Host Lisa Kiefer interviews President & CEO of New Resource Bank in San Francisco, Vince Siciliano, about running a bank with purpose and rethinking what capitalism stands for by achieving environmental, social, AND financial returns for local communities - the bank as an agent of change.
TRANSCRIPT
Speaker 1:Method to the madness is next.
Speaker 2:And
Speaker 1:you're listening to in [00:00:30] method to the madness of biweekly public affairs show on k a l x Berkeley Celebrating Bay area innovators. I'm Lisa Kiefer and today I'm interviewing Vince Sicilian [inaudible], the president and CEO of new resource bank in San Francisco.
Speaker 3:Okay.
Speaker 1:Welcome to the program. [00:01:00] Thank you, Lisa. Hi. Nice to be here. Yes. I don't typically think of a bank as something that we would, uh, organization that we would interview. It's just not, you know, when you think of innovation, I don't think of that, but I've heard a lot about new resource bank. I understand that you coined the term where does your money sleep at night? You think of a bank as an agent of change. So why should our listeners in the bay area think of your bank as an innovator?
Speaker 4:Because actually your money doesn't sleep [00:01:30] at night. Your money spends the night somewhere. Uh, in other words, you put your money unless it's in your mattress. It's in a bank and it's not living in the vault. It's actually out somewhere. So if you could imagine your dollar bill was a little miniature magic carpet and you could sit on it and fly around the world and see what your money is doing at night where it's spending the night, you might not be so happy. And we, we believe that money in banking can be used to do good in the community. Tell me some of the examples of where money can be that you're saying that we wouldn't be very happy about, [00:02:00] uh, open, open pit, uh, coal mining in West Virginia, blowing off the mountaintops of West Virginia or going down and producing palm oil in Indonesia. A lot of trade finance from the American banks will, we'll do that sort of thing.
Speaker 4:Or if you get away from the loan side, there's another whole activity called the financial economy as opposed to the real economy. And a lot of banks really spend most of the life in that financial economy. And what is that? What are you talking about? The financial kind of me means that banks will invest their deposits and there are other sources [00:02:30] of funds in a speculating in commodities and foreign exchange. And buying bonds and stocks and hedging activities. Some small fraction of which may be really legitimate, but most of which is just trading for trading sake to make profit. And when you hear some of the big catastrophes that have happened over the last couple of years, it's usually been around the the financial economy where those catastrophes have happened.
Speaker 1:Okay. This is really an unusual thing to hear from a bank. I think maybe I'm wrong, but I mean is there anyone else, this kind of thing, but you,
Speaker 4:[00:03:00] well there are a couple kinds of banks that I would say are doing good things. So in general, the community bank, the more local regional banks that are headquartered in the community, if you look at their balance sheet, you're going to see that most of their funds are invested in loans that help the community grow. So the start with that would be there. Some banks are what are called community development financial institutions, and they are really focused on the inner cities and generating jobs. But as far as the bank like us that's trying to achieve wellbeing for the community and the planet, there's really only a handful of us in [00:03:30] the country. And you have one location in San Francisco, one location downtown who your clients are? I've, I've read some of them. Cowgirl creamery. So you know, a lot of small companies. Tell me about some of them.
Speaker 4:So we lend to companies that we think are helping to build this or achieve this wellbeing in the community. So one whole sector would be organic food for example. So a cow girl, a hog island, Strauss creamery, alter ego, companies like that are all our clients and we're very good at helping young and not so young middle-sized [00:04:00] organic food companies grow. Another area would be having to do with clean energy. So solar energy, bio gas digesters, a lot of energy efficiency. We do a lot of lending in that whole area. A third area would be in the real estate world. A buildings that are built, uh, to be energy efficient. What's called lead construction or retrofits for those buildings. That would be another area for us. In the fourth area, a very large area is working with nonprofits. We have a lot of nonprofit clients, many of whom don't borrow.
