Alabama’s community banks weathered turbulent times during the Great Recession and in its aftermath, with more stringent regulations and oversight, as well as customers struggling to stay afloat.
But community bankers are finally seeing signs of recovery, and their 2014 performance reflects that, says Scott Latham, president and CEO of the Alabama Bankers Association, a trade organization representing locally owned or controlled banks across the state.
“The slow signs of a recovering economy we are seeing across our state and country have in turn facilitated improved performance among community banks as well as other segments of our business and industry, ” says Latham. “We expect those trends to improve even more in 2015.”
So what sets the successful community banks apart? They have personal relationships with their customers, they know their reputations in the community and they can better anticipate evolving needs, Latham says.
They have “a stake in the economic growth, health and vitality of each respective marketplace, ” Latham says. “By understanding the needs of both the individuals and businesses they serve, these banks contribute significantly to the success of endeavors large and small and, in turn, become more successful themselves.”
Business Alabama selected the Best Performing Community Banks in Alabama based on pre-tax return on assets, as reported by the FDIC for the year ending Dec. 31, 2014. With a pre-tax ROA of 4.49 percent, EvaBank ranked No. 1.
Here’s a look at the Top 10 banks:
ROA — 4.49%
CEO — Dewayne Morris
Location — Six branches in Eva, Cullman, Birmingham, Madison and Decatur with a loan production office in Arab
EvaBank’s Dewayne Morris believes the bank’s connection to its customers has set the Cullman-based bank apart, particularly in 2010, after sweeping reform legislation known as the Dodd-Frank Act became law.
EvaBank serves rural customers, some with lower credit scores who may still need a mortgage, mobile home or construction loan. When Dodd-Frank was enacted, Morris says he focused on meeting its requirements rather than fighting the legislation.
“Our customers depended on us” to be able to continue offering mobile home and construction loans, he says. “I read the entire document to understand what we needed to do.”
Customer base: Morgan, Cullman, Madison and Jefferson County residents, some with lower credit scores, who need a loan of $50, 000 or less and are interested in buying a mobile home or building on their property.
Community economic profile: Rural, lower to middle income, farmers, service workers.
Growth philosophy: Grow organically to meet market demands. The bank has branches in Morgan, Jefferson and Madison counties.
Innovations in technology: “We offer online and mobile banking, including mobile deposit, ” says CEO Morris. “We are constantly updating.”
2. Hometown Bank of Alabama
ROA — 2.41%
CEO — Danny Kelly
Location — Three branches in Oneonta, Pinson and Snead
Customer base: Individuals and small businesses
Community economic profile: Primarily commuting wage earners and service providers (i.e. construction)
Growth philosophy: Strictly internal growth. “We grow by doing more of what we are doing, ” says CEO Danny Kelly.
Innovations in technology: “We are in a constant state of innovation, ” says Kelly. “Customers demand multi-channel banking, and you must deliver it.”
3. First Metro Bank
ROA — 2.34%
CEO — Rodney Howard
Location — Muscle Shoals, with branches in Russellville, Florence, Lexington, Tuscumbia and Greenhill
“First Metro Bank is a traditional, community bank located in Northwest Alabama with eight locations, a strong sense of dedication to the community and a passion for service, ” says CEO Rodney Howard.
The bank’s success is based on a “traditional, yet vital, approach, ” he says — simply that “the needs of the customer always come first.”
Community profile: First Metro’s customer base is drawn from three counties, “with diverse needs, diverse populations and diverse income levels, ” says Howard, adding that average annual household income is about $50, 000.
The bank’s team works to understand local issues and find responses that will benefit the community, he says, mentioning that bank employees volunteer many hours providing financial literacy education for students in Colbert, Franklin and Lauderdale counties. Interacting with students helped bank staffers see a need for a new youth-oriented savings program, changing the minimum age for savings accounts from 19 to 15. The financial literacy and youth savings programs earned recognition from the FDIC.
Niches Served: First Metro Bank services both consumer and commercial accounts and strives to provide the best products and services available while remaining fiscally sound and compliant. Small to medium commercial loans and agricultural loans tend to make up the majority of the Bank’s loan portfolio.
Growth Policy: “While First Metro Bank does not have a stated policy on growth; traditionally, the Bank has grown through internal means, ” says Howard. “The First Metro Bank Board of Directors made the decision some time ago to limit expansion to areas where they felt a true, positive financial impact could be made. First Metro Bank was founded in 1988 by a group of local investors and chartered with approximately $4, 290, 000 in initial capital. The original subscription involved 400 shareholders, with each limited to no more than 2.3 percent ownership. The originators envisioned First Metro Bank as a true community bank and wanted its shareholders to reside in the community and be active with its leadership.”
Profitable every year since its founding, First Metro has grown to more than $500 million in assets, making it the 17th largest state-chartered bank in Alabama, Howard says.
Technological Innovation: In 1995, First Metro Bank was among the first in the state to offer online banking, says Howard, and it is working toward offering Apple Pay services to its customers. Mobile banking was added last year. Other recent innovations include an upgrade to the Bank’s core system to improve efficiency, accuracy and customer service, as well as a new loan platform and new account-opening software to speed the process while safeguarding compliance issues.
