T. Heath Fountain is the CEO of Colony Bancorp, Inc. (NYSE: CBAN — $433 million), a $3.6bn asset bank headquartered in Fitzgerald, GA, and operating in some of the most promising markets in the Southeast. Since Mr. Fountain became the CEO in 2018, he has led the company’s transformation, completing three full bank acquisitions, with an additional one pending. Along the way, he has made additional acquisitions in the insurance space. Under his leadership, Colony Bank has continued to strengthen its core banking franchise while expanding its capabilities and positioning the company for long-term growth.
Prior to joining Colony Bancorp, Mr. Fountain served as President and Chief Executive Officer of Planters First Bank in Hawkinsville, Georgia, from 2015 to 2018, and as Chief Financial Officer of Heritage Financial Group and HeritageBank of the South from 2007 to 2015. He has over 25 years of experience in the banking industry, with experience spanning executive leadership, financial management, strategic growth, and mergers and acquisitions.
Editor’s note: This interview was conducted with help from Perry Weinstein. Sunday’s Idea Brunch is looking to interview more exceptional small and mid-cap CEOs. Please send nominations to edwin@585research.com
Heath, congrats on all your success and welcome to Sunday’s Idea Brunch. What attracted you to pursue a career in banking?
I got into banking by accident. I started my career in public accounting with a regional firm, and I spent a lot of time auditing banks. I was intrigued by the banking industry, and ultimately ended up going into banking on the wealth management side. I did that for 5 years before getting into management on the finance side of banking as a controller then a CFO.
What have been the keys to success in transforming Colony?
There have been a lot of things that we did to transform the bank, but really it comes down to culture and talent. When I got to Colony, they had been the same size for about a decade, and finally finished cleaning things up from the great financial crisis. I knew that to turn it around, we would have to instill a culture that embraced growth and high performance. We very methodically built that. As we did that, we were able to see many people on the team step up and embrace it. At the same time, many people on the team didn’t want to be part of a high performance culture, and most of those people self selected out. As they did, we brought in new talent, including many people I had worked with at other banks. One of the most important things a CEO can do is to shape and communicate the culture. The second thing is to have the right people in the right seats doing the right things. Thankfully, we have been able to develop talent, and bring in outside talent, and those people are in the right roles and embrace our culture.
The acquisition of First Reliance has given you a regional presence in the Southeast and Colony will be nearly $5bn in assets. Talk a little about the lessons you learned integrating Colony’s prior three acquisitions and how that has shaped your strategy regarding the First Reliance deal?
We try to learn and get better in everything we do. After each acquisition, we perform an after action review so that we can go over the things that we did well, and the things that didn’t go as planned. We have a very well documented playbook that we use to integrate an acquisition, and we update that based on those after action reviews so that we can do better the next time. As that list grows and is refined, we get better each time. The biggest lessons we learn each time comes down to things we could have done a better job of communicating. I tell our team that 90% of problems come down to some failure in communication, and if they think a problem we have isn’t about communication, they better go back and dig deeper because it’s highly likely it was a communication issue. So we take particular care to keep increasing our communication, trying to keep the new team members and new customers apprised of the process and what to expect. With First Reliance, one of the things we are doing different is creating a leadership orientation process, where we are taking the leaders at First Reliance, who will be leaders in the combined company, through a process where we talk about our culture, we explain why we lead like we do, and prepare them to embrace our culture, meeting structure and communication cadence. I think this is going to be helpful in ensuring that this is our smoothest integration to date.
Since you took over in 2018, how have drastic shifts in rates and geopolitical and technological environments affected your strategic priorities and how you run the bank?
Just prior to the rate increases, we had grown the bank from about $1.2 billion to over $3 billion, through both organic growth and through 2 acquisitions. Through that, we did not focus enough on interest rate risk, and that really hurt us rates moved up rapidly. As I look back now, it is probably one of the best things that could have happened to us. I was fortunate enough in my career to be at a bank that was able to be offensive during the great financial crisis. I learned lessons about credit risk by sitting across the table from folks who messed up real bad, and we were acquiring their bank through an FDIC-assisted acquisition. That was impactful to me, and I learned to be very careful about managing credit risk. But I got to live the interest rate risk lesson firsthand, and I am not going to make that mistake again. I am proud of how our team responded, and we are a better bank today for having gone through that. As rates rose and our margin declined, it forced us to look at our expense base, and do a better job of managing headcount and noninterest expenses. We bit the bullet early, and cut headcount and other expenses. That allowed our performance to remain stable while margin decreased. And now that margin has improved for the last 8 quarters, we’ve seen our performance improve above the median of our peer group, and we see that improvement continuing.
The pace of change in financial technology has been another major challenge, but one that I feel like our team is doing a great job of managing. We like to think of our strategy not as cutting edge, but being a fast follower. We brought an innovation officer several years ago, and that really helped our team develop a culture of innovation. We participate in several fintech investment funds, and that allows us to stay up to date on what’s out there, and what’s coming down the track. We have great support from our board on this. The chairman of our technology committee is a heavy user of digital banking tools, and he keeps pressing us, with the full support of the board, to keep leaning into technological advancements. We’ve been an early adopter of AI advancements as well, and I feel good about the steps we are taking to drive both revenue and efficiency as AI opportunities evolve. With AI, and really with all technological investments, the key is really to get as much of the team as you can involved. If they embrace innovation, you will be successful. If they don’t, you will fall behind the curve. We are in a great place now, and will continue to drive our innovation culture as we move forward. It’s an exciting time, and I am excited to see where all it can take us.