Following a model more Buffett than Trump, Georgia Bank & Trust rides out the storm, and prepares for the next generation of customers

 

Collier Construction Company is in the midst of a changing of the guard. Robert “Bob” R. Collier, Sr., has run the firm since 1963 in Augusta, Ga., but in recent years he’s been breaking in his grandson, Robert “Riah” Collier III.

Dan Blanton has been banking the senior Collier across three banks that he’s worked for, including his current one, $1.3 billion-assets Georgia Bank & Trust Company of Augusta. In the early days, Blanton kept blank notes clipped to the visor of his car for handling impromptu advances to Collier and other commercial customers. Of course, between stricter regulatory attitudes and technological advancement, you won’t find those above the visor of Blanton’s SUV anymore.

Construction and development lending is “home” to Blanton, who is the current chairman of ABA’s America’s Community Bankers Council, and president and CEO of $1.4 billion-assets Southeastern Bank Financial Corp. since 1997.

 

Southeastern is parent of the Georgia bank and of $123.6 million-assets Southern Bank & Trust, the company’s savings institution affiliate in South Carolina, founded in 2006. But just as the homes that Collier builds have evolved, so have the needs of such customers.

“Today, we’re keeping three balls in the air, as a builder needs to do,” says the senior Collier. “And the bank is our partner.” But to remain a partner, the bank has to adapt.

“I’m a technology geek,” says Riah Collier, as the pair get ready to show Blanton progress at a nearby subdivision the firm is finishing and in the midst of selling. Georgia Bank & Trust made the land acquisition loan and followed that with construction credit.

Something that Riah especially likes is the bank’s remote deposit capture service. He handles much of the company’s financials. Anything technological that can help get his job done is welcome. “The sheer volume of checks we get, between our rentals and our commercial side, is huge,” he explains.

Bob Collier notes that his generation was much more focused on the credit aspect of the relationship—“I want to know, Dan, if you are going to turn your thumb up or down,” he tells Blanton—and speaks of the importance of the personal connection between local banker and local builder. But clearly Riah likes electronic links as much as knowing personal links, and is as comfortable with a PDA in his hand as with a hammer.

Navigating new seas
The Colliers represent a transition that Blanton and his bank see more and more. “As my career ages,” says Blanton, 58, “I am banking second and third generations. It is fun watching my customers bring in the new generation and sort of handing things off.”

This isn’t the only transition affecting banking in this corner of Georgia. Some long-time community banks disappeared over the last decade or so, and, more recently, the state has seen several newer banks succumb to the effects of the housing collapse.

Community bankers everywhere are making their own shift from the days of overall strong growth and high profitability to a period when everyone will be tested. For much of its 20-year history, Georgia Bank & Trust has been “drinking from a fire hose,” as Blanton puts it, enjoying strong growth and strong profitability.

“No bank has done well lately, but over 20 years, his has done very well,” says Norman F. Wilson, president of Asset Advisors Corp., Augusta. Wilson knows this better than most. Many of his clients are among the approximately 800 shareholders of Southeastern Bank Financial Corp. and Wilson’s firm represents the largest holder, in street name, of Southeastern’s shares.

Wilson rattles off some figures from his computer. Most notable is the 12% compound annual return realized by anyone who invested when the company went public, from its family-owned roots, in 1989. And that’s not counting dividends.
The fire hose, for now, is coiled, however.

“In the economy that we are in today,” says Blanton, “I’m not earnings-conscious at all. I’m safety-and-soundness-conscious. I don’t give a rip about earnings right now.” Being a closely held—and mostly locally held—public firm helps. Much of the bank is held by a mix of family and directors. The family of Dan Blanton’s wife Patty—the Pollards—were instrumental in starting the bank and hold a large portion of the holding company shares.

“I don’t have to worry about investors’ short-term expectations or market makers’ expectations,” says Blanton. He has always valued the ability to grow organically. In fact, he prefers that to paying a premium to acquire someone else’s growth—and, potentially, mistakes.

“Overall, we control our own destiny and can manage for the long term,” he adds.

A corner of stability
“Everyone’s going to feel it,” Blanton says of the bad economy. He describes Georgia Bank & Trust’s situation at present, compared with other banks, as being “the tallest of the seven dwarfs.”

 

One thing his markets offer is long-term stability. They haven’t seen the booms nor the busts other parts of the country now suffer through—including the Atlanta metro area, 150 miles to the northwest. Builders, for instance, are in relatively good shape, and foreclosures aren’t an issue. Coming increases in the region’s military presence, especially from nearby Fort Gordon, home of the U.S. Army Signal Corps, will help.

