July 01, 2008
Kessell Stelling has spent the last year running Bank of North Georgia, taking over the presidency after its merger with Peachtree National and First Nation banks. The Synovus bank will soon have more than 800 employees, but he still takes time to meet with all employee candidates.
"Even though we are a $6 billion bank, I like to know what makes you tick, how you treat people," Stelling said.
Bank of North Georgia hires and recruits a certain type of person, he said. In a meeting with executives of the two banks soon to join the fold, he talked about the passion needed to serve customers and communities.
Times are tough in the banking industry these days.
"It's a very tough real estate market in Atlanta," Stelling said. "Times are tough with the real estate part of our business."
"We are still making money. Not as much as we'd like to... At the end of the day we'll come through this cycle stronger than our competitors," he said.
Stelling said the bank is recognizing its problems and moving on.
"The key is make sure you don't lose sight of our customers that have been loyal," he said.
Bank of North Georgia has one group dealing with the real estate issue, with the rest telling its story to its customers.
For the banking industry in general there is a concern as the confidence in the banking industry by customers. More want to talk to their bankers about the bank's health.
Stelling said that's not a problem for Bank of North Georgia, with more than $650 million in capital – and soon more than $700 million. Bank of North Georgia is part of Synovus, which has more than $3 billion in capital.
"We've been around since 1888," he said, calling Bank of North Georgia a strong, stable bank.
"Our goal is to come through quicker and stronger than our competitors."
The subprime mortgage crisis hasn't hit Stelling's bank like some others.
"We weren't in that business, so there's no direct effect. Any bank that tell you they weren't affected at all maybe isn't thinking through the ripple effect," he said.
At the end of the day, fewer homes are sold, fewer can be built. Some of the product out there is not getting loans.
"Fewer qualified home buyers has certainly affected the overall housing market," Stelling said.
Despite the fears in the housing market, now is a great time to buy, he said.
"If you are a Bank of North Georgia customer and you want a mortgage today, you are not getting a rate any different than a year ago," he said.
If you have good credit, mortgage rates remain at historically low levels.
"Most people already refinanced. If they haven't it's a good time," Stelling said.
What's in store for the banking industry?
"I think the industry as a whole is going to, I think, shrink a little bit. I think some banks that are here won't be here in a year," Stelling said. "So there will be fewer of us, we'll be stronger, better managed."
The remaining banks will be in a strong capital position.
"I can see tightened up underwriting, short and long term," he said.
Stelling believes Bank of North Georgia's situation won't change much.
"As an industry, I think you will see a more vanilla approach. I think you will see more conservative underwriting, kind of a return to the basics," he said.
Mergers, buyouts and closures are in the future for the banking industry, Stelling said. A large Arkansas bank failed a month or so ago.
"I'm not predicting gloom and doom. Some banks in this economic cycle are going to have a difficult time," Stelling said.
Whether they are merged by their own choice, or merged by a regulator's choice, forced or otherwise, some banks will close.
What would you tell someone wanting to start a new bank?
"I get asked that question by investors all the time. I tell them the same thing – bet on management," Stelling said.
"At the end of the day, if I were investing on a startup bank today – which I wouldn't – it would because I believed the management of that bank had a vision that I believe in," he said.
Stelling said the vision of growth for such a bank should not be too aggressive.
"It would be a tight economic market right now," he said. "Everybody wants lower rates on loan, highest rate of return on deposits. That market is really squeezed."
Stelling shares an opinion several other long-time metro bankers have stated.
"I think there are too many banks out there. I've told regulators that," he said.
Stelling said potential investors should ask management what it is doing to position its bank differently in the market. If there is a bank on every corner, how will it position itself differently in the market to grow.
What's in store for Bank of North Georgia?
On Oct. 27, two other Synovus banks will merge into Bank of North Georgia. Its banks in Carrolton and Douglasville will join the fold. That will bring it to 48 offices stretching from the Alabama state line on the west, Covington and Conyers on the east, with Peachtree City south and Jasper north. More than 800 team members will be part of Bank of North Georgia.
"The challenge is when we get large we still act and behave like a community bank," Stelling said.
As chairman of the Metro Atlanta Chamber of Commerce this year, Stelling told the executive committee a few weeks ago that even more prospects want to move to Atlanta.
While in the next three months Charlotte might seem a better opportunity, "long term, I'm really bullish on Atlanta," he said.
What would you advise the customer?
"First of all, I think a customer has a right to ask about the financial health of the bank," Stelling said.
In his bank's case, excess capital and more than 100 years of history is Stelling's story.
"Beyond that, I think the customer should demand service, they should demand products that keep pace with what other banks have," he said.
Bank of North Georgia prides itself on its lack of turnover. In the large employee category, it was voted the fourth best place to work in the Atlanta Business Chronicle's survey, a and in Georgia Trend was 15th – and the only bank.
If those employees are happy and motivated, they probably will be motivated to serve customers.
That's why he advises customers to ask about the employee base, about its stability.
"I'm not saying we are any better. We have a story to tell, we tell it. We hope that will be attractive to a large part of the community we serve."
What financial advice would you offer?
"I would say be conservative, save. I can't tell you what interest rates are going to do. I would say don't put all your eggs in one basket," Stelling said.
He wouldn't put all his money in a one-year CD and wouldn't put all his money in the stock market.
"I think now, more than ever, is a time for diversification," he said.
"I think, given the uncertainty of the economy, I think it really is a time to be conservative in their spending and wise in their saving. But then again, at the end of a day, people can't be afraid to make a decision," he said.
"It's a good time to buy a house. Home prices are down, mortgage rates are down. It really is a good time," Stelling said.
Get off that three-month horizon, he said.
"At some point it's going to turn and you're going to say, 'Doggone, I should have bought that house in June," Stelling said.
People need to regain confidence in the economy of the city and country.
"Don't be afraid to make a decision just based on what you heard someone say. This is a part of it. People are afraid right now. It's a good time to invest in Atlanta. I think it's a good time to invest in real estate," Stelling said.
What is in the store for the future of banking?
"I'm one of these glass half full kind of guys. Yes, our industry has problems, but the strong will survive. I don't wish any bad will to any of my competitors. I hope everybody makes it because that's better for our industry," Stelling said.
"In long term, Atlanta's great, northern Atlanta is greater. There's no place I would rather be," he said.
- www.northfulton.com
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