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VOL. 9 | NO. 29 | Saturday, July 16, 2016

Paragon Executive Touts Personal Touch of Community Banking

By Don Wade

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Robert Shaw won’t say that big banks don’t have their place in the industry. He knows better.

Robert Shaw and Michael Edwards pride themselves and Paragon Bank on having high-end service and knowing their customers very well, something larger banks might not be able to do. Technology also has played a central role in how Paragon operates.

(Memphis News/Andrew J. Breig)

“Larger banks do a lot of things very well,” said Shaw, CEO of Paragon Bank. “But community banks can do things on a more personal basis.”

Paragon Bank is now 11 years old and has four locations throughout the Memphis area, all on Poplar Avenue – stretching from its Grove Park location at 4515 Poplar Ave., Suite 108, to 7600 Poplar in Germantown.

“One of our competitors coined the phrase, instead of the Poplar Corridor it’s the Paragon Corridor,” Shaw said. “And we’re good with that.”

Michael Edwards, president and chief operating officer at Paragon, believes Memphis is an especially good fit for the community bank.

“Because Memphis is a small business city,” Edwards said. “Job growth in the region comes from small business. And community banks lend to small businesses and they generate net job growth and that’s what drives the economy.”

That connection also plays out internally at Paragon. Employees own stock in the bank.

Paragon was just a few years old, of course, when the recession tightened its grip on the country and Memphis. The bank’s staffing dropped from 65 employees to 55, but now has rebounded to 70 employees.

While Shaw is willing to give larger banks their due, he also knows from having worked at one that the employees of a big corporate bank based elsewhere might have trouble relating to local customers. Edwards says the large corporate bank typically is making loan decisions based on boxes they do or do not get checked, the decision on the loan ultimately being made higher up the chain.

“Just a hands-off approach,” Edwards said.

And that, he says, does not prepare those employees for a transition to a community bank.

“Sometimes people that desire to work at Paragon cannot because they just don’t have the background,” he said.

Like almost all banks, Paragon is seeing more of its transactions occur online. The first quarter of 2016 was the bank’s most successful in its history with a net income of $419,000. Revenues reached $4.2 million, a huge leap from the previous year’s first quarter when revenue was just under $3 million.

One of the key’s to succeeding as a community bank: keeping up with technology while also being nimble and offering personal service at a level that can be difficult for the big corporate banks to match.

“Our technology is good,” Edwards said. “We were one of the first banks here to offer remote deposit capture, where a business deposits a check from their office and doesn’t have to come to the bank.”

But when customers do come to one of the physical locations, that’s an opportunity. New customers are recognized with a ringing of a bell. Returning customers are greeted by name.

High-end service is easier to generate and maintain, Shaw says, precisely because front-line employees are literally invested in the company.

“They act and think differently,” he said.

Paragon also has developed a track record for community involvement. Each year, the banks’ employees contribute about 1,500 volunteer hours around Memphis. Each employee is allowed to volunteer up to 40 hours during regular work time.

The bank has a strong relationship with Make-A-Wish of the Mid-South and has given out 11 wishes in 11 years. Paragon also adopted a class at Hawkins Mill Elementary School in Frayser and trains students in the Junior Achievement program.

Paragon also has some of the same challenges faced by larger banks.

“There's maze of regulations coming out of Washington, D.C.,” Edwards said. “You can start out the year with a wish list for technology and at the end of the year you may have spent it all on compliance.”

Cyber security is another daily issue.

“The whole industry relies on each other to protect customers’ information,” said Edwards, adding that Paragon has added a board member that has a tech company.

Paragon offers multiple products in the wealth management and wealth solutions categories, ranging from investments and retirement plans to insurance.

“We grew very fast at the beginning,” Shaw said of Paragon’s early days. “In the short-term, we’re very pleased with where we are. We see the ability to continue to grow and improve on profits and add more customers.”

PROPERTY SALES 92 480 7,835
MORTGAGES 115 551 8,785
BUILDING PERMITS 325 1,167 17,068
BANKRUPTCIES 39 311 5,159