Speaker 4:They may deposit, [00:04:30] but some of whom do borrow. But beyond all that, anybody can be a sustainably minded business, a triple bottom line business, a business that's looking to achieve not only financial but also social and environmental returns. And that's the kind of client we want. And speaking of that though, you said that you want to go even beyond that, you want to go beyond the triple bottom line and talk about the difference that purpose and values make from an individual perspective. How do you go beyond triple bottom line and as a banking institution? Well, in the [00:05:00] end I think that everyone has a sense of purpose and should, should connect with that. And that's not something that's often talked about in the marketplace. Businesses have a purpose, but it's usually to maximize shareholder value. But if you really step back and look at your life, work and businesses, just a part of it.
Speaker 4:And I guess the question is where do you get your sense of wellbeing from? Where do you get your sense of purpose in life from? And it's not normally from work, it's not really from the marketplace. But as we, as we grow up in this country, we're really pushed into marketplace. [00:05:30] A definition of self worth that comes from our job. It comes from the approval of others. It comes from, you know, what you own, what you're doing, what other people think of you. And, and really what we're saying is that's not a sense of wellbeing. It doesn't come from the marketplace. It should come from your values, your sense of purpose. You're your family, your, your work. Those are things that your sense of spirituality, your connectedness with nature. That's where your sense of wellbeing, you should come from, not from the marketplace. I'm kind of shocked [00:06:00] to hear this coming from a banker.
Speaker 4:What do your peers in this industry think of what you guys are doing? Well, I think a lot of them think we're nuts. Uh, that, uh, really as the Wall Street Journal would say, yeah, if you deviate from profit maximization pushing to the very edges of the boundaries of into the gray zone of what's legal, if you deviate from that, you're really being inefficient and ineffective in your use of capital. And so we really call that unconscious capitalism, unconscious, capitalistic conscious [00:06:30] capital conscious conscious capitalism says, well, what are the values that we should bring into the balance sheet? What is, what about thinking about the future? For example, you know, most businesses have a discounted analysis of whether they'll do an investment or not. And if you look at the future that way, uh, frankly the value of the future is, is nothing that doesn't have a seat at the table.
Speaker 2:[inaudible]
Speaker 1:[00:07:00] if you're just tuning in, you're listening to method to the madness. A biweekly public affairs show on k a l x Berkeley Celebrating Bay area innovators. Today I'm interviewing Vince [inaudible], the president and CEO of new resource bank in San Francisco.
Speaker 5:[inaudible]
Speaker 2:[00:07:30] okay.
Speaker 4:You didn't found the bank. So tell me what was the impetus for the founding of this bank? Did you change the mission or was it always what you're talking about? The bank was founded with the mission of being a Green Bank and there were a couple of different groups that came together that were working [00:08:00] around that. Peter Lou was the, the fellow that really put the bank together and got it off the ground. The bank grew somewhat rapidly in the first couple of years. It ran into the recession and it really wasn't exclusively focused on this mission. There was a lot of what we would call classic community banking loans that were being made, but when the bank ran into its problems back in 2008 it was a chance to really in a way restart or refocus the bank and at that time I came in, new chairman, came in a number of new board members and new executives.
Speaker 4:Then as [00:08:30] we refocused the bank we said, yeah, this is our mission. It's to be a green and sustainable bank, focused on a new idea model for banking and really helping change the way people think about banks and all of our lending needs to be mission oriented and compatible with that model. That's great that you took something that was bad for most everyone in the industry and made that an opportunity. And I understand that Al Gore and his investment group got interested generation investment capital, original investor. They are no longer an investor, but they did come in at the founding of the bank. I think they definitely [00:09:00] felt an affinity. But I think that banking is not a growth industry. It's a much harder industry than many investors realize. Tell me what, what the mission of numerous resource bank is now that you are, their mission very simply is to help achieve wellbeing for people and the planets.
Speaker 4:And you might say, well, what is wellbeing? And I would ask you that everybody has a sense of what wellbeing is. And uh, and that's the nice thing about using the phrase wellbeing. Obviously it has to do with basic minimums of housing and schooling and education. And, [00:09:30] and, uh, but it goes beyond that. It goes, goes to problem solving problems. Are you solving? Well, we're really, we're really helping a lot of young companies get bigger companies that are triple bottom line focus that are trying to make a difference in the community that are not just profit oriented but worry about wellbeing. So how do you screen for these companies? I mean, you know, they have to be, they have to have the financials, but they also have to have this other ideal that you're talking about. Yes. So we have had our own, uh, internal survey that we would use with companies, a little questionnaire that helps [00:10:00] us understand what is their perspective on, on financial versus social versus environmental issues.