The Augusta region “has never had any of the industries that can make a lot of money quickly, and because of that, they can’t lose a lot of money quickly, either,” says J. Douglass Cates, IV, a CPA with Cherry, Bekaert & Holland, L.L.P., who has known Blanton for decades. One of the area’s biggest strengths is the medical industry—the state’s medical college is based in Augusta, as are numerous major medical facilities.

“So, right now, we’re basically going through a banking cycle downturn,” says Ronald L. Thigpen, executive vice-president and COO, and Blanton’s right hand, detail man. “We aim to dot all the i’s and cross all the t’s, and come out right on the other end.” This is not to say that the bank, a heavy real estate lender both residentially and commercially, isn’t having its challenges—nonperformers, chargeoffs, and OREO all rose in 2008 and earnings were off. But compared to banks in other parts of the country, it isn’t hurting as badly.

Nevertheless, survival and solvency are Blanton’s watchwords. He holds little hope for significant profitability or growth in the immediate period ahead. But while some of this will take getting used to, he takes comfort because flash and experimentation have never been part of his company’s formula for success.

“We’re a plain vanilla banking company,” says Blanton. “So we’re not riddled with problems. And right now, plain vanilla tastes pretty good.”

Branching has helped the company through the years, as has expansion into South Carolina, just across the Savannah River. But the strategy has always been to expand using traditional business lines and conservative credit standards.

“If we don’t understand it, we don’t get involved,” says Dr. Randolph R. Smith, an Augusta surgeon and member of the holding company and Georgia bank’s boards. “This has kept us out of a lot of bad things,” adds  E.G. Meybohm, holding company vice-chairman, Georgia bank chairman, and head of a local realty firm.

The company continues to lend, defying the national headlines about banks not doing so. But there has been a tightening. The chief thing that has changed is that the bank won’t stretch for new loans.

Even with customers of Wachovia shopping for new banks, and some of the other large banks in the market turning away borrowers, Blanton prefers that his lenders pick carefully among would-be new customers.

“We’ll continue to meet customers’ needs,” he says. “But I’ve told my guys, ‘Don’t bring me a loan with a hair on it’.”

Similarly, he has long avoided getting into price wars for loans. The bank has a longstanding rule that cutting the rate on an existing, larger loan, to keep it, has to be approved by three officers.

Liquidity looms large in the priority list.

“Ron Thigpen and I are willing to compromise earnings in order to have liquidity,” says Blanton. The bank has been running an 80% loan-to-deposit ratio, and the pair plan to watch that ratio carefully.

“We don’t have a safety net around us. And nobody is going to bail us out,” Blanton says. So increased prudence, up front, is the order of the day.

“We’re into ‘fit’”
Quiet competence plays big in Dan Blanton’s world. He admires Warren Buffet—“I think the man is incredible. Yes, he’s out to make money, but his attitude is great”—but can’t stand the ego and glitz of Donald Trump.

Indeed, though Blanton likes a buck as much as any other businessman, he prefers  that his bank stand for more than just making money at all costs. He also prefers that those who work for him feel the same way. When someone reveals themselves to be a “mercenary,” Blanton cools on them pretty fast.

“We’re into ‘fit,’ around here,” says Blanton. “I’m not into having a rogue officer who can build a book of business but who will cut the throats of everybody else here to get that business. We are all about being a family here.”

Putting traditional and local roots first, literally, has helped Blanton in his expansion. In 2007, his bank holding company was buying an old home in Aiken, S.C., known as the “Tavelle House,” to be a branch of its South Carolina savings institution subsidiary. Locals were concerned about a huge, double-trunked oak, a landmark, on the property. Blanton understood, and respected, the community’s feelings. He brought in a renowned arborist, received recommendations to preserve the tree, and implemented them.

If all this makes Dan Blanton sound a bit old fashioned, that’s okay with him.

“Dan’s word is as good as a signed note,” says Patrick D. Cunning, CEO of Sidewood Development, LLC, of Aiken, S.C., and chairman of the board of Southern Bank & Trust.

Blanton the builder
There’s also his strong respect for history, from his choice in reading—he especially favors the military novels of W.E.B. Griffin—to the buildings he chooses to rehabilitate for his bank’s branches. There’s his love of vintage wood cut decades ago from Georgia long-needle pine—“heart of pine” boards that he buys  for future projects whenever he hears of a building coming down that contains some. (He keeps a garage stuffed with it.)

Blanton credits his mother for his interest in wood. She had him refinishing furniture from the age of five. This blossomed into a love of architecture. Blanton started college (BS, Clemson, 1973) as an engineering major.

