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2008-07-10  BUSINESS POST | Walker on banking: Fewer loans keep cash as king
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July 01, 2008
The president of First National Bank of Forsyth said for the commercial business person who is in the business of developing subdivision lots for home builders, the world has changed greatly. The bank probably does not want to talk to someone in this business, or loan any money to do that. And all of this has to do with home prices. Nobody wants to buy any lots.
Walker said commercial customers are concerned with renewing their note with their bank, buying some time to sit it out.
"If you are a borrower who is in the business of building houses, you are not finding anyone out there right now who wants to buy a house," he said.
That borrower probably has trouble finding credit, particularly with the affects of the subprime market fallout. Money can't be found to build more houses when a builder can't sell the houses already built.
But Walker said some pockets of residential development generally are doing OK.
It's another story in commercial building.
"If you are a person who builds shopping centers, office buildings, well, you are not finding as difficult a relationship with your banker at this time. There are still people looking to rent. And those are slower, but they're not dead," Walker said.
"If you are a person who is building office medical, you probably haven't had any difficulties," he said.
Across north Atlanta, a lot of the business was construction business and growth.
"A person that owns his own building and manufactures widgets, or a store in a retail center who sells things, or is the dentist... Well, in North Atlanta you will probably will say that you've seen a little slowdown in your business because there is perhaps a recession, or at least a slowdown. But you haven't seen much difference," he said. "Nobody is out of business. Things are kind of slow.
"In other words, the general economy across north Atlanta still looks good."
The professional – lawyer, collection agent, doctor – has not had any problems. An architect has seen business "probably a little slow if you were in the home business."
What about banks?
"Financial institutions are hurting from a stock standpoint, but we are all very busy as customers come in to buy certificates of deposits, open checking accounts. We don't see much lending commercially. Other people are kind of cautious," Walker said.
One thing he said lenders and borrowers can do is make a slowdown a real recession.
Consumers looking to make big ticket purchases haven't seen Walker and his loan officers much for a long time anyway. Major purchases such as cars have customers getting financing straight from the dealer.
"Dealers almost give away the loan," he said.
Planning a vacation, buying an expensive lawn mower or big screen HD-TV? Most consumers save money – or use credit cards – and don't come in to see a banker for these expenses.
But there is pain for the homeowner looking to sell, particularly if a home equity loan was obtained. Walker said the house might have fallen in value and its sale price might not cover the first mortgage and the home equity loan.
"So you're kind of stuck – you can't go buy a new home. The builder's stuck, the man selling lots is stuck," he said. Taking that another step, "the man owning raw land, trying to sell to a developer, he can't retire because he can't sell his land," Walker said.
Walker's best advice
Save money, this bank president says.
"Cash is king. We do not save enough as a society today. but save your money. Spend it on things where you can get a lot of value for your money today," he said. "If you have cash money today and you need to buy a house, you can get a good deal. Same for a car and a TV.
Walker said maybe he's being too pessimistic, but that's what happens with oil at $125 a barrel (the price on the day of this interview). He said people expecting Medicare and Social Security to be there for them might need to share his pessimism.
"I have concerns the system will be viable, so I'm saving money. I think now's the time to be prudent," he said.
Not all is doom and gloom for this long-time banker.
"There are some values out there. If you need something, you can really get a bargain. But try to think long term," he said.
Still planning to build a house? Start thinking energy effieciency now.
Wind, solar, insulation… "How can I fix this thing up in such a way that I can keep my bills down," he said.
Oil is going to be on a hard road for the next 20 to 30 years.
Lower risk, payoffs
"Understand that we are a regulated industry. Now that gives us a degree of safety and soundness that you are not going to find in other industires. Your deposits are always insured," Walker said.
"We're regulated to the point we're pretty much told what kind of loans we can and cannot make. Bank failures are fewer and far between, It's a safe place.
Safe isn't a get-rich quick scenario.
"The safer something is, the less I think you are going to see it jump in value," he said.
Treasury bonds, for instance, pay far less interest rate than possible with GM stock. But one is government backed, while the other is a risk.
"Bank stocks will come back; they always pay smaller dividends," Walker said.
That makes them generally good, long-term investments.
"They're still the best place you can think of to pay money," he said.
Remember, he said, banks are insured.
"It's nice to put money where it is insured," he said.
- www.northfulton.com
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Executive profile
Andrew K. Walker
Chairman, President & CEO
Andrew K. Walker has been a banker since 1974, when he began his career at Gainesville National Bank (now Wachovia Bank, N.A.), In 1984, he was named president and city executive officers of the Central Bank of the South in Auburn, Ala., then president, CEO and a director of Georgia First Bank in Gainesville. He took this bank from $15 million in assets up to $150 million in that year. That led to being named a regional executive for Century South Banks, responsible for five banks. In 1998 he headed First National Bank of Johns Creek, which four years later merged into Main Street Bank. Several months later he left that position to organize Allied Bancshares and First National of Forsythy, heading both companies.
A merger with Buckhead Community Bank put him in place as a regional president. He has headed banking and business organizations satewide and in Hall and Forsyth counties, served as a director for charities including United Way of Hall County and Hall County Girls Club, served as president of Rotary Club of Johns Creek and serves on university and college boards. He is a member of Johns Creek Baptist Church and is a former lay Eucharistic minister in the Episcopal Church
Number of employees:
25
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What sets your bank apart?
The quality of our directors, management and employees: our excellent locations and our absolute dedication to the best customer service we can deliver.
What banking trends do you see in this area, and what seems to be causing them?
Tightened underwriting standards; increased core deposit growth efforts; more electronic banking. Recent economic concerns have caused credit tightening where shrinking profit margins drive the need for less expense deposits. Customer desire for convenience and speed and bank's desire to control cost are responsible for increased electronic banking
How has the subprime mortgage collapse affected your bank?
Indirectly. The slowdown in the housing market hurts everyone including our builders, developers, material vendors as well as retailers and taxpayers. Job opportunities decrease, less people can afford new cars, TV's, etc.
What is in store for the banking industry and its customers?
Bank Consolidation, new checking account products, Global banking on your Blackberry 24/7, wealth management, one stop shopping and have it your way banking.
Other Comments:
Don't be afraid of the times. Remember this to will pass. Buy a house, car, stock or TV. Prices will never be better. Don't miss the opportunity of a generation! |
Quick Glance
Latest deposits*
As of Aprl 30, 2008: $ 172,000.00
North Atlanta locations:
Cumming and Gainesville
Statewide: Part Of Buckhead Community Bank with 8 north Atlanta Locations
1700 Market Place Blvd.
Cumming, Ga. 30041
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