Cathy Ackerman: Hey, welcome to Sweet Tea and Strategy, a podcast by Ackerman Marketing and PR, featuring business and community leaders throughout Tennessee talking about issues and trends of importance to our state and beyond. And sharing some of their best sweet tea recipes and tea sipping stories. I'm Kathy Ackerman, and today I have the pleasure of talking with Billy Carroll, CEO of SmartBank, which is one of the fastest-growing banks in our region. So welcome to Sweet Tea and Strategy, Billy.


Billy Carroll: Thanks, Kathy. Great to be here today.


Cathy Ackerman: Thank you. So having grown up here in Tennessee, where sweet tea is frequently a staple at our dinner tables, are you indeed a true Southern boy who loves sweet tea?


Billy Carroll: Kathy, it's funny. I am a Southern boy, there's no doubt about it, but I'm an unsweet guy.


Cathy Ackerman: All right.


Billy Carroll: And so—so for me, I don't—I'm not as big on the sugar. I like a—I like an orange in my unsweet tea. Don't put any sugar in it and drink it that way. So that's way I prefer it.


Cathy Ackerman: So you're a big orange fan.


Billy Carroll: I am a big orange fan. That's right.


Cathy Ackerman: There you go. You're supporting your Vols with your iced tea.


Billy Carroll: I guess there was a company here in Knoxville that started that years ago with a little hint of orange in—in their tea, and I like—I like it that way.


Cathy Ackerman: All right, very good. So switching to the more substantive topic of SmartBank, it has been interesting to watch you and your team pursue a fairly aggressive growth strategy over the last couple of years. So tell us, if you would, a little bit about your bank's overall growth plan in terms of what your ultimate goals are for the bank in this regard over the next few years.


Billy Carroll: Yeah, you know, we—we really have. Our—our company has been so fortunate over the last several years in particular. We started SmartBank back in 2007, as you know, in Pigeon Forge, Tennessee, and have really been able to grow it and got into an environment over the last several years where our industry was consolidating and we were able to get positioned to where we could really grow the bank through acquisitions fairly aggressively.


Billy Carroll: And it's been exciting. You know, in our business today, scale is so important because number one, the regulatory burden that banks have—you've got to be of a certain size to really handle it, because everybody has to do it, so you can leverage that by getting scale.


Billy Carroll: And so that's a big part of it. Also today, just the ability to do larger projects—gosh, just to build for a client to go out and build a retail center or a hotel or an office building. The cost of those, so loan sizes are so much bigger today than they used to be, just to do a simple—to do an owner-occupied project. What we see is the scale has allowed us to really be more competitive in those fronts. So we've been able to acquire and grow and have a team that's really worked hard to do that.


Cathy Ackerman: Is it important also in terms of driving investor returns with you being a publicly traded company?


Billy Carroll: It is. It definitely is. You know, when we made the decision to move to a public traded company back in late 2014, early 2015, it really is—being a public company's got pros and cons. I've been on both sides; I've been private, now I've been public for a few years. And you know, the private side definitely has its advantages, but the public side gives you the ability to grow and acquire and scale.


Billy Carroll: And so it's a—while there are things about it I don't like, it is something you need to do if you're really going to scale the company. And growing it—investors want to see growth, they want to see earnings per share growth, they want to see that return grow. And so being able to acquire is, to me, very, very key to having a successful public company.


Cathy Ackerman: So what was the biggest surprise after going public in terms of how your life changed?


Billy Carroll: You know, just the—probably the time that you have to spend just on a quarterly basis getting yourself prepared for earnings releases, getting yourself prepared for earnings calls, investor meetings, things along those lines. You know, when you're private, you have a shareholder's meeting once a year and you typically have friends that show up and come around and sit around a table with you and you give an update on the bank.


Billy Carroll: Well, today, you know, when you're public, you're really out front, especially when you're a growing public company. You get a lot of requests to be at investor meetings, quarterly earnings calls, those things. So you really have to be on spot-on most of the time and be ready and prepared with a lot more detail than you typically would as a private company. But it's okay; it keeps you sharp.


