In its three-and-a-half years of existence, First Community Bank of East Tennessee has scrappily gobbled up 25% of its home county's deposit market share.
It still has a way to go before it can match First Union Corp.'s 40% share, but the bank's officials just ask for a little more time to chip away at their larger rival's stranglehold on this pocket of rural eastern Tennessee.
"Our goal now is to dominate Hawkins County," said John L. Campbell, the bank's president and chief executive officer.
First Community Bank of East Tennessee already dominates its peers in the community banking world.
An American Banker study of banks with $3 billion or less of assets showed that the Tennessee bank is the best all-round-performing de novo bank in the country. Only banks that were founded in 1993 were included in the ranking.
The bank boasts a 1.28% return on average assets, 11.1% return on equity, and 11.6% capital-to-assets ratio. Its top ranking was based on these and three other factors: loan concentration, operating expenses, and ratio of assets to nonperforming assets.
The bank was ranked especially high on percentage of delinquent loans to assets, which at yearend 1996 was 0.22%
"It's an incredible feeling, and we want to be humble about it," Mr. Campbell said. "We know it's not only a product of our efforts but the result of the trust people had in us in so short a time."
The bank's headquarters, Rogersville, is considered a conservative town, conscious of its traditions. The downtown historic district, with its Georgian-style buildings, shingle roofs, and cut-stone sidewalks, has earned a spot on the National Register of Historic Places.
Mr. Campbell said his strategy is simple: He's trying to win over the typically conservative customers in this county of 45,000 who want to bank with a locally owned institution - not one of the big Charlotte, N.C., or Atlanta banks.
It's become the familiar pitch of community bank organizers nationwide who herald a return to smalltown banking. The wave of start-ups, which has grown each year since the early 1990s, has produced hundreds of new banks trying to make money by taking on the megabanks. In Tennessee alone, 11 community banks have been opened since 1994, and four more are in organization.
"What we're seeing in Tennessee is a lot of interest in the community bank concept," said state Bank Commissioner Bill Houston. "Where local banks are purchased, there's a lot of interest in forming community banks."
It's too early to gauge the success of many new community banks. Mr. Houston said most new banks are "on budget," while some are losing money.
In Rogersville, First Community Bank is far exceeding its own expectations. Mr. Campbell said he had expected to amass about $31 million of assets after three years but now has $81 million.
"I think one of the delights to our investors has been the performance of our stock," Mr. Campbell said. The stock, originally sold for $10 a share, now fetches about $26.
And there are plenty of stockholders to share in the wealth.
The bank's organizers decided they wanted the equity to be widely held, so they sold it to nearly 1,000 investors.
It was an attempt, Mr. Campbell said, to make many of the bank's customers shareholders.
Mr. Campbell "set the standard that everyone else coming along behind him is trying to achieve," said Phil Carriger, president and chief executive officer of 14-month-old People's Community Bank, Johnson City, Tenn. "We're trying to have the financial results that he's had."
Bill Greene, a colleague of Mr. Campbell at the former Citizens Union Bank, sees the business landscape as community banks versus "the rock crunchers," a not too affectionate term he uses for superregionals like NationsBank Corp. and First Union.
Mr. Greene, now chairman of Bank of Tennessee in Kingsport and Carter County Bank in Elizabethton, said he's convinced that local customers are loyal to bankers, not banks.
First Community's Mr. Campbell has spent a little time among the rock crunchers. Before embarking on his new venture, he was president of Citizens Union Bank, a subsidiary of Dominion Bankshares Corp., Roanoke, Va. But First Union bought Dominion in 1993, forcing Mr. Campbell to rethink his future. He doubted he had one with First Union.
"I really missed the opportunity to deal with our bank customers on a more traditional basis without the bureaucracy" a larger bank has, Mr. Campbell said. "I think our customers missed that themselves."
First Union officials don't feel threatened by the competition in Hawkins County.
True, First Community did manage to pull away deposits when it opened, said Frank Proffitt, First Union's county president. But $140 billion-asset First Union has three branches in Hawkins County, which is the superregional's fifth most profitable location, he said.
Mr. Proffitt said First Union has the advantage of a vast array of products, including the only brokerage in Rogersville.
"It's phenomenal to be in an area with this population, to have that kind of banking service available to them," he said. "That's how we intend to grow our bank."