask them: In addition to your PPP loan, do you have any other lending needs? And if they were happy and satisfied with the way we interacted with them through the Numerated platform, we’d love to entertain a loan request,” George explained.

Giving Businesses the Banking Experience they Demand

One final learning shared during our March 16 webinar, was the realization that helped George and Cari see the future of business banking.

As we’ve discussed on this blog recently, the conventional wisdom for years—especially among relationship bankers—is that the business banking experience is too onerous and too complicated to move online.

As Cari puts it, it was her initial hesitation with going digital.

“The way [businesses] interact with us is very high touch and we offer a really exceptional level of service,” Cari said. “I was worried that [businesses] wouldn’t be in favor of, or that the technology would somehow compromise that level of service.

“In fact, we found the opposite.”

According to Cari, the competitive advantage that leveraging the Numerated platform created was one that would enable her teams to still work effectively in building and growing relationships, with the added help and convenience that digital provides. For Montecito, technology was additive, not subtractive.

As George put it, “this gives us an ability to use technology in a way that is friendly, that is safe and sound, that the regulators would like to occur … It creates so much possibility for us as an organization.”


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