Cathy Ackerman: Absolutely. So I assume that you're going to continue looking for smart acquisitions, and if so, what does that ideal acquisition candidate look like for you in terms of size and shape and maybe even location?


Billy Carroll: Yeah, great question. And we do. You know, the acquisitions are—they're not easy to find. We've been fortunate; we have found a number of really good ones over the course of the last several years. And I think a lot of it kind of comes back to just kind of "cultural sync" is what I call it. Because I think that's one of the first things to me that we talk about when we look at a deal. So the type of deal that we like is—you know, it needs to be strategically right geographically and their business lines need to complement.


Billy Carroll: But outside of that, it's really culture; it's the people side of it. It doesn't really—I've always said, and I think Kathy you've heard me say this—it doesn't really to me matter what name's on the building, even though we spend a lot of time on branding and things like that. Our business is so much about people.


Billy Carroll: And so, you know, if you can sync the culture and you find operators that have similar philosophies culturally and kind of an "associate-first" type mentality, it really has made a big difference there. So we look for cultural fit first. And then from that standpoint, as from a geography point of view, you know, we're fairly diverse now because not only are we in the Knox MSA and the Chattanooga MSA, you know, we're over into Murfreesboro now, we're into Huntsville and Tuscaloosa and some great communities on the Gulf Coast region in Alabama and Florida.


Billy Carroll: And so for us, a lot of it is just kind of filling in that geography. So really for us geographically, we would love to look in kind of East to Middle Tennessee and down I-65, looking more into Huntsville and Birmingham and Tuscaloosa and some of those zones that we think would complement really our scale and getting more density in the markets where we are.


Cathy Ackerman: Is there a size of bank that is interesting to you at this point with you all having grown so much yourselves?


Billy Carroll: Yeah, we've looked at several. You know, as you get larger, I think you tend to want to look to larger institutions because the time and energy it takes to integrate a smaller bank is similar—it doesn't really matter whether it's two to three times that same size, it still takes the same amount of time. So larger's probably better, but not necessarily every time.


Billy Carroll: You know, we had a smaller acquisition that we just really closed at the end of last year right here in our—in our Knox MSA in Maryville. Great combination that brought us some great team members. It was the smallest deal we've done, but it also gave us great density additions here in the Knoxville market. So it really doesn't matter. But so we would say from an asset size, our asset size for our company today is just a little under 2.5 billion in assets. The small end of that would probably be around 200 million, the upper end maybe up toward a billion.


Cathy Ackerman: You know, you've spent a lot of time building the culture here and spending a lot of focus on the team. Talk about that a little bit. You've mentioned it in terms of acquisitions, but what does teamwork and culture look like at SmartBank?


Billy Carroll: Yeah, I'll tell you, the culture that we're building—and it is a constant effort—is probably the thing that I'm most proud of that we've built in this company, or are building in this company, because like I said, you never get to the finish line. It's been so great.


Billy Carroll: You know, we started out when we started the bank back in 2007. And I'll never forget, I was with a good friend of both of ours, Jeff Wampler, the Peddler and Park Grill restaurants in Gatlinburg. Great friend, one of our founding organizing directors, and a long-time friend and mentor of mine. Jeff and I were talking about it after we'd been open a couple months. We'd got the bank open and the bank was doing really well and we were performing, we were growing loans and deposits and everything, but it just—there just was something that wasn't right.


Billy Carroll: And we'd recruited some great folks from a bunch of banks in the community to help us start it. But it just—something just wasn't syncing. And I'll never forget, I was sitting and I was having lunch with Jeff and I was telling him about this. I'm saying, "Gosh, everything—the numbers are great, but there's something just not syncing right." And he goes, "Well, have you told them what you wanted it to look like?" And I said, "No." And he goes, "Well, heck, they can't read your mind."


Billy Carroll: You know, it was just one of those—a light bulb went on. And I said, "You know what? You're right. I just assumed that everybody knew what I was thinking, and they didn't." And so at that point we started having culture meetings on a weekly basis as we built the bank. And it really helped set the foundation that has been so critical to what we've done today.


