Small Atlanta Bank Wins with Exporters

ATLANTA - Finding no help at the major Atlanta banks, CCA Electronics Inc. turned to suburban Summit National Bank to service its export finance needs.

International trade finance is normally the bailiwick of major city banks, but Summit National is doing a tidy business servicing companies that are not big enough to interest its downtown competitors.

The bank, with $65 million in assets, offers a full range of international services, including letters of credit, foreign exchange, collections, payments, wire transfers, and translations into major Asian and European languages.

"While Atlanta tries to call itself an international community, the banking community tends to orient itself toward the larger customers," said Bernard Moskow, vice president of finance at CCA Electronics, which has sales of $3 million a year.

Summit arranged a $150,000 revolving line of credit for CCA through a special program of the