Tom Wiley knowingly took on an improvement project in assuming The Coastal Bank's leadership in 2007.
He anticipated adding on, not fixing up, however.
"Our intention when we got here was to be a consolidator, to acquire other banks and grow our market share," Wiley said. "The storm, it turned out, was significantly bigger than anticipated."
The "storm" was the recession and banking crisis. Like many banks across the country and particularly in Georgia, The Coastal Bank was built on real estate-based loans. As recently as the summer of 2010, 91 percent of Coastal's loans were backed by real estate collateral -- the highest concentration of any community bank in the area.
Drops in real estate values contributed to losses exceeding $10 million over a three-year period. The hit wasn't the largest in the area but did promise a long and difficult recovery for Coastal, particularly in a regulatory environment punitive to small community banks.
Yet as 2012 draws to a close and the wider economic recovery continues to creep along, Coastal is showing a profit, a strong capital position and a stability in assets many of its peers can't rival. The strength of the bank's underlying fundamentals has Wiley and the bank's new leader, Jim LaHaise, focused on growth once again.
The turnaround, driven by Wiley, LaHaise and the bank's management team, makes Coastal Bank our choice for "Comeback Business of the Year."
"There's no question with that level of management talent Coastal Bank will continue to have success in the future and will emerge as the preeminent independent bank in Savannah over time," said Ed Sibbald, director of Georgia Southern University's Excellence in Banking and Financial Services.
Buckle down early
Credit The Coastal Bank's proactive approach to the banking crisis for the bank's accelerated turnaround.
Wiley became the bank's CEO in April 2007. Within a month, he closed a worrisome loan production office in the South Carolina Lowcountry and set to work on a growth strategy, which would include a capital raise and acquisition of BankSouth's two Savannah branches, both in 2008.
Wiley also built his management team and charged them with two tasks: Change Coastal's deposit mix, which relied heavily on brokered deposits, or funds purchased from other financial institutions; and assess and address problem loans.
Among Wiley's management hires was LaHaise, with whom he'd worked at AmeriBank. As the recession dawned and loan defaults accelerated, LaHaise recommended appointing three of Coastal's strongest bankers and "isolating them to deal with the problem loans only."
"That way the problem loans don't drag down everybody in your organization," LaHaise said. "The speed at which values went to zero was unreal. There wasn't a segment that thrived."
The bank hit bottom in January 2011, with $49 million worth of delinquent loans or repossessed properties in its $484 million portfolio. But Coastal's problem loan team was already addressing the issue, cutting a million dollars a month from its non-performing assets.
Coastal closed the third quarter 2012 on Sept. 30 with $31.5 million in its problem bucket. Meanwhile, the bank had grown its assets by 3 percent since the end of 2010. By comparison, Coastal's two biggest competitors in town, First Chatham Bank and Savannah Bank, saw double-figure cuts in assets -- much of that strategic to free up capital.
Coastal raised capital in 2010 not through trimming its balance sheet but in the marketplace.
"That told us we were doing things right," Wiley said. "To raise money from investors given the situation showed their faith in what we were doing."
Look in the mirror
Coastal also looked internally for improvement.
The bank introduced what LaHaise calls a "bootstrap strategy" in 2011. The goal was to increase profitability by maximizing revenues across all income streams while cutting expenses.
Coastal made the risky decision to alter its fee income structure and offer innovative mortgage products as well as manage its cash stringently. The bank cut overhead by reducing its workforce through attrition.
Coastal invested in technology advances related to online banking and security. The bank will "leverage that technology" going forward, LaHaise said. The bank's deposit base is growing.
"We have built an organization that can adapt to the speed of change," he said. "If you can't get faster, you're going to get behind faster. So we have had to be as aggressive as possible when it comes to technology."
Among the changes for Coastal Bank recently is leadership. Wiley accepted a job in October with Atlanta-based State Bank & Trust. He remains as the chairman of Coastal's board of directors. LaHaise was named his successor in what has been a "seamless transition."
"Culturally, we are very similar," Wiley said of LaHaise. "He has his own methods, of course, but the strategy going forward remains -- this bank is going to play more offense than defense."
BEST OF SAVANNAH BUSINESS 2012
All this week, the Savannah Morning News will profile companies and organizations that made major contributions to the local business environment in the past year. The Exchange staff chose the honorees -- from a list of nominees submitted by local business and community leaders -- utilizing broad criteria, from growth and success to philanthropy and community involvement.
Thursday: Savannah Slow Ride (Newcomer of the Year)
Wednesday: World Trade Center Savannah (Advocate of the Year)
Today: The Coastal Bank (Comeback Business of the Year)
Friday: JCB Apprenticeship Program (Educational Partner of the Year)
Saturday: Wet Willie's (Entrepreneurial Business of the Year)
Sunday: LMI Aerospace (Manufacturer of the Year)
COMEBACK BUSINESS OF THE YEAR
Winner: The Coastal Bank
Leader: Jim LaHaise (CEO), Tom Wiley (chairman)
Business sector: Banking
2012 Revenue (projected): $24 million
2012 Accomplishments: The Coastal Bank is on pace to post an annual profit after losing more than $10 million in the previous three years during the largest banking crisis in a half-century. The second-largest locally owned community bank in the Savannah area, The Coastal Bank is growing while its peers have shrunk to improve their capital standing.
The bank debuted many technological advances for customers this year, including IronKey Trusted Access, a secure Web browser for online banking designed to prevent identity theft, payments frauds and online banking account takeover. Coastal also introduced several customized mortgage products catering to homebuyers.
The Coastal Bank changed leadership late in the year, with Tom Wiley stepping down as president and CEO to accept a similar position with State Bank & Trust in Atlanta. Wiley's top lieutenant, Jim LaHaise, was chosen to lead the bank.
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