In today’s economic climate, any news about banks changing ownership is likely to spark questions and concerns. Last week’s announcement that GB&T Bancshares was being sold to SunTrust was no exception.
In the days following the announced sale, officials with the company’s flagship bank, Gainesville Bank & Trust, say they have dealt with a number of worried customers and investors, some apparently reacting to unfounded rumors about the transaction.
Richard Hunt, president and chief executive of GB&T Bancshares, said in an interview Wednesday that despite the pending acquisition of the bank’s holding company, it will be "business as usual" for Gainesville Bank & Trust and the six other company banks for weeks and months to come, including moving ahead with plans for a new branch office on Spout Springs Road in South Hall County.
Top officers of the company said they think some of the confusion is from customers who don’t understand the relationship between GB&T Bancshares, the holding company that owns seven separate banks with offices in several counties, and Gainesville Bank & Trust, the largest of the independent banks held by the holding company.
"GB&T Bancshares is the sole owner of seven banks that are separately chartered and stand on their own" said Hunt.
Loan problems at two of the company’s banks in West Georgia accounted for 70
percent of the nonperforming assets of the entire seven bank company.
Nonperforming assets are loans that are more than 90 days past due and real estate that has been foreclosed on by the bank.
In quarterly reports to the Federal Deposit Insurance Corp. on Sept. 30, the two banks, HomeTown Bank of Villa Rica and Community Trust Bank of Hiram, had the holding company’s largest percentage of nonperforming assets and loans more than 30 days past due.
HomeTown Bank has $36 million of its $191 million loan portfolio listed as nonperforming, or 18.89 percent. Community Trust’s nonperforming assets were $26.2 million, or 9.71 percent of the bank’s $270 million loan portfolio.
Hunt said the two banks do a good portion of their business in Paulding County, where problems in the housing market reached a difficult point in the third quarter.
"If you look at the real estate market, that’s the area (western metro Atlanta) that has been hit the hardest," said Sid Sims, the company’s chief credit officer.
The developers appeared to suffer residual effects of the crisis in the subprime mortgage market. The lack of availability of mortgage funds for prospective homebuyers with less than perfect credit left many developers with an inventory of unsold homes they couldn’t pay for.
"We typically make construction loans to local home builders," said Hunt, adding that builders found themselves unable to sell the homes, and now those loans are either in arrears or the bank has had to foreclose on the property.
Hunt and bank Chairman Philip Wilheit said the percentage of troubled loans at Gainesville Bank & Trust was among the lowest in the entire company. Of the bank’s $536 million loan portfolio, $10.69 million, or 1.99 percent were nonperforming assets. Loans greater than 30 days past due represented 0.8 percent of the total, according to the company.
Hunt said that 70 percent of the $10.69 million was from a single piece of foreclosed property.
Sims said given the current economic climate, Gainesville Bank & Trust’s numbers were well within acceptable ranges.
According to the quarterly report of GB&T Bancshares, nonperforming assets for the entire seven bank company on Sept. 30 were $89 million, or 4.53 percent of total assets, compared with $56 million, or 2.82 percent, on June 30. Foreclosed real estate represented $34.3 million of nonperforming assets, up from $15.6 million for the second quarter of 2007, and from $3 million one year ago, the report said.
But Wilheit, who was a founding director of the flagship bank, and Hunt, who was its first president, said the loan numbers for Gainesville Bank & Trust are an indication of the bank’s strength and should not be a cause for alarm for its customers.
Hunt said while the transaction between GB&T Bancshares and SunTrust is expected to close in March or April, the conversion of the bank into SunTrust may not be completed until late summer of 2008.
Until then, he said the bank continues to operate as usual.
"We will be out looking for business and asking for customers," Hunt said. Construction continues on a planned branch in Flowery Branch, and it will open next year.
Hunt and Wilheit said there was no basis for speculation that the transaction was in any fashion forced by bank regulators, but rather that they took the best deal possible for the company and its shareholders.
Hunt said SunTrust plans to offer jobs to employees at the bank’s branches, including in areas where the two banks have offices which overlap.
"For people who are not needed going forward, SunTrust has a very attractive severance package," Hunt said.
Wilheit said SunTrust knows the value of the GB&T staff.
"Our people have driven the market share to where it is," Wilheit said. "They recognize that, and they’re going to keep the people that made that happen."
In the June 30 FDIC Market Share Report, Gainesville Bank & Trust held a 19 percent share of the market, less than 1 percent below perennial market leader Regions Bank.
When added to SunTrust’s current 5.79 percent of Hall County deposits, the combined banks, SunTrust and Gainesville Bank & Trust, would hold 24.85 percent, the largest share of the Hall County banking market when measured by deposits.