The Queenstown Bank of Maryland | Kevin B. Cashen

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The Queenstown Bank of Maryland – Staying Relevant as a Small Community Rural Bank in a Changing Banking Market

Kevin B. Cashen

President & CEO

The Queenstown Bank of Maryland

Interview conducted by:

Bud Wayne, Editorial Executive

CEOCFO Magazine

Published – August 15, 2022

CEOCFO: Mr. Cashen, you joined The Queenstown Bank of Maryland as President and CEO in 2017. Would you tell us about your role at the bank and how it developed to where you are today?

Mr. Cashen: I became President and CEO in 2017. Most of my banking career had been in Baltimore and Washington D.C., the majority of that in the Washington market, although I am a native of Baltimore. The longtime CEO here had been CEO for 26 years and was retiring. They were looking to bring in somebody to help modernize and grow the bank. Therefore, I joined as the bank as president and CEO after having served as the president and CEO of a small community bank in Baltimore.

CEOCFO: You have been in banking for over 30 years. Tell us about the changes you’ve seen in the banking industry over that time and how your experiences have helped you shape the strategy at The Queenstown Bank of Maryland?

Mr. Cashen: I started in banking of January of 1984, coming up on almost 39 years. I started with a small savings and loan in Baltimore. Back then, it was a very personal business and you really knew your customers and you knew people in the community. Over the last 30 years, banking in total has become less personal and that has really been driven a lot by technology and the sheer size of banks today. With technology you do not have to see or talk to people to transact business. It has also been driven by scale, you have some very large banks and it is more difficult to be personal when you are that large. I think the general approach to banking has been less and less personal.

The thing that I enjoy about where I am now is, about ten years ago, I got back into the community banking space after working with some larger midsize banks. I like the community bank space because it is personal. You know your customers; you are in the community and, particularly where we are, I run into customers all the time no matter where I go. I have come full-circle back to a more personal banking experience which is where I like to be.

CEOCFO: With the rise of online banking and mobile apps, and COVID still keeping some people at home, is the personal touch still important for you and your customers or do you find with the newer generations that are in the workforce these things don’t matter as much?

Mr. Cashen: The answer to that is really driven by the community that you are in, both geographically and the composition of the community. We are a very rural community with small towns making up the core of the market. If we were the same size bank with 8 branches in a metropolitan area, it would be much harder to be a personalized community bank because you would be a very small part of the community and everything is moving fast. I think the nature of who we are and the rural community with smaller towns allows us to have more of a personal touch. We still have a lot of people that come into the branch just so they can talk to their banker even though they could do most of their transactions electronically or do it at the drive-through window. Most people want to deal with other people, not a computer or phone screens.

Our customers and employees were upset when we closed our lobbies for COVID. For four months our lobbies were closed but our drive-through windows were open. People missed the fact that they could not come in and see their local banker. When we opened our lobbies, people did come back relatively quickly. I am not saying that they did not learn how to use electronic banking or that that they did not continue to use the drive-through occasionally, but now they use all three channels to get to us. However, we still see traffic in our branches at levels approaching pre-pandemic. We even find that the younger people treat their money differently than many other things. People are more nervous about making a mistake with their money and care more about where it is than they do about where they buy their milk. People can do most of what they need to do electronically and they can research any financial matter on-line but they often want to talk to someone in person before making a final decision.

When people are making the decision about a mortgage, which is one of the most important decisions in their life, they often want to talk to somebody, look somebody in the eye and make sure they are not making the wrong decision. We still see younger people coming into the branch, probably more so than you would think. We tend to still see all age brackets in our branches. That might be ease of access to our locations and just the nature of our community. It would likely be different in LA, Baltimore of Washington D.C.

CEOCFO: Would you give us a little background and history of the bank and how it developed from its founding?