Speaker 4:And we are now actually converting that over. There's a company called B lab and there are benefit corporations that are of triple bottom lines. They came up with this. And so we're now using their survey, uh, beginning next month. But, but really this is a journey in the woods. Somebody can come to us and they may be financially motivated, economically motivated and so they're redoing their building for energy efficiency and they're redoing their, looking at their product [00:10:30] line and they're changing their supply and they're using recycled materials and they all, that all may be just an economic motivation and that's fine. We're not here to pass judgment, but they are moving along that journey of sustainability. We talk about the the the, the newer comers actually being learners and then they become achievers and leaders and champions as they progress, as they're both commitment and competency to the idea of triple bottom line grows.
Speaker 4:They move along this journey and we say we don't really care if you're a learner or a leader, [00:11:00] just that you're on this journey towards triple bottom line business. Speaking of triple bottom line, you got an award last year, best for the world. What does that mean and how many other banks, if any, were given that award? So actually it was all across all B Corp's. There are around 1500 B Corp's in the world, most of them in the u s and everybody is tested every year or two to say [inaudible] manufacturing and everything among all companies. The top 10% of all companies are called best for the world. [00:11:30] So that was quite an honor for us. It really is our DNA. It's really who we are. It's how we run internally. Uh, our values of transparency and community and sustainability and teamwork. All of these are internal as well as external practices.
Speaker 4:I'm interested in your employees. I read that not only are your employees familiar with banking, but they're all doing, it sounds like pretty things outside of the bank that have to do either with community or sustainability. Can you talk about that? How you screen [00:12:00] for that kind of person? Because some of the challenges in banking, I would think we would be finding entrepreneurs who also understand sustainability. Our biggest challenge when people ask me what, what is our biggest challenge? It is finding financially oriented people, bankers that are also mission-oriented. Uh, at the beginning of the bank we found a lot of mission oriented people, but they didn't have the financial background. When you say missionary you mean your mission? This mission about triple bottom line sustainability. Then we found more bankers, but they weren't particularly [00:12:30] as mission-oriented as we wanted. And so really now we've gotten very, uh, thorough and narrow about finding people that are both financially oriented and, and get our mission.
Speaker 4:There's an expression, you know, get it wanted and can do it. And that's what we want people to get it, want it and can do it and therefore they'll fit into the bank. Well, but wellbeing as a personal concept too. So we want everybody to be achieving wellbeing. And that means how do you look at their life and how do they look at what they do outside of out of their work life? In fact, we've [00:13:00] started a process, we call career conversations, which is to really crack open the, the, the pretend belief that someone's gonna work at a company for the rest of their life. They're really not. Uh, so let's not pretend they are. And let's, let's open the door to where do you want to be in five years and how can we help you get there. It's a different way to interact with your employees.
Speaker 4:And I think at first people don't believe it. They feel like it's, no, I'm, maybe I'm being a trader if I, or they think you're just trying to find out if they, if they're going to leave. But that in fact, you know, we had an example of an employee who came and said, well, [00:13:30] I'd eventually like to have my own little business that services nonprofits does the back office for nonprofits. But in order to get there, I'm going to need to understand accounting better. And I'd love to spend a couple of years in the banks finance department that would help prepare me for that. Terrific. I mean, I would welcome that. And then eventually they'll, they'll leave and they'll start their own business and there'll be a raving fan and that'll be terrific. How many employees do you have? I think about 42 employees. So that's small enough that you could actually know everyone.
