Community Banks Intown

Buckhead Community Bank President and CEO Marvin Cosgray (left) and Midtown Community Bank President Donly Chase. (Photo by Brent Sturgis)

The comforts of neighborhood living appeal to most of us; we want to live, work and play in a friendly community. We want to develop long-term and trusting relationships with our doctors, teachers, local shopkeepers and bankers.

The growing desire for hometown living has helped community banks increase in popularity and number over the past several years. Brian D. Schmitt, chairman and CEO of The PrivateBank, points out that in the State of Georgia, 21 new banks started up in 2006, 14 in metro Atlanta alone, with another 10 chartered for this year. “The Atlanta metro area has 125 different bank charters – and all of them are doing relatively well,” he said.

According to C. Wendell Daniel, senior manager with the CPA firm Cherry, Bekaert & Holland, there are several factors that led to the current favorable climate. Mergers and acquisitions have created opportunities for community bankers and investors alike, he said, and history shows that banks are a good investment with very little risk.

Schmitt shows just how strongly investors do trust banks with their money. Despite the uncertain economic picture after the Sept. 11, 2001, terrorist attacks, The PrivateBank (originally called Piedmont Bank) opened in October 2001, with every one of the investors who had intended to finance them coming through with the start-up money. The PrivateBank had $10.5 million in the bank when it opened, $2 million over the goal.

Positive factors such as Atlanta’s population statistics and low unemployment rates, along with the largest airport in the world and the influx of new corporations and businesses, draw the attention of entrepreneurial bankers. Bank of North Georgia’s President and CEO Kessel Stelling says that all of these things point to a lucrative banking market in the area and that it’s believed that the trend will continue for the next eight to 10 years – maybe more.
 
Service the old fashioned way

Probably the biggest reason for the ongoing growth in the industry, however, comes back to the personalized service they offer. “Community banks pride themselves on customer service even to their smallest customers,” Daniel said. “People like to know that decisions are made locally by the same people they know from church, school and civic organizations.”

Charlie Crawford, president and CEO of Private Bank of Buckhead, said that community banks allow their bankers to handle all their customers’ needs. In turn, customers like the advantage of having their business and individual needs taken care of by one person, instead of being sent to multiple departments and divisions within the bank.

While big banks have high employee turnover, community bank employees tend to stay in their jobs and develop long-term relationships with their clients, adds Donly Chase, president of the Midtown Community Bank, a division of the Buckhead Community Bank. And personalized customer care applies to bank officers as well as tellers.

“Since our bank directors are self-employed, self-made Atlanta businessmen, they loan money to others like themselves,” Chase said. “And we offer a quick turnaround when processing loan requests, since we don’t have to go through the complicated, layered application processes that big banks do, often involving their headquarters in other cities.”

Investment and involvement in the community, quick on-site loan decisions from local bank directors and seasoned professionals on staff are important features of community banks. Many senior bankers leave the big banks after acquisition; they find work at community banks, taking loyal clients with them, and offering customers their years of experience and knowledge.

Still there are challenges that community banks face – and meet head on. “At Georgian Bank, we hear stories daily of people who are tired of feeling like a number and not being able to get what they need done in the big banks,” said Penn Wells, Georgian Bank’s community executive in charge of the Buckhead banking office. “But today’s banking industry is somewhat polarized. Clients have the choice of either a galactic bank or a community bank that may be too small to meet their needs.”
 
Overcoming limitations

With the tenacity of David against Goliath, smaller banks use innovative thinking and cooperative strategies to give their clients the best of both worlds. Some banks manage to overcome their loaning limitations by joining with other non-competing community banks to participate in loans together.

Wells tells how, more than three years ago, Georgian Bank raised $50 million, the most capital ever raised at the time, to meet the needs of local business owners, high-net-worth individuals and metro-Atlanta entrepreneurs who needed the products and lending capacity offered by the big banks. Now, Georgian Bank can give them superior service by experienced bankers, along with a legal lending limit of nearly $35 million.
Other limitations disappear as technology advances. “A smaller community bank can’t offer the wide selection of branch offices that a larger institution can,” said Willard “Chuck” Lewis, president and CEO of One Georgia Bank. “However, with technology development on the rise and such things as desktop deposit, which we offer, this will soon become a moot point.”

By working with The Banker’s Bank, community banks keep up with Internet and technology-related services. Now they can provide nearly all the same services and conveniences as the larger banks – and in some cases, they’re ahead in the game – like online banking, check cards and remote deposit.

Stelling of Bank of North Georgia gives this advice to readers: “Do some homework. Create a list of community banks to consider, visit their Web sites, call and visit the local offices. Talk to the staff, ask about their culture and philosophy and what products and services they can offer. Based on your research, ask yourself some questions: Will they work hard to build a long-lasting relationship with you? Are you confident that they will be here a year or two from now? This evaluation will give you the knowledge you need to make an informed decision.”

Fidelity Bank President and CEO H. Palmer Proctor, Jr. sums up the benefits of using a community bank. “It’s all about service! We know your name and your business—and because of our smaller size, we can tailor solutions to fit your unique needs.”

COMING NEXT MONTH: Profiles of Intown's Community Banks