Mr. Cashen: The bank was founded in 1899, so we are 123 years into this. If you are not familiar with the state of Maryland, there are distinct regions within the state driven by the Chesapeake Bay, the largest estuary in the country. It divides Maryland, so there is the “western shore”, as we refer to it, which is everything west of the Bay – Baltimore, Annapolis and the western parts of the state. Then there is the “eastern shore” which is on the eastern side of the Chesapeake Bay, which is much more rural, until you get down to the beach area. We have beach communities in Ocean City Maryland, but the eastern shore, in general, is very rural.

Back in 1899, most banking and commerce was done out of Baltimore. The eastern shore was very agricultural but most things were shipped back and forth from Baltimore. The bank was founded because, as the eastern shore grew, there was a need for a community bank on the eastern shore rather than addressing all banking activity in Baltimore. So, the bank was really in response to the growth of the commerce on the eastern shore, mainly through farming and seafood that ultimately was transported through the ports in Baltimore.

Five gentlemen started the bank and they just saw a need to have a local bank here to meet the local needs. That is how we started and that is how we still operate today. In the mid-1950’s, the first bridge between the western and eastern shore was completed which really expanded the opportunities on the eastern shore. We are about an hour from Baltimore, an hour from Washington and about 25 minutes from Annapolis which is the capital of Maryland. They are all on the western side of the Chesapeake Bay and represent the majority of the population in the state. People are often surprised how rural it is on the eastern shore. We get to have the best of both worlds. We are within an hour of the cities but we live in a rural area which is quiet and more slow-paced with lots of natural beauty.

CEOCFO: Has the vision changed much from its founding vision?

Mr. Cashen: Yes and no. The challenge that was presented to me when I arrived was, figuring out a way to stay relevant in the banking community through our products, services and technology while honoring our heritage as a community bank serving the needs of the people and businesses in our market. Much of the commerce in our communities is built around agriculture, seafood, travel/tourism and services and we need to figure out how to continue to serve those businesses. A lot of seafood comes out of the Chesapeake Bay in the form of crab and oysters. So out of respect to the heritage of the bank, we work very hard to serve these groups while at the same time seeking ways to serve a broader group of people across a broader footprint. Relevance for banking in the last ten years has been an investment in technology and broader services. Things at the bank are moving quickly to keep up with the competition. When I got here, we had much of the core technology which was primarily delivered via internet banking which is a big component of what we do. We have done a lot more investment in delivering services via the phone. We refined the technology with more mobile applications such remote deposit capture, mobile transfers, peer-to-peer transfers and wires/ACH. These days you have to deliver all your services by phone, internet, and branch. These are all additive to what banks have always done. Nothing went away. We still have a branch network and serve customers through that while providing technological solutions. We have made a lot of upgrades in our technology and we have expanded our footprint. My banking experience is on the western shore of the Bay. Given that, we have done more business in some of the counties that are in close proximity but are located on the other side of the Bay. We have also expanded more into the beach area and Delaware market. My challenge is to keep a small community rural bank, relevant to a wide variety of customers across a broader footprint.

Our more seasoned customers that have been here for a long time, they still want to come into the branch. During COVID, even the older generations learned how to use some of the mobile banking solutions on the phone because they had to, they could not come into the branch or they did not want to go out in public. I think COVID accelerated the move to some of the digital products by five or ten years and it really propelled people to use tools that they had not used in the past. We had to design everything to be done in more of a mobile fashion although we are a retail enterprise so we have to have live people in our branches. We moved things around on the operational end out of necessity and you learn what you can and cannot do in a remote environment. The pandemic accelerated some good things and some bad things, but it accelerated technology a lot in the banking space.

CEOCFO: What are some of your product offering and where do you see the greatest growth coming from?

Mr. Cashen: We have always been more of a retail/consumer bank. We do mortgages that we hold in our portfolio. About 40% of our portfolio is one-to-four family mortgages. We are still actively in the mortgage business which has gotten bigger and more sophisticated over the years which requires you to stay current. We have always served the agricultural and seafood industries. Our community is built on agricultural, tourism, seafood, and services. There is no real manufacturing. There are very few people that produce a lot of products in our community.

