July 01, 2008
S:art/filefoto/business/banks & finance/Schmitt-Brian D_The Private Bank.jpg
Brian Schmitt said his company's name tells its story – The Private Bank.
"The name itself, The Private Bank, kind of gives an indication of who we are," the bank chairman and CEO said.
A banker in Atlanta for 25 years, Schmitt ran Premier Bancshares until it was sold to BB&T in 2000.
"I left BB&T in 2001 and started Piedmont Bank of Georgia," he said.
A year and a half ago that bank was acquired by PrivateBancorp, and he stayed in charge of what is now known as The Private Bank-Georgia.
"We are not a retail bank like Bank of America, which makes a lot of consumer loans," Schmitt said. We're not actively marketing for home equity lines, mortgages."
| 
advertisement |
"We see the rubber meeting the road is more on that side," he said.
Anyone making subprime loans that by their nature carry more risk have caught many financial institutions with a bunch of really bad paper, Schmitt said.
While the subprime debacle, as he describes it, did not directly affect his bank because it did not make any subprime lines, it continues to affect all banks and will for some time. Bankers who say it didn't hurt them at all are misleading their customers.
Every financial institution touched and affected by the housing industry, whether a subprime lender or The Private Bank, which has been a fairly large construction and development lendor, has felt the contractions of that industry.
People buying and selling homes can't get loans as easily, which causes problems for the builders and, as a consequence, even lendors who don't count consumers at their customers.
The subprime market has slowed down a whole industry, he said, severly impacting the home building industry in the process.
To make up the loss of customers on the residential development side, The Private Bank looks to commercial and industrial real estate and customers.
"And we are a significant SBA lender," he said.
The writing was on the wall for Schmitt.
"We saw this happening a year and a half ago," he said.
The Private Bank had to cut back on the residential side of the business because additional housing products were not needed.
The bubble itself is very real, it has touched and impacted everyone," he said. "I don't believe the general consumer really fully understands the impact of all of this.
"Subcontractors, furnitures sales... It's all those ancilliary lines of business or support groups that have slowed down dramatically also," Schmitt said.
By teaming up with a larger bank holding company in Chicago, The Private Bank remains strong, he said.
"They've been able to provide us with products and services we couldn't offer, Treasury services and the like we haven't been able to offer before because of our size," Schmitt said.
He said the parent company in Chicago took advantage of Bank of America buying out LaSalle Bank in Chicago, which at that time was the ninth largest bank in the United States with $120 billion in assetts. PrivateBancorp saw that as an opportunity to recruit, and hired LaSalle's former CEO in the same position. Another 150 employees were hired, with many products added also. Those hires allowed the company to raise $350 million in capital.
The balance sheet has shown almost 32 percent growth since 2007, Schmitt said. The balance sheet has increased to $1.5 billion since October.
"Many bank analysts say its really, turly the only growth stock in banking," he said.
The hiring included Georgia, with two gentleman who headed up Lasalle Bank's loan production office in Atlanta handling large transacactions heading up the same office in The Private Bank.
The capital was raised with $200 million in common stock issued in December 2007, and $140 million in June through a trust preferred capital raise.
"People say I was very smart to pull the trigger at the right time. I don't know if I was smart or lucky – I'll take either one," he said. "We came up with folks that had the right capital."
In 2001, Schmitt opened the bank's administrative offices in Buckhead. Two years ago an office was opened in Peachtree Corners, with the Alpharetta office off Windward Parkway opening five months ago.
What does the future hold for banking?
"We're going to have some banks that have some issues that might need to find some strategic partners. We'd like to be those bank's outlets, at least to talk to them," he said.
Schmitt and his team have the full support of the bank's holding company, which has "raised a tremendous amount of capital that would allow us to do that."
Banks that are going to struggle do not necessarily have bad bankers, it's just the economic environment, he said, that makes them look for strategic partners. He would like to be able to talk to those banks.
"If there's room in their organization to be part of our organization, then team up, let them be part of The Private Bank of Georgia," Schmitt said.
"There's a lot of uncharted water for a lot of CEOs at this time. We haven't been at this level of downturn before. It's a scary time," he said.
"Banks are feeling pressured today. They're all out there trying to figure out how to raise capital to support balance sheets," Schmitt said.
But that's not a problem The Private Bank's CEO faces – he has the support of its holding company's capital.
"A lot of my brethren out there, they don't have that luxury right now," he said.
Advice for businesses and consumers
A general retail type consumer will be OK with banks.
"If you are a small business owner, I would stay close to your banker... Make sure you understand the position the bank is in, how they are viewing things," he said.
If the bank has a history, find out how it reacted during the last economic downturn.
Ask questions about anything of your banker to get ahead – "Your bank loan, the line of credit you've got with your bank, is your lifeline."
It's just as important to know your bank and banker as it is to know about your own finances, he said.
"Bankers tend to tell more if you listen, more than maybe they should," he said.
If all of a sudden a new directive comes out of a bank's holding company that it no longer wants to be in business with your type of industry, changes can come very quickly for your business.
- www.northfulton.com
For related stories click here
|