Billy Carroll: And we have a culture team that meets usually on a monthly basis now where we get together. We pull folks from all of our different geographies, folks from our executive team, other managers in our company, and we talk about how do you continue to build the culture as you grow.


Cathy Ackerman: And that gets more difficult as you grow, obviously.


Billy Carroll: And it does. And you acquire and you'll bring a bank in that's got a culture that's really good but it's different. And so we talk about those integrations and how do you integrate team members. But if you're deliberate about it, it makes so much difference. And that's what we are; we're just very—we're driven about it, we're deliberate about how we discuss it. And folks really—that's what I have found: if you explain why you do it, it makes all the difference.


Billy Carroll: People understand it. And while they may say, "Huh, well we did it differently," but I understand why they do it that way at SmartBank, and I buy in. Not everybody—sometimes folks don't buy in, that's just part of it—but for the most part, good associates, if you explain it to them why you do it and give them good business reason behind why you operate this way or you have a culture that looks like this, people get energized about it.


Cathy Ackerman: And one of the nice results of that is that your company has won the best workplace award here in Knoxville for several years now, right?


Billy Carroll: We have. We have been nominated and have won being in the top workplace, the Sentinel Top Workplace Awards over the last several years. This year winning the mid-sized business first place award. It's really nice to see and get those type of accolades because we spend a lot of time and work hard at that piece of the business. So it's been great to receive those awards and be recognized for them.


Kathy Ackerman: So how would you define the SmartBank brand if you had to sum it up in a sentence or two?


Billy Carroll: Yeah, you know, we take a look and we have a couple of words that we utilize around our company a lot, and it's "energy" and "positivity." And those two words are in our core values statements. And so I think it's really that.


Billy Carroll: When we talk about "what's different, what's so smart about SmartBank?" we get asked sometimes. From our standpoint, it's just we look to recruit and hire great folks that are positive and have got a great energy about it. And you know, it's those two things, because you work fast, you work hard. We try to have fun; that's one of the things that our culture committee has talked about.


Billy Carroll: You know, when you're a hard-working team, you've got to interject some fun into the equation, so we enjoy each other, we'll laugh, we get to know each other personally as well. And so we're there to support when you need it personally, but also everybody understands they've got a job to do and we work really hard to get that done. But I think it's those two words to me are the biggest things; it's positivity and energy. And if you've got that, you can accomplish a lot.


Cathy Ackerman: So looking beyond your great team out there at your customers, what kind of relationship do you try to create with your customers? I know that you don't like to be purely transactional; you want to have a true relationship. So what does that look like?


Billy Carroll: Yeah, it really is. Especially as you grow, as you get larger in the banking business, we focus more on relationships. And when we say a relationship, it's really both sides of the balance sheet. We want—we want your loan transaction, but we also want your deposit transaction.


Billy Carroll: We want to be your trusted financial advisor. You know, and so for us, we want our clients to view us as a partner, just like you would your CPA or an attorney. We want to be thought of in that same light from a trusted advisor standpoint, to where if you have something going on in your business that's financial related, we want you to be able to pick up the phone and talk to your banker.


Billy Carroll: And so we see in our business a lot of times bankers get tied up on wanting the deal, they want the deal, they want the loan. And that's great and that's definitely important because loans drive income and that's what from a top-line revenue standpoint we've got to have that. But we also—we would rather hit more singles and doubles and build those granular relationships, because I think at the end of the day if you do that, you build a better core bank. And at the end of the day you have a more valuable company.


Cathy Ackerman: And you have customers that stay with you for the long term and you can grow with them.


Billy Carroll: You do. The loyalty factor when you have a customer that you have what we call kind of "both sides of the balance sheet" and you've got a true relationship with—good clients get called on all the time. You know, and we do it; we call on clients, other banks call on clients, it's what we do.


Billy Carroll: But to me, you're less likely to take those meetings and those calls if you're getting handled the right way by your banker. And so for us, it keeps you on your game, you have to stay out in front of it, but we really do—we want those true relationships and—and that's what's fun about our business is being there for those clients, being an advocate and helping their businesses grow.