We are looking, as part of our vision going forward, to become more balanced and expand more on the commercial lending and small business side of banking. We have an orientation today that is more retail/consumer and we are not moving away from that. We will balance that out with growth on the commercial and small business side. That is directionally where we are going.

CEOCFO: Would you tell us about your lending solutions? What is your approach to attracting customers and maintaining a relationship with them?

Mr. Cashen: With smaller communities, boards become very important because our board is made up of mostly business people in the community and they have friends in the community. When you are around as long as we have been in a smallish community, we tend to be on people’s lists of banks that they are going to talk to because of our longevity in the market and our reputation for service. The big banks have a much smaller presence on the eastern shore because it is more rural and probably does not meet some criteria as far as size for some of the larger banks.

Most of our activity comes through the relationships we have in the community. When it is a smaller community, you can do that. As we branch further out into serving commercial customers, it is less of that because we are moving into newer markets. To do that, you have to have the products and services people are looking for. We have most of the products and services that you need for most small to medium-sized businesses. The beauty of banking, that is different from when I got into it thirty years ago, or even fifteen to twenty years ago, is you had to develop your own products, particularly on the technology side. Banks now use core processors, such as Fiserv in our case, that do the back-office technology, keeping of ledgers and such. Those firms also will have all the products and services you need, so online banking is done through them and mobile banking is done through them. Even small banks can have pretty good technology because of the way it is delivered today.

We feel we have a very competitive technology platform. We are always trying to make it better but we feel that it is very compelling for a small to medium size business, so then we just need to get out telling our story. We just recently hired a Chief Lending Officer that has more of a commercial background that can help us expand further into commercial banking.

CEOCFO: You have branches in Queenstown, Chester, Centreville, Ridgely, Grasonville, Benton’s Crossing, Easton, Church Hill and a loan production office in Cambridge. Do you encourage your team and staff to be active in the community? What is your commitment to the health of these communities?

Mr. Cashen: Six of our branches are in Queen Anne’s County, one in Caroline County and one in Talbot County. We also have an LPO in Cambridge, Maryland that we are converting to a full-service branch, which will pick up Dorchester County which is another county here on the shore. The majority of our branches are in Queen Anne’s County but do have presence in the other surrounding Counties.

As a community bank and part of our culture here is we encourage involvement in the communities. The local fire chief is one of my senior lenders. The volunteer fire department on the eastern shore and rural communities, are a very integral part of the community. We have many people involved in the volunteer fire company. In addition, we serve on local boards, support our local county fairs, sponsor most everything in our community.

We really do invest in Queen Anne’s County, because this is our home base, but we also do it in the surrounding counties. Banks historically have been serving on charitable boards and serving on the social boards of organizations that make these communities tick. I would like to complement our people; we do that well.

CEOCFO: How many branches do you have and are you looking to grow that number in the near future?

Mr. Cashen: We have eight branches now and we just received approval for a ninth branch. We are building that out and it probably will not open for another sixty days. By the end of the year, we will have nine. That was to fill in a hole that we had in Dorchester County. Not a lot of people are opening new branches anywhere anymore but it was a hole that we were trying to fill for us. Beyond that, I do not see other branch opportunities that are necessary for us at this point.

CEOCFO: When you add branches is it through acquisition, de novo or a mix? Is branding important for you?

Mr. Cashen: We are doing one now that is de nova. We have not opened a branch prior to that in 15 years, most of which were de novo. We bought a branch about fifteen years ago from another community bank so our Church Hill branch was a purchase. We have done a little bit of both.

Branding at the branch level is very important. A lot of our branches look similar in that they are brick with a colonial look to them with columns, so you can tell it is a Queenstown Bank. We are in the process of upgrading the interiors of our branches. We have done our Chester Branch which was the first one and now we are going to march through the rest of them just to make them feel more contemporary. We do have an “It’s A Wonderful Life” look to some of them so it is time to upgrade.

