Motivated by a healthy economy and what they see as an opportunity in the banking market, many of these would-be bank owners looked for help from consultant John Kline, president of Kline & Associates and formerly an official with the state banking department.
“This was by far the most new bank startup work I’ve had in any one year,” said Kline, referring to his nine years as a private consultant. “The economy’s pretty good, and a lot of people have seen the shrinkage of banks by mergers and small banks being acquired by larger banks — SouthTrust being the biggest one that got eaten up.”
Big mergers, such as Wachovia’s recent purchase of SouthTrust, often inspire the creation of smaller, community-based banks — simply because many consumers prefer locally owned banks, he added.
“Usually in these acquisitions, (the large bank) loses 20 percent of their deposits,” Kline said. “A lot of times, if there’s a local bank or a bank owned out of Charlotte, N.C., many people will go with the local bank.”
In Rome’s case, the Wachovia-SouthTrust deal should not have significant impact, since SouthTrust didn’t have any branches in Floyd County. Instead, River City organizers say their decision to form a new bank was motivated by the growth they believe is coming for Rome’s economy.
The bank’s organizers recently applied for its charter and plans to open next spring on Second Avenue.
“The better days of the economy for Rome are ahead,” said Eddie Wilson, proposed president of the River City Bank in organization, which also used Kline as a consultant “We think the timing is right now to get started and be ready when the real growth hits.”
Bankers in nearby Adairsville and Rockmart had the same idea recently.
The Community Bank of Rockmart opened in May, largely motivated by the lack of any local banks in Polk County.
“That was our driving force,” said Larry Collier, president and CEO of the Rockmart bank. “We’re probably a little early for the real growth in the county, but we feel like the opportunity for growth and expansion is good.”
In Adairsville, well-known investors Bobby Cox and Orlando Wilson helped start NorthSide Bank, which already has a second branch in Cartersville.
“(The region) is just a really good growth area,” said Greg Patton, the bank’s president. “It’s right in the middle between Atlanta and Chattanooga.”
Amid the flurry of startups, Collier concedes that too many new banks opening could oversaturate the market.
But he adds that banks are traditionally very successful companies that provide good returns to investors — often by merging with or selling to another bank.
Tom Caldwell has concerns, too, as CEO of Greater Rome Bank and past president of the Community Bankers Association of Georgia.
“Across the state, there is a concern among many bankers that there are too many new charters being issued, particularly in no-growth or slow-growth markets,” he said, although he also said community banks have a traditionally high success rate.
“Very few banks fail anymore. They usually wind up being acquired and merged into some larger bank holding company.”
Kline, for one, doesn’t see an oversaturation of Georgia’s banks, pointing to the steady “food chain” of mergers and acquisitions.
“It’s addition by subtraction, in a way,” he said. “It’s not like we’re having a glut of new banks. We’re filling a void that’s out there in growing areas.”
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