S-corp bank under $100 million

 

Deep roots in a community with more than surface potential is the secret to this bank’s success. 

 

By Lauren Bielski, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

 

Willacoochee and Pearson, each in southeastern Georgia, are home to the $57.4 million-assets, two-branch The Peoples Bank. (Not to be confused with similar sounding, People’s Bank of Willacoochee.)

As far as towns go, these two look pretty and unassuming, according to Chief Financial Officer Cindy Mathews. Willacoochee, the name of a town and a river that runs near the center of it, is an Indian name said to mean “home of the WildCat,” according to an unofficial website for the city.  It is perched near Highway 90 and the relatively new four-lane U.S. Highway 82. Nearby Pearson, which is the county seat, has two main streets, two traffic lights, a court house, and not a strip mall or big box retailer in evidence.

 

Each town, however, and the surrounding county of Atkinson, is characterized by a hardy sense of reinvention and self-reliance, despite a high migrant worker population and an ongoing struggle with poverty.

It’s this local and striving economy that The Peoples Bank is contributing to by supporting local business.

Relying on new manufacturing
Light industry, not the traditional lumber and agriculture, is the area’s newest growth engine. Companies launched in a period of economic redevelopment starting in 1995 include Whittley Cruisers, a division of Whittley Marine, headquartered in Australia, and Fleetwood Homes.

 

“The region used to be known for mobile home manufacturing as well as lumber, with four mobile home manufacturers in the area,” relates Mathews. “However, the lumber plant closed and the mobile industry has shrunk to a single firm.” Instead, she indicates, Atkinson County and the surrounding region counts on a spate of new industrial manufacturers, including TLC Mouldings and Willacoochee Industrial Fabrics, a plant that makes “erosion cloth,” used in highway construction as well as shading fabric used in plant nurseries.

 

The bank, which doesn’t have heavy concentrations in any one industry, has a well-balanced portfolio. “When we were examined last year, examiners looked at us closely, given our investments in industrial cloth manufacturing in particular, but we passed as far as concentrations go. The numbers were fine,” says Mathews.

Behind the numbers
That’s for sure. Certainly, a well-timed stock sale of banker’s bank stock had something to do with it. That move resulted in capital gains of $1.7 million and vaulted the bank from 624 to 8 in this year’s ranking of Top Performing S corps of under of $100 million.

 

But there’s more to the story than getting out of a stock at a healthy gain. That’s because, at a time when banks are being asked to reinvent branches, processes, and their approach to their business, The Peoples Bank has sought to maintain classic community banking practice (that is, lending based on  relationship), while being flexible enough to eye new opportunity in those emerging industries.

 

Simply put, “sound, traditional banking practice” also means no reliance on excessive fees (the bank has an NSF fee of $12), and working with folks who keep ties to the Atkinson County region. This has put the bank on a solid path of growth, with an asset growth rate of 8.77% and nonperforming loans of only 1.25%. The operating philosophy is stick-to-your-guns orthodox, not much fazed by fads.

 

“We’re a traditional lender and believe in the branch model,” Mathews says, noting that even when the bank finally launches internet banking with a provider sometime later this year (management is down to evaluating two candidates), it will be doing so in order to improve customer service in the area, not attract out-of-region, internet-only customers.

 

“We’re holding our own here and avoiding some of the mortgage-related woes that some other areas nearby seem to have been hit with,” she adds, offering this as an example of the bank’s sense of tradition.

 

Management is careful not to overstretch the bank’s activities. “We lend only to our county and sometimes venture into surrounding counties,” says Mathews.

 

The bank also sticks to its commercial knitting.

 

“We do not have a mortgage department and rarely ever stretch loan terms over five years. This allows us to reprice our loans as the market changes,” Mathews observes.

 

As for loan losses, Mathews notes that the bank has experienced a slight increase in past-due loans, but does not expect to experience large losses, particularly given exceptional collateral values.

 

When asked what she finds most fun or interesting about being an active bank in two small towns, Mathews answered: “Knowing 95% of everyone who I talk to on the phone.” 

 

The electronic version of this article available at: http://lb.ec2.nxtbook.com/nxtbooks/sb/ababj0608/index.php?startid=42

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