We are bringing in the technology to help serve the existing customers and to bring in the younger people. The way an interior and exterior looks sends a message to people as to who you are and what you are committed to. We are looking to upgrade our interiors of our branches to show our commitment to being “current”. We changed our logo, colors and tagline after I got here. The one prior had been around for about forty years. I am a believer that you have to refresh that stuff to make it current and make it pop and make it contemporary. We went through a rebranding four years ago that has really been well-received and looks good. It feels more current and that is what we were trying to accomplish.

CEOCFO: Since 2019, we have seen COVID and now inflation and economic challenges? How have you helped your customers deal with these challenges?

Mr. Cashen: I think the good thing about a small community bank is you can understand your community easier. If you are a large national bank and you are dealing with what is going on in Charlotte, LA, and Chicago, all those cities move at a different pace and have different issues. Here, it is pretty straightforward, we understand our community. Some of the programs the governments provided were very helpful but we did extensive use of deferrals for peoples’ payments and mortgages and even on the business side. At one point, we approached almost 20% of our portfolio that was on some type of a deferral. They changed some accounting rules that made it easier for banks to do that, it had to all come together so they changed some of the rules to allow banks to do that and it helped our communities greatly. On deferring the payments, we went interest only on some of the people for some period of time to lessen the burden and just worked with our customers.

The PPP program was very important for our community. We did loans as small as $500. We had people in our community that had tried other places but were too small to get the attention of those other lenders. We were willing to serve everyone. We did it for mostly customers, although we were open to anybody. We did the small loans because $500 was as meaningful to some businesses as $50 thousand was to another one. We felt very good about those programs, our response, our ability to listen to the stories of people and how they were impacted and try to work with them through that period.

CEOCFO: What is your management style? Are you more hands on or depending on your officers?

Mr. Cashen: I am pretty hands-on. However, I have over the time been able to let people run their own show. It is still a small group of us and a small bank and we see each other all day, every day. As you develop your team and you get trust built both ways, you have to let them do what they need to do.

CEOCFO: What is your current funding position? Is reaching out to investors an important role for you as CEO?

Mr. Cashen: We are a stock-held bank. The stock is owned mainly by people that live in the community. We have no large shareholder. In some small community banks, there is some family or someone who owns a big slug of the company, but we do not have any significant individual shareholders. It is a little old-fashioned in that, for people in the community, it is an honor or almost an obligation to own stock in the local bank. So, I would guess that 80%+ of our shares are owned by people that live within a 50-mile radius of this building. We do not have institutional ownership, we are not public, so we report our performance to our shareholders and pay a nice dividend. It is not part of my world to be out in the investment community. That is not how our ownership base works.

CEOCFO: In closing, what sets The Queenstown Bank of Maryland apart from other banks in the community?

Mr. Cashen: Our competition tends to be other community banks more so than the larger national banks. Although they have a presence here it is not a deep presence. This is changing a little bit, but community banks on the eastern shore have always historically been geographically based. We are Queenstown Bank and we have traditionally covered Queen Anne’s County and Queenstown. Geographically, each community had its own bank at some level but that has consolidated over time.

We differentiate ourselves by our service. People like to be with us because we are responsive. You can get to a human being very quickly and not get lost in the hierarchy of the bank because the bank’s management is pretty flat. We can get to decisions and our board is very available. We still have a weekly meeting with our board to approve loans requiring their approval. Our board is very involved. We can move very quickly and we have the technology to compete with other banks. We try not to just compete on price because that is a big battle but we pride the service, responsiveness and an understanding of the community, that people are looking for.

The Queenstown Bank of Maryland | Kevin B. Cashen | Maryland Banks | The Queenstown Bank of Maryland – Staying Relevant as a Small Community Rural Bank in a Changing Banking Market | CEO Interviews 2022 | Community Banks

“Figuring out a way to stay relevant in the banking community through our products, services and technology while honoring our heritage as a community bank serving the needs of the people and businesses in our market.”
Kevin B. Cashen

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