By Bridgette M. Redman
Bigger isn’t always better — especially when it comes to small- to medium-sized businesses and their banking needs.
It’s why Chairman Jim Unruh and CEO and President Joe Stewart have partnered to create Gainey Business Bank, a new community bank — and only the second community bank to open in the past 14 years. In mid-July, they held a grand opening of the first branch at 8501 N. Scottsdale Road, Suite 110, Scottsdale.
With a mission of serving the community with its local market knowledge, local decision-making power and superior customer service, Gainey Business Bank has more than 125 mostly local investors who raised more capital than what was required by regulators.
The idea was born with Unruh, the owner of a private equity firm that invests in small- to medium-sized technology companies. Immersed in that market, he says it quickly became clear to him how limited the banking support is and how few services are available for the smaller to medium-sized businesses.
“We have a lot of banks, but there really is a gap in the market here in terms of banks that serve this size and this type of business,” Unruh says.
“As fast as we’re growing and the more our economy becomes diversified, the more important having banks like a Gainey Business Bank becomes important. I saw the need, I saw the plight of those businesses and thought this is a worthy effort to make — to do something that can help.”
Stewart points out that everyone using a bank needs to have access to cash and the ability to move money around, but small- and medium-sized businesses often need capital, usually in the form of lending.
“That involves risk for the bank and for the client,” Stewart says. “The big banks, with the number of clients they have and the size of their operation, tend to use algorithms and certain markers that indicate whether they’ll lend you money. Our model is more high touch.”
Stewart says they tend to spend more time with business owners to understand their models and financial situations. They set aside the usual credit models and algorithms and work at understanding how a business operates and why they exist. He sees them taking a different approach from the larger banks that have to make their decisions at corporate level and must limit their level of service to cover their cost structures.
What makes them different isn’t necessarily their size.
“It’s that the decisions are local,” Stewart says. “It is locally managed.”
To understand the need for Gainey Business Bank, Stewart says it helps to understand the recent history of business and economics in the greater Phoenix area. He pointed out that 20 to 30 years ago, the economy was heavily directed by how favorable interest rates were and whether construction was possible.
Real estate and construction were the driving forces of business and growth in the region. Stewart served on the executive board of the Greater Phoenix Economic Council around 2007 to 2009. Their goal then was to bring in businesses that were not 100% real estate related — or construction or developers. While those endeavors are needed, they were seeking a balance with more businesses to provide an array of services, products and manufacturing.
Today, Stewart says, there has been a major improvement with many businesses opening and bringing new jobs to the Valley.
“Jim saw this,” Stewart says. “We’re just going to need to have some local people, local decision makers, veterans that understand how to help these businesses get off the ground. There’s no one-size-fits-all.”
Stewart — who has spent decades in the banking business including serving as the president of JPMorgan Chase Arizona — says banking has changed a lot since the 1980s. Then, customers visited bank branches. Now, people are more likely to engage in mobile or online banking. That results in some alienation of the client to the bank, he adds.
“I’m old school in that there’s a certain appeal for many, many clients to know their people locally, people who understand them and greet them,” Stewart says. “It’s service. You have to have a personalized approach.”
With the grand opening wrapped, Stewart says the staff is focused on getting to know their clients and understanding how they want to use the bank and how they want to be communicated with.
“That’s not saying many of these folks don’t want the online and the mobile, but they want to know who is handing their money,” Stewart says.
“Banking has gotten a little homogenized and a little ‘I can do all that online’ and I’m not a believer that that’s the best solution for everyone. Let’s say I did a business loan and I had a bump in the road and I needed to have folks look at this and see if we can make some changes. Well, it’s very tough to do if you borrowed the money online. I believe there’s an enormous amount of clients who long for understanding their bank and the bank understanding them. I don’t think that goes away because of technology.”
Unruh agrees, stressing that Gainey Business Bank is committed to forming deep relationships so that it can deeply understand what its customers are doing and can offer them sound advice.
“There’s a comfort and knowledge in knowing each other well enough that you can develop the business more like a partnership,” Unruh says.
When investors call the bank, they can reach someone who can immediately meet their needs without having to pull a file and research them. The person they are talking to will know who’s calling.
“A lot of our customers have experienced the lack of local flavor,” Stewart says.
“I learned early in my career, you don’t get anywhere by talking negatively about competitors and I will never do that. But there can be a flavor in the smaller banks in town that they’re community banks. If a transaction opportunity is above a certain size, (other banks) could have to go to their home office for an approval which could be anywhere in the country. We don’t do that. All decisions are made local. We have a veteran crew. We’ve been through a lot of wars.”
Stewart says Gainey Business Bank isn’t taking away business from regional or national banks. There’s enough room for everyone, and they will serve a much-needed niche in the Valley.
It was the niche that Unruh recognized as being important and why he was willing to invest in the creation of Gainey Business Bank.
“I really want to stress this local aspect,” Unruh says. “We’re locally owned with locally managed decisions. The decisions are made here by people who understand this area, this environment, this market, and therefore are able to add more value for our customer than simply the money that we provide.”
With the grand opening of Gainey Business Bank, its leaders hope that customers will seek them out because of their service and the reputation they plan to build. Their goal is to be able to help their customers solve problems and grow their business successfully. Unruh stresses that they plan to be an asset to their investors and to their community.
“It’s more than just earning a return on investment. This is building a business that makes a difference.”