Cathy Ackerman: That's wonderful. So switching gears just a little bit, you served on the Federal Reserve Board, which is quite an honor. So what does the Federal Reserve Board do? And what did you learn as a result of that involvement?


Billy Carroll: Kathy, I'll tell you, it was one of the most rewarding experiences I've had outside of growing this company is my time getting a chance to work with the Federal Reserve. I had an opportunity to be on the Nashville branch of the Atlanta Federal Reserve. There's 12 Federal Reserve banks across our country and most of those offices have branches and have boards.


Billy Carroll: The unique thing about the Atlanta group, the Federal Reserve in Atlanta, they have several offices that are branches and those branches have boards that really get out on a typically on a monthly basis and really collect anecdotal information from business leaders in the community in an effort for the Fed to really understand what's going on in the markets.


Billy Carroll: You know, you hear the words around the Federal Reserve "data," "data-driven," and "data-dependent." There's a lot of data that goes in because these economists do a lot of numerical, statistical work to understand what the economy's doing. But they also really want to know what's happening on Main Street. They want to understand what's going on so the anecdotal piece comes from the directors.


Billy Carroll: So we'll typically—we would get a list of questions that would be of interest for the Atlanta Fed President. And so every month we would get that list and then I would have contacts. You know, I think I'd contacted you, I'd talk to you Kathy, what's going on—you didn't know probably what I was asking about—what are you hearing and going on in the market? What are some of your clients talking about? Is the economy good, business good?


Billy Carroll: Those type things. They want to know what's going on with employment, they want to know what's happening with wage growth, they want to know what's happening with your projections and outlooks for 2020 or they want to know what's going on next year. So it really is such a rewarding experience to play a really, really small piece in the overall rate policy setting process here in our country.


Cathy Ackerman: That's great. So do you have any predictions relative to the economy looking forward?


Billy Carroll: Gosh, I tell you what, I wish I knew. You know, those crystal balls are so tough. You know, it's so interesting. We're in such an unusual economic time today. I was looking at last—at the end of last year when we were setting our budgets for 2019. We were looking ahead and at the time, the market had projected a couple of rate increases during 2019.


Billy Carroll: Well you fast forward now to the midpoint in the year—actually there have been no rate increases and actually a rate cut's now projected for the second half. And so we live in such a global economy today with what's going on overseas, what gets tweeted out of Washington on a daily basis. All of this impacts kind of where our economy is and rates.


Billy Carroll: Plus, you know, even though our economy has some pockets maybe where things aren't as great, overall our economy is so good. But globally it's not as strong in other pockets, so you have a lot of investment coming into America that keeps our rates much lower.


Billy Carroll: So it's from a global standpoint, it's so tough to predict because you never know what's going to happen with China tariffs, you don't know what's going to happen with other trade wars. But right now I think from a projection standpoint, I would say that for the foreseeable future, we think rates are going to stay reasonably low. I think it's a good time for borrowers to continue to invest and grow their companies. We see rates in to me borrowing rates still very favorable now and probably anticipate that staying that way through at least through next year.


Cathy Ackerman: So real estate lending is strong?


Billy Carroll: It is. You know, in our—and we're fortunate to be in some great markets. I'd mentioned some—Chattanooga and Knoxvilles and Middle Tennessee, the Nashville MSA, Huntsville, Alabama, and Tuscaloosa. So we're in some great growing Southeastern markets.


Billy Carroll: Those markets all really have had great growth. And so it continues to be positive outlook, is very positive in those zones. So from a real estate standpoint, real estate lending standpoint, yeah, we would say it's still—we would still feel very bullish on that moving forward.


Cathy Ackerman: Billy, we appreciate you joining us today for our Sweet Tea and Strategy podcast. You've given us some great things to talk about as business people, and we appreciate you sharing your insights and your exciting plans for SmartBank. We wish you much success moving forward.


Billy Carroll: Sounds great. Thank you, Kathy. Great to be with you.


Cathy Ackerman: Thanks again.