Speaker 4:Oh yes. Absolutely. So I understand that one of them works for Amazon Watch. [00:14:00] One of your vice presidents is on the climate panel of San Francisco City of San Francisco. I mean they're doing all these really interesting outside things that aligned with your mission aligned that happened after or did you pick them because there was there? I would say a lot of that came after they were already employees, but they certainly did bring their own interests and their own passion for the mission with them. But we promote that. We want them to be involved with these, these community building activities that it's great and we want [00:14:30] them to discover all the skills and passion they have in life and be able to, to exercise that. You talk about helping small businesses. Tell me why an individual would want a bank at your bank. Like let's say myself, what would be my motivation?
Speaker 4:Well, we go back to the question of where does your money spend the night? And so do you know what your money is doing? And so at a bank like new resource bank, we're saying that you can see where your money spends the night. We, we have reports that show quite clearly what our loan [00:15:00] portfolio looks like, how much money we've let into organic food or alternative energy or nonprofits. And uh, that's all our lending is, is mission oriented. It has been for the last six years. It's pretty transparent. You can see what we do. So as opposed to saying, I'm putting my money in one of the big banks. In fact, I like to ask the question, not only where does your money spend the night, but does your bank have convictions? If you think about that word, convictions for a moment, it's double edge sword there.
Speaker 4:One kind of conviction, which means values. The other kind of conviction [00:15:30] means have you been convicted of a crime? So if you look at all the banks that have recently been convicted of rate fixing for international funds or many of the other crimes that, that they've pleaded no, not guilty to now they've actually pleaded guilty to, yeah. Well, even finding a local bank, quote unquote is kind of difficult because you find out that your local bank is actually owned by a big French bank or a, you know, it's, it's not so easy to know, but there are 30 or 40 local banks in the bay [00:16:00] area and you can usually pretty easily find out what you're right. Sometimes they have a foreign parent, but most of the time, uh, you can make it more difficult to know where your money sleeps. That's right. And credit unions are another good place to go because they lend exclusively in the community so they, they would be a good place too.
Speaker 2:[inaudible]
Speaker 1:if you're just tuning [00:16:30] in, you're listening to method to the madness of my weekly public affairs show on k a l x Berkeley Celebrating Bay area innovators. Today I'm interviewing Vince Sicilian, the president and CEO of new resource bank in San Francisco.
Speaker 5:[inaudible]
Speaker 2:[00:17:00] okay.
Speaker 4:Does this mission that you have for new new resource bank, does it come back from your early years, say at Stanford, getting a biology degree, getting a master's here in Berkeley and environmental planning? Are you hearkening back to your early values and, and that's what you've brought to banking, or did you always have that? I was an accidental banker. I had no desire [00:17:30] to be a banker. I don't know if anybody grows up wanting to be a banker. Actually. And a, my wife also went to Stanford and Berkeley. She studied Chinese history and language. She wanted to continue that in Taiwan where Stanford has a program. I needed a job, like we couldn't just move to Taiwan. And my father, uh, called someone he knew at Bank America to say, hire my wonderful son. And so I did not have their normal MBA sort of profile.
Speaker 4:And when I was hired at Bank of America, I remember, and we were sent right [00:18:00] to Asia to go to Taiwan, which was, which was the plan. And I remember being hired and on the way to Taiwan, we stopped at the divisional office in Tokyo. And I was told I was a legacy hire. Uh, which meant I was someone who was hired. You really wasn't qualified. It was more because of what the Chinese would call Guangxi or connections. And, uh, but I ended up spending 10 years, 10 very good years with Bank of America, seven years in Asia. And I discovered that the most interesting part of banking is that you're supporting other companies. You're really involved. [00:18:30] It's really the business of everyone else's business. So eventually I left B of a and became the CEO of a local bank in San Diego and I've never looked back.
Speaker 4:I've been a banker for the rest of my life. Uh, but it was accidental and I've always been values oriented. And this opportunity here in the bay area when it came up was an opportunity to bring back in not just values of integrity and transparency, but also the values around environment and community and the future. And it's perfect cause it's San Francisco. I mean you, you've got a great audience [00:19:00] there and people who really understand the concepts, it is perfect. People do understand. And I think one of the, one of the great, uh, weaknesses of capitalism is not only that, it doesn't price in a lot of these values we're talking about, but it really discounts the future. Meaning that, uh, we don't give much weight to the future. We really are so present oriented. And what I like to do is ask a question. Uh, if I were to give you with $1,000 right this moment or $5 million in a hundred years, which would you take?
