A Conservative Approach is Paying Off
A history of conservative banking has prepared South Georgia Banking Company for the current economic conditions.
“We are well capitalized, have good liquidity, sound lending practices and have built our bank by taking deposits only from local customers and generating our loans within our local markets,” said Dale McGriff, Executive Vice President of SGBC.
This philosophy, while preventing rapid growth in the past, has proven to be a benefit during the past two years.
Like all other financial institutions, SGBC has been affected by the recently shrinking net interest margins.
“To minimize this effect, we have taken plans to control expenses, increase good loans within our markets and continue aggressive business development efforts to increase our customer base by offering excellent banking services,” said McGriff.
While SGBC has certainly not seen a decline in customers, we still stress the importance of continuing to grow as a business, especially in hard times.
“It is really just business as normal, except more aggressive. We are seeking out businesses through referrals and incentive programs. We’re really trying to build a banking relationship with our customers, and we’re trying to continuously keep growing,” said McGriff.
Since SGBC is well capitalized and has good liquidity, the bank did not find it necessary to apply for investment from the Treasury Department’s Capital Purchase Program; and despite the current economy, lending practices at SGBC have not changed.
“We continue to aggressively seek good-quality loans based on the individual borrower, the loan and the collateral, within our markets. It is important for the overall health of the community,” said McGriff. “Providing loans to qualified borrowers in their area of business is how they have remained profitable and stable throughout the credit crisis.”
While the bank is not suffering dramatically, demand for new commercial and residential lending has slowed significantly in Tift County and surrounding areas.
“We are, however, seeing an increase in applications for refinancing, especially in the residential area,” said McGriff. “Rates are very attractive at this time.”
In addition, many customers are saving more and moving their investments from the equities area into the safety of bank certificates of deposit. The equity market is really the stock market. In the recent past, the stock market values have either shown decline or become unreliable. Many people have chosen to move their money into fixed income-type investments, like bank certificates, where they are ensured that their principle investment will be protected. Bank certificates are also insured with the FDIC.
“We are definitely seeing a more conservative approach by both consumers and commercial customers,” McGriff said of the recent trends he has seen. “Some of those with excess cash are paying down debt to prepare for the future while others are moving to more stable investments. Most savings investments are going into accounts maturing in one year or less, hoping for increased returns in the future.”
Article by Chivaun Perez
March/April edition of South Georgia Business Magazine[back to list]