But he admits to having an impetuous streak. He liked to improvise and that didn’t jibe with his professors’ views.

Today Blanton satisfies the building urge with projects on his own property, and in rehabilitations of historic structures that make good banking locations. Most notable of these is the historic Cotton Exchange branch the bank maintains in downtown Augusta.

The erstwhile engineering student also built the bank’s new Operations Center, opened in 2007, in what used to be a supermarket. The new center, taking advantage of the supermarket’s open floor plan, offers the ultimate in flexibility and growth possibilities. Blanton had it designed for the long haul, and nearly every internal wall in the 48,000 square- foot facility can be moved for reconfiguration of work spaces. This “reuse” also served the community better.

The Ops Center also serves as the largest symbol of one of Blanton’s key community banking philosophies, which is that you do business with those who bring you business. No noncustomer contractor could bid on work for the center.
 
If we don’t tell our story no one will
Blanton sees one of his key roles being to help ABA drum up grassroots support for industry positions.

 

“I’m astounded at the number of bankers who won’t respond” when ABA calls for comments on pending regulations or legislation, says Blanton. “A lot of bankers just don’t feel like they can make a difference. But it’s a numbers game, and they can make a difference.” Banker input was a key factor in beating back Farm Credit System expansion, he notes.

Blanton hopes to help make sure that the members of America’s Community Bankers Council get plenty of the right kind of information to guide their deliberations and input to ABA staff this year. He sees this as critical; over the next year all community bankers will have to take responsibility for their own future.

“They need to get off their duffs,” he insists, “because if they don’t offer the community bank story to their representatives in Washington, Congress surely won’t defend it.”

Beyond the valley, growth
In many quarters, banking offers a grim picture, and, as noted, Blanton considers the immediate future an effort to ride out a bad storm. While that must be endured, he hasn’t given up on long-term growth.

 

Within five years, for instance, he expects that Southeastern will cross the $2 billion-assets threshold without a whole-bank acquisition. Besides organic growth, some of this may be accomplished through acquisition of other lenders’ portfolios. The company did this in 2008 to grow business in Athens, Ga., a new market.

Branching will also likely be a significant part of the mix. This will likely continue to be based on Blanton’s strategy of choice: “buying the banker,” rather than the bank. What Blanton and Thigpen like to do is find a banker who knows a market, and then build his organization’s market presence around that lender.

The company finds this approach much cheaper, and much safer.

“A lender is going to bring his good customers with him,” says E.G. Meybohm. “And he’s not going to bring his bad ones.”

Independence is the plan. “We are, and we will remain, fiercely independent,” Blanton declares. The only time the company has ever been mentioned as a takeover target, the media got it wrong, mixing up the Georgia bank with another. Employees were so grateful  many signed a card thanking him for not selling.

“I just got my cubicle in order,” read one of the entries. “Thanks for not making me pick it all up again.” BJ

 

 

Have you ever answered “fair to middling” when someone asked how you were? You may not have realized it, says Dan Blanton, but you were talking cotton talk.

You can find more cotton terminology and history in the Cotton Exchange branch of Georgia Bank & Trust Co. in downtown Augusta. The branch, which features the beautiful antique teller cages seen on the opening pages of this article, is located in the city’s old Cotton Exchange Building. Built in 1886, it is entered in the National Register of Historic Places. The bank acquired and restored it, and reopened it as a branch in September 2004.

In its heyday, the exchange was the center for the area’s cotton business. Augusta was once a major inland nexus for the cotton trade, second only among the inland ports to Memphis.

You can get a sense of the old days in the branch’s lobby. There, a huge chalkboard used by exchange staff has been restored, including some of the price and grade postings typical of the era.

There’s a lot of Dan Blanton tied up in the building. He has a deep interest in history, as well as architecture, and his involvement is a labor of love. He tracked down the branch’s wooden teller cages, from a Kentucky bank, at an Atlanta antiques dealer. The lobby’s brass and glass Art Deco check stands came from a New York bank.

Upstairs, in the “Robert W. Pollard, Senior, Board Room,” named in memoriam for Blanton’s father-in-law, one of the bank’s founders and its first chairman, are more traces of the Blanton touch. He designed the intricate crown molding that lines the room, and had its walls plastered and glazed for an authentic look.

Back when the bank started, it located its first office, and present headquarters, out in the suburbs, where business conditions were better than in the city’s heart. As downtown Augusta continues to experience a comeback, the bank has seen the Cotton Exchange branch grow.

“We’ve got a good book of business down there now,” says Blanton. The restoration has been a public relations sensation.

And all of that is better than “fair to middling.”

 

The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj0209/index.php?startid=20

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