Speaker 4:And [00:19:30] uh, and don't worry about your, the credit risk. It's going to be with the u s treasury, unless you think the government's going to fail. It'll be there, it'd be bitcoin or whatever, but you'll get your $5 million in a hundred years or a thousand dollars now. And, uh, most people I should ask you, what would you, what would you take? I'd take the thousand dollars now. So most people will take the thousand dollars now. And when I asked them why, it's because while I'm out around in a hundred years. Well, that's true. And that's the very point. You're not around in a hundred years, but what would the, what's the value of [00:20:00] the lives of your grandchildren in a hundred years? And most people will say, well, that's priceless. So what's the present value of priceless? Well, it should be priceless. But in fact, in our economic system, the present value is really nothing. Uh, the net present value of any future number after a hundred years is very little.
Speaker 4:5 million in a hundred years is only worth 1000 bucks a day. That does not buy you a seat at the table. So we aren't making decisions for the long run because our economic system doesn't encourage us to. It discourages us from that. So what do we [00:20:30] do about that? That brings you back to conscious capitalism, that it also brings you back to the need for the government to take that longer term perspective. And frankly, that's at the heart of the climate change debate. I hate to call it a debate, but that small fraction of people that doubt climate change, because if you admit that there is climate change caused by man, then you have to admit that the marketplace can't handle that. It's not pricing that into goods and services. So that means the government has a role to play in order to recognize the value of a hundred years from now in today's [00:21:00] transactions.
Speaker 4:B Corp and Saxby and groups like that are putting, I mean I think that they're accelerating that conversation that certainly a CSB and and uh, the FASBI as well. They're all beginning to require disclosures. That type of valuing companies that do take into consideration. Yes. Triple bottom line. And part of the, uh, part of the divested invest movement with respect to fossil fuels. The argument is that a lot of the so called reserves of the oil companies really are valueless [00:21:30] because if we really do want to control climate change, we're never going to be able to spend that much carbon into the economy. So you have one location in San Francisco and I assume that in the future you want to have more than one location, maybe you don't. So what does the future bring for new resource bank and how will you scale up if you are going to grow to be something across the nation?
Speaker 4:Maybe we would like to scale it up. We are now lending outside of the bay [00:22:00] area. Outside of California. We have clients up and down the west coast. We have clients in other states and even some on the east coast with electronic banking. It's the idea of a lot of locations is unnecessary. So in the bay area for example, one branch will do, but we will look at other cities. We will look at southern California. We'll look at some of the obvious cities around the western half of the u s that how about farther out, what about New York City and and Massachusetts, places that are in like mindset about sustainability [00:22:30] and certainly like mindset, but I think we want to start with something that's geographically closer so that a, I mean bank skin can get in trouble when they go across the country and open offices and they don't really know the area very well.
Speaker 4:So we would want to stay in the western half of the United States for now, but go to communities that are like minded, that share the values, that have an infrastructure and an economy that's already moving in this scale that like how do you finance that kind of expansion? Well, we have capital and we're basically, it's about leveraging our capital, so we have raised capital [00:23:00] several times. We have very supportive shareholders and we will go back for more capital or or bring a new shareholders as we go to some of these other locations. You talk about your mission helping business clients meet the challenge of operating sustainably and profitably, but how do you actually help them? I know you know you can give them money, but I assume you're talking about a different kind of help. Yes, money. We help our clients. Sure. People need money as they grow for what's called working capital, but [00:23:30] let's take a young organic food client that has achieved some sales and now they're beginning to sell into whole foods or the beginning of the sell into a Costco.
