THOMSON, Ga. - Taking out loans was - Boone A. Knox's only experience with banks before he became president of one.
In 1975, Peter S. Knox Jr., chairman of the Bank of Thomson, plucked his 38-year-old son off the local golf course and installed him - without his knowledge - as president of the 85-year-old institution.
Boone Knox had done handsomely in construction, real estate, and lumber. And, his father, reckoned, he had all the makings of a good banker.
"He doesn't have any banking experience," Peter Knox told one board member, "but he's borrowed more money than this "bank's got."
As unorthodox as the decision may have appeared, it proved to be a wise one. Boone Knox took hold of the sleepy $17 million-asset bank and in less than 20 years has transformed it into a high-performance, $535-million multi-bank holding company with 26 branches in eastern Georgia.
The holding company, Allied Bankshares, has acquired seven financial institutions in the past nine years - including three just two months ago.
Along the way, the company has routinely posted stellar profits, thanks in part to a no-nonsense, personal approach to customers.
"We don't jack people around," the ruddy-faced bank president says. "If a guy walks in the door, and I know him, and I know he wants money, I usually know right away if I'm going to lend him any money. We talk for a bit, and I tell him right then, without signing anything, that he's got the loan. I think that philosophy works."
In 1976, Mr. Knox's first full year as president, the bank had 35 employees and earned roughly $200,000. Today, with branches in eight different counties in the state, Allied Bankshares has 350 employees. Last year it earned $7 million, and it's on schedule to make $8.5 million this year, Mr. Knox says.
He win be "very disappointed" if the company does not reach his target of $10 million annual net income by the end of 1995.
Mr. Knox doesn't drink twice about reaching this goal, emboldened by the success achieved in the business world before becoming a banker. With his brother, Peter S. 3d, he took those bank loans and built up several solid companies - including a sawmill that they sold for $7 million in 1973.
Boone Knox then devoted himself totally to golf. He became a scratch golfer in 1974 and even qualified for the British Amateur tournament, to be held in Scotland the next spring. Fortunately for Bank of Thomson, Peter Jr. had other plans for his son.
Unbeknownst to, Boone, he called a meeting of the bank's board of directors on a Thursday. They elected Boone president and told him that night he was starting on Monday.
A leisurely stroll through this old southern town, located about 30 miles west of Augusta, reveals how the Knox, family and the bank itself are woven through the fabric of the area.
Across from the old bank building sits a shopping mall called Knox Center-, there's a two-story structure called the Knox Building; nearby stand Watson & Knox Real Estate and Watson & Knox Insurance and Realty.
A cousin, Robert E. Knox Jr., has been the mayor of Thomson for the past 14 years. Boone's son, Jeffrey, presides over the bank's eight branches in neighboring Columbia county.
Most of the major projects in the town during the last 30 years or so were financed, at least in part, by the Bank of Thomson - including the Belle Meade Country Club and its top-of-the-line golf course, built on Knox land.
The key to the bank's success, Mr. Knox believes, is simple: he thinks like a businessman, not like a banker. Sitting behind his desk early one recent morning, cigarette in hand, he gave an example.
Like a lot of institutions, the Bank of Thomson used to have bowls of matchbooks in its lobby for customers. Mr. Knox had no problem with the giveaway, until he discovered that a match company had a contract with the bank, to send a shipment every quarter, whether it needed them or not, at the price of $2,600 per load.
"I couldn't believe it," Mr. Knox said. "I called that company up and told them, 'If you ever want to sell another pack of matches in this town again, you tear up that contract and stop sending us matches.'"
In their place, Mr. Knox bought 1,000 cigarette lighters and told his tellers to hand them out only to customers who smoke. That supply has lasted to the present day.
Cost cutting, and attention to detail, Mr. Knox asserts, are crucial to the bank's consistently impressive balance sheets.
The bank's returns on assets and equity, for example, often have been above 2% and 15%, respectively. In the third quarter, those two figures slipped to 1.37% and 14.6%, primarily due to poor asset quality at the recently acquired institutions, Mr. Knox says.
His current challenge is, as he puts it, to run the blood of his healthy company through the veins of these subpar institutions.
Mr. Knox, observers say, is well positioned for the challenge.
"This is a very profitable bank," says Gray Medlin, vice president of the Carson Medlin Co., an investment banking firm based in Raleigh, N.C.
"The stock has been trading at about 250% book value. That's a considerable premium."
The high multiple stems primarily from the bank's traditionally strong performance, history of paying dividends, and large percentage of internal ownership, according to Christopher Marinaic, a bank research analyst at Interstate/Johnson Lane, a brokerage finn based in Charlotte, N.C. More than 50% of the stock is owned by the Knox family and employees.
To help keep profits strong, Mr. Knox steers clear of heavy competition on interest rates. In fact, he estimates the bank's deposit rate is normally about 25 basis points lower than that of competitors, and the loan rates are about 25 basis points higher.
"Not everyone is a rate-shopper," says Mr. Knox. "If they are, they can go somewhere else. We're not trying to push money out the door here. We will serve customers who are worthy of being custodians of our money."
Says Hugh C. Long, the Knox family banker for years and now the mid-Atlantic area president of First Union Corp., "I would rather have a wink and a nod from Boone, than a written agreement from anyone else. We winked and nodded a lot through the years."
Allied Bankshares' subsidiaries - three state-chartered banks and a mortgage company - offer only core services; there are no trust departments and no real credit card business. Allied Bank of Georgia - formerly the Bank of Thomson - offers a card bearing its name, but does not actually underwrite the credit.
"If people are going to be using our money, I want to be able to look at them eyeball to eyeball and know what they're using it for," Mr. Knox says. "I want to be able to tell them that they don't need that damn dishwasher."
Looking to the future, Mr. Knox believes that it's inevitable that Allied Bankshares will merge with another company or be acquired. Just five years ago, in fact, Allied was nearly acquired by North Carolina-based Southern National Corp., but the deal failed at the last minute due to "philosophical differences."
"I'm not seeking an engagement, but I still want to be the prettiest girl at the prom, when and if someone does ask us to marry him," says Mr. Knox, referring to the possibility of an acquisition. "But if we end up being a spinster, I want to preserve our beauty and quality as much as I can."
While Mr. Knox never got to compete in the British Amateur, and his handicap has risen to a nine, he nevertheless received a rare honor four months ago. He was inducted by the celebrity studded Augusta National Golf Club, which has only about 25 local members.
It was an achievement that may never have occurred if his father hadn't yanked him off the golf course 19 years ago.