ABA Banking Journal - February 2009 - (Page 14)
Community Banking 2.O Banking It’s not all gloom and doom Media’s broad portrayal of banks and economy irks bankers. But everybody’s challenged to some degree in 2009 really is gloomy where Gary Fox does business. His Bartow County Bank is based in Cartersville, Ga., about 40 miles north of hard-hit Atlanta, and banks in the area are getting hammered, he says. The $427.4 million-assets bank, founded 35 years ago, has its own share of challenges. “In our area, lending’s pretty well ceased,” said Fox, president and CEO. “Banks are trying to run customers off. Everyday I have people come in my bank saying, ‘I’ve never missed a payment, but so-and-so bank wants me to move all my loans.’ And it’s strictly because of the risk-based capital standards. The banks are trying to get their capital levels up.” “Of course,” Fox continues, “we can’t take in these borrowers, because everybody’s kind of in the same shape. We’re all trying to reduce loan outstandings to increase our capital ratios.” That’s not Bartow County Bank’s only challenge. Fox says that deposits have become very expensive. Area bankers have started cutting back on reliance on out-of-market deposit sources, so local funds command a higher premium. And correspondent banks that used to be reliable standbys can’t be counted on. “They’re drawing back just as much,” says Fox. He adds that the real estate market is frozen, and the only properties that move are foreclosed ones where the selling bank is glad to finance the buyer. So 2008 net income was down for Fox’s bank, and he anticipated a challenging 2009. And many bankers share a piece of the By Steve Cocheo, executive editor It Ax or scalpel? Cost-cutting tips from the roundtable The first items to go will be those things you almost forgot your bank was spending on. None of the roundtable members were going in for slashing and burning yet, instead seeking small things and pursuing incremental efforts. “Over the years, if you really want to be truthful about it, we’ve probably gotten a little bit chubby in some areas, and it’s a good time for us to look at reality and cut some of the fat,” said Barry Williams of First State Bank, New Braunfels, Texas. “We’re trying to determine some areas where we can make some cuts without it having too adverse an impact on customers,” said George Marx of Copiah Bank, N.A., Hazlehurst, Miss. ■ Stop building for a while. Many community banks have been on a branching binge in the last five years or so. One panelist whose bank opened seven branches over this period said his institution would curtail that activity, to bring down the expense ratio. ■ Play ball a little less. Season tickets habitually bought for sports and concerts are getting chopped. Some roundtable participants pointed out that their banks were purchasing so many COST-CUTTING TIPS continued on page 18 14 FEBRUARY 2009/ABA BANKING JOURNAL Subscribe at www.ababj.com
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