Speaker 4:We have lots of clients that sell into whole foods and Costco and so there's certain tricks of the trade if will. There are certain challenges that come to come about when you're signed at Costco or whole foods. Um, we have a network of these organic clients, so our, our folks are able to advise our younger companies, our newer companies, uh, and provide them with some [00:24:00] expertise. That's nonsense. Like industry consultation, non right industry consultation, strategy ideas, networking ideas, marketing ideas that are different from just providing a line of credit free. Absolutely customer service. You can compete, we can compete on the basis of being experts in finance, but lots of banks are experts in finance. That's not really the goal. The idea is not to be promoting ourselves, but really is to promote, is to be promoting our [00:24:30] clients. So get to the other side of the table and understand what the client is passionate about, understand what they want to be best in the world about, understand what their economic engine is and then be supportive on, on a much broader set of dimensions.
Speaker 4:Before we were running out of time now, but I want to give you a chance to talk about how you got personally invested in the idea of community sustainability and working in a place that aligns with your personal mission. [00:25:00] That's a great question and it's a little bit more philosophical. Uh, I think that, you know, we're brought up to one to achieve business success. How high can I go? How much money can I make, what kind of house in car while I have, et cetera. The problem is it's never so simple and you went ends up with failures. So I've had failures in my life. I've been fired from jobs and when I've been fired, I feel bad about myself, which means that my sense of significance and security has been totally wrapped up in my work [00:25:30] rather than in something else. And you know, we have this expression here in the bay area that people say, I want to do good, but I want to do well and uh, I don't want to have to compromise on my investment return while I'm doing good.
Speaker 4:So really what they're saying is, I want to do well and maybe I get to do some good. Or actually I think what they're saying is I want to do well, just do well and then I can make a lot of money and then I can be a good partner and do good later on. And I think that's the really the wrong dimension. It's really not about, uh, about [00:26:00] doing good and doing well. It's really about being well, how am I as a human being? How can I live my life in a way that's centered in my values and community and sense of purpose and connection to nature and spiritual life? How can I be well and then go out into the world and work and do good. And I think it's, you think that will follow. That's a much different perspective. And then we, you're rooted, you're centered, you're going to be stronger as life goes up and down.
Speaker 4:You will do good in your life. And um, you obviously you need to make money and survive and be able to retire, [00:26:30] but it's a whole different kind of passion and focus. Uh, and, and connectivity with community. It's really moving from ego to eco, from, from ego being edging good out to Eco, which is embracing the or embracing community. It's a whole different way to live your life. And I've learned the hard way that that's where I want to live my life. One thing people don't realize is the power they have to use their money to do good. In other words, they think of themselves as, oh, I'm just a small person. I don't have that much in the bank. But they go out [00:27:00] and they buy organic food. They go out and buy organic peanut butter. So why don't you use an organic bank?
Speaker 4:Why don't you see that your money carries your values and your money can be used as an agent of change in every single buying decision you do, whether it's your bank or the foods you buy or the clothes you buy. And that's, I want to encourage people to think of it that way. They have real economic power to do good with their money. No matter how much money that is, no matter how much money that is. My daughter told me about a study. People are actually much happier if they are [00:27:30] making a certain amount of money. Well with the study says is that once you make over you only need to make a certain amount and once you, once you go over that amount of money, which is remarkably small, it's in the 50 to 75,000 a year maybe per person a year. Not Happier if that's at all.
Speaker 4:Yeah, that's what it was. Anyway. That was pretty interesting. So if um, any of our listeners here in the bay area would like to get ahold of you, do you have a website or an email address where they can contact you directly or yes, the bank, yes there is. [00:28:00] We do have a website, new resource bank.com I'm on that website. My email addresses visa silvano@newresourcebank.com where people can call into our main number and they can ask for on the lending side a Gary Grof or on the depository side they can ask for for a Mary Resendiz or, or Janiece. Uh, so there are lots of people they can ask for, but you can feel free to email me as well. Well, thank you for being on the program. Fit is a great pleasure. Thank you.
Speaker 1:[00:28:30] You've been listening to method to the madness of biweekly public affairs show on k a l x Berkeley Celebrating Bay area innovators
Speaker 5:[inaudible].
Speaker 1:If you have questions or comments about this show, go to the Calex website, find method to the madness and drop us an email. You'll also find a link [00:29:00] to previous podcasts.
Speaker 5:[inaudible]
Speaker 1:tune in again in two weeks at the same time.
Speaker 3:Great. Nicole.
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