After spending more than seven years working for Bank of America Corp. and Capital One Financial Corp., Ed Barry in 2012 took over as the CEO of a community bank with a specific goal in mind. He wanted commercial and industrial (C&I) deposits to drive the business just like they do at those larger banks.
“At the big banks, we’ve always led with deposits and TM [treasury management], and then you pull the loan through,” says Barry. He has been driving that message home for the past 14 years at Capital Bank, a subsidiary of $3.8 billion Capital Bancorp, based in Rockville, Maryland, where he now serves as CEO of the holding company. The bank serves customers in five states and the District of Columbia.
At Capital Bank, Barry started preaching from day one that noninterest bearing C&I deposits lead to more C&I loans and more treasury management customers, which eventually leads to more high-margin fee revenue. “When you look into the business banking groups at much larger banks, about 20% of the revenue is TM revenue,” he says. “Small-to medium-sized businesses are where I think a lot of community banks really play and where they can be really competitive.”
Before he could fully execute his vision, Barry first had to convince Capital Bank’s board of directors and front line salespeople that earning those deposits was worth a major shift in strategy. “We were very heavily wholesale funded when I got here, because it was the classic mentality — loans, loans, loans. Just find any deposit, right? They’re all the same to fund the loan. And if you could find cheap ones, great, but don’t pass on a loan — ever,” he says, describing the former mindset at Capital Bank.
Scott Earwood, head of the community banking division at the digital solutions provider White Clay, says the struggle to change that mindset among community bankers remains. “The cheaper way to get funding is through [C&I] deposits,” he says. “So, in that way, do anything you can do to entice them to come over. And by the way, if you get the right kind of deposits, you can easily afford discounts on loans.”
Embracing Deposits
Commercial real estate (CRE) lending still dominates the portfolios of most community banks. Federal Deposit Insurance Corp. (FDIC) data from the first quarter of 2026 shows CRE loans accounted for 34.44% of total assets for banks between $1 and $10 billion, a record only surpassed once in the last 60 years, in 2024.
CRE loans accounted for just 26.23% of total assets at Capital Bank in the first quarter of 2026. Barry has seen the margins on CRE lending continue to shrink, which is why he pushed his employees and directors to change their mindset. He also brought in new employees who worked at larger banks. “We’ve beefed up that over time and continue to hire treasury management product salespeople and deposit salespeople who have no loan goals, so they’re not encumbered by chasing the loan,” he says.
Those salespeople instead lead into conversations with potential C&I customers about things that directly relate to moving their deposits. “‘How do you get paid? Who pays you? Are you concerned about fraud? How are you managing fraud in your business?’” Barry says. “I think it really fits with a community bank mindset of how do you be an adviser and not just a product salesperson, because you’re really getting into a deeper understanding of the operating cycle of a customer and trying to kind of map your payment solutions and deposit solutions to that.”
Barry also believes in upgrading the bank’s tech stack and is now also putting that into practice. Capital Bank uses White Clay’s data analytics platform to determine the profitability of customers. The company says the platform helps banks with pricing, as well as relationship, sales and performance management.
Barry says the tool points his sales team in the right direction. “When a customer’s really profitable, now you can go, ‘OK, well, why? What are we doing that this customer is so much more profitable than this one that is less profitable?’” he asks. “And it gives you a little bit of a road map of things to play with to drive profitability up.”
The change in philosophy and the use of data has resulted in the growth of C&I deposits at Capital Bank. Barry says they now account for 23% of all bank deposits and — as he predicted — the loans eventually followed. C&I loans accounted for 19.2% of Capital Bank’s total assets in the first quarter of 2026, according to a Securities and Exchange Commission filing. That is well above all banks with assets between $1 billion and $10 billion, whose C&I loans average just 10.5% of total assets, according to the FDIC.
It also represents a major change for Capital Bank. Just five years ago, C&I loans accounted for only 7% of its total assets.
Growing Treasury Management Revenue
Capital Bank also grew C&I deposits by upgrading its tech stack to provide better treasury management services to those customers.
The bank uses Fiserv Premier as its core and added Q2 Holding’s treasury management platform two years ago. That allows the bank to offer a wide range of traditional treasury management services such as ACH and wire transfers, remote deposit capture, merchant and payroll services, and Positive Pay for fraud protection. But the bank also offers niche solutions for certain industries. By utilizing a layer of application program interfaces (APIs), the bank can plug in and offer Z-Suite Technologies’ Zescrow service for maintaining and servicing escrow, trust and custodial accounts, and its ZRent tool to streamline the rent process for tenants, landlords and property managers. The bank also integrates with Qualia’s title closing service software.
Earwood says White Clay’s research shows the average treasury management customer brings $1,300 per year into community banks in the form of fee revenues. And he says maintaining a nimble approach to technology is key for community banks that want to keep or add to that. “If you don’t have the TM that can handle the cash management that the client needs, they might have to go to a larger bank that can do all this,” he says. “You’ve done everything right, just haven’t evolved your treasury management stack maybe the way you needed to.”
Barry says community banks might not be able to compete with large banks on everything, but new, targeted technology solutions do allow them to compete head to head in more niche industries, including money services, cannabis or businesses involving foreign entities. While those come with more risk, they also provide community banks with some major upside. “You’ll have high monthly fees to handle all the compliance costs,” Barry says. “That becomes very profitable.”
While more than 20% of Capital Bank’s overall revenues are from fee income, treasury management fee revenue still only accounts for a small part of that. Barry says one of his remaining goals is still to see those TM fees account for 20% of all business banking revenue like it does at his former employers. “It’s moving quickly now as we bring in more people,” Barry says. “We build out the technology and the products, so it’s starting to move.”
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