4. Cheaha Bank
ROA — 2.3%
CEO — Shad Williams
Location — Branches in Oxford, Alexandria, Jacksonville and Anniston
Customer base: “We focus on merchants and professionals who can be found on Main Street, ” says CEO Shad Williams. “Many customers were once refugees from the super-regional banks, and they prefer the community bank atmosphere with the more efficient, personal service that we can provide.”
Community economic profile: “Long-term economic health of a community bank will mirror that of the markets the bank serves, ” says Williams. “Our local economy is very diversified. Major employers include Honda, Anniston Army Depot and Jacksonville State University. Interstate 20 runs through Oxford, making it a regional retail hub.”
Growth philosophy: “We have excess capital that we would like to put to work. Obviously we want to grow our four Calhoun County offices, but if we found a partnership with another bank, which had similar values and whose market we understood, we would be interested in a possible acquisition, ” says Williams.
Innovations in technology: “We strive to stay abreast of innovation and modern technology, which levels the playing field between ourselves and the big box banks, ” Williams says. “This year, everything from the telephone system to our core processing will be updated.”
5. Citizens Bank of Winfield
ROA — 2.26%
CEO — Russell Carothers
“Our roots run deep” is the slogan for Citizens Bank of Winfield, and it’s more than just a slogan, says President Chris Carothers, who is the son of CEO Russell Carothers. The bank has been 85 percent or more family owned since its founding in 1920 — “and a lot of our relationships have been well established over a period of time, ” he says.
“We try to give our customers the best service of any bank around and our customers tell us we do that, ” says Carothers. “That’s the only difference between banks. A checking account is a checking account. But customer service — that’s what sets us apart.”
Community profile: Winfield, with some 4, 500 residents, is the focal point of Marion County, with 3M, a hospital, a city school system, Joy Global making conveyor equipment for coal mining and KingKutter making farm implements. Those businesses and shopping conveniences like Walmart also draw residents of nearby counties — Fayette, Walker, Winston and Lamar — into town.
Niches served: Citizens Bank provides construction loans for housing and for businesses, says Carothers, as well as consumer lending for cars and personal loans.
Growth policy: Citizens is “always looking to grow, ” but has no specific plans, says Carothers. “We’ve done well with one bank, watching our deposit base grow and making conservative loans and investments. That’s how we keep our return high. And we emphasize keeping expenses low.”
Technology: Citizens offers Internet banking and bill pay and is within a month or two of implementing mobile banking. The bank doesn’t aim to be first with technology, he says, but to watch what works and wait for the prices to drop before making the expenditure.
6. CCB Community Bank
ROA — 1.95%
CEO — Tom Lane
Location — Andalusia, Opp and the Florida panhandle
Headquartered in Andalusia in Covington County, CCB Community Bank got its start in 1947.
Today, the bank has some 115 employees and more than $434.6 million in total assets, up from $427 million in 2013, according to the December 2014 FDIC report. CCB also has $353 million in deposits, a pre-tax ROA of 1.95 percent and an after-tax ROA of 1.82 percent. CCB also has a healthy ROE of 17.62 percent.
Niches served: Diversification in lending helped the bank weather the recent economic downturn, says Tom Lane, chairman and CEO of CCB Community Bank.
“Back a few years ago, so many banks had a lot of their loans in development loans, and when the market went down and housing went bust, a lot of banks got hurt throughout the country, ” says Lane. “We diversified, meaning we had some in agriculture, we had some crop lines. We had some car loans. We had some equity lines and residential real estate.
“And not only do we have those, ” he says, “but we have them in different geographical areas.”
Community profile: Lane describes Andalusia as a vibrant, small town where the economy progresses at a steady pace. The town’s commercial profile, he says,
“About 65 percent of all of our loans are commercial, ” he says. “We have agricultural loans, manufacturing, small businesses and retail businesses. It runs the gamut.”
Innovations in technology: To help attract new business customers, the bank rolled out mobile banking and remote deposit about a year ago, he says. So far, he says, customers have been making approximately 300 deposits a month. He says he expects that number to grow.
Growth policy: For customers who still prefer to visit a brick and mortar branch, they can go to one of the bank’s four branches, including the one in Andalusia and in Opp. CCB also has a branch in Crestview, Florida, and its newest branch in Niceville, Florida, which opened in 2013.
As for any future expansion, Lane says, “It’s always dependent on the opportunity. We never turn down an offer to look. We would if the conditions were right.”
7. First Community Bank of Central Alabama
ROA — 1.94%
CEO — Michael Morgan
Location — Wetumpka
Wetumpka in Elmore County is home to First Community Bank of Central Alabama. The bank, which opened in 2001, has 71 employees and seven locations across Elmore and Autauga counties, says President and CEO Michael Morgan.
“In terms of non-interest expense, ” says Morgan, “we try to keep our overhead low. We’re a group of doers and a lot of worker bees. There are no secretaries and assistants. Our lenders underwrite and document their own loans. We try not to overstaff.”
Community profile: Morgan says that while Elmore and Autauga counties are mostly rural, the business climate there is changing.
“Over the last 10 years, there has been a tremendous buildup of subdivisions and neighborhoods all over Elmore and Autauga counties, ” he says. Major employers include nearby GKN Aerospace, Maxwell Air Force Base and Hyundai and its suppliers.
Niches served: “Commercial niches and small business are really the backbone of community banks at this time, ” he says. “We do have a lot of commercial real estate lending, ” he says. “But we cater to a lot of small businesses and self-employed people.”
Innovations in technology: Online banking options are expanding to include mobile capture and instant issue debit cards.
Growth policy: Morgan says that while technology has been a major investment for the bank, they are taking a careful approach when it comes to building more locations. The bank opened its newest branch in Tallassee in December 2013.
“We’ve always said that we never want to outgrow who we are, ” he says. “We don’t want to outgrow to where we lose our culture and identity.”
8. First Bank of Boaz
ROA — 1.9%
CEO — Ricky Ray
Location — Boaz
First Bank of Boaz, in the city of Boaz, has just 26 employees, says the institution’s president, Ricky Ray. It has only one location. But it is among the state’s top performers. Founded in 1906, the bank has thrived on serving a diverse business clientele, Ray says.
Niches Served: “We’re very diversified here in terms of employment, ” says Ray. “We’ve never had to rely upon any one particular industry. We’ve never been widely affected by the economy.”
The once thriving apparel industry and the outlets in Boaz have long gone. Most recently, in 2014, the Pilgrim’s Pride poultry processing plant closed its doors. But the city’s business community still includes retail shops, car dealerships, auto parts manufacturing and distribution plants and farm equipment manufacturing companies.
Although the bank is healthy, competition from credit unions for consumer loans has caused local banks to target commercial prospects more aggressively, he says. As a result, the bank has been courting medium-sized businesses, as well as small, solely owned companies, including small corporations owned by families, he says.
“We’ve been very successful at it in the last few years, ” he says.
Growth policy: “It appears to me that after 41 years in this business that, particularly now, brick and mortar branching is not a great way to go, ” he says. “It’s not the direction that we plan on going in. It’s so expensive, and they’re usually not profitable.”
The bank is, however, expanding its online banking services to include mobile banking and mobile check deposits. “So by targeting that, we believe we’re getting the cream of the crop, the ones that we can convince to do business with us both on the loan side and the deposit side.
“Historically, over the last 34 years, we’ve worked on growing our bank 3 to 5 percent a year. We look for consistency, both in growth and in earnings.”
9. Small Town Bank
ROA — 1.87%
CEO — Alan Hubbard
Location — Wedowee and Roanoke in Randolph County; Heflin and Ranburn in Cleburne County
Small Town Bank of Wedowee, headquartered in Randolph County in east Alabama, has been open since 1999. Besides the bank’s main office in Wedowee, it has another Randolph County branch in Roanoke and branches in Heflin and Ranburn, both in Cleburne County.
Community profile: Randolph and Cleburne are rural counties, with farming, poultry production and the Randolph County School system being among the area’s major employers.
Niches served: “We don’t have a niche, ” says Alan Hubbard, the bank’s president and CEO. “We don’t concentrate on a specific type. We wouldn’t have enough business. We look at any opportunity that makes good banking sense.”
Hubbard says, however, that Lake Wedowee, also known as the R.L. Harris Reservoir, is a popular attraction that has led to an increase in real estate development in the area.
“In the summer, you see more Georgia car tags than Alabama tags, ” he says. “A lot of people have built there and found out that around Lake Wedowee was a good buy compared to the Georgia lakes that were getting so full.”
Growth policy: To beef up its commercial loan division even further, Small Town Bank opened a loan production office in the city of Oxford in Calhoun County in 2011.
“The Oxford market is a growing market, ” he says, “and we are in an expansion mode. We feel like we can gain some loan opportunities if we have a presence there. Plus, I have about four or five of my officers, including myself, who are from the Calhoun County area, so we have contacts that we feel could give us some loan opportunities. We are also looking to expand our presence in the West Georgia market.”
Innovations in technology: “We have online banking, ” he says. “We recently updated our website to be a lot more modern and user friendly, and we have a few services that we hope to bring online in the next 12 to 24 months. We are definitely looking at mobile banking and remote capture deposit.”
10. Town-Country National Bank
ROA — 1.86%
CEO — Hal Huggins
Location — Camden
Town-Country National Bank in Camden opened in 1978.
Today, the bank has $100.2 million in total assets, according to the FDIC.
Camden is the county seat of Wilcox County, which is home to companies like Golden Dragon USA, a copper tubing plant, and International Paper. Other major business sectors in the area include agriculture and farming and fishing-related companies and small businesses.
Town-Country National Bank’s services include online banking, business checking and an interest-bearing checking account for sole proprietors and individually owned businesses, according to the bank’s website. CEO Hal Huggins declined to be interviewed.
Sherri Goodman, Gail Short and Art Meripol are freelancers for Business Alabama. All three are based in Birmingham.
text by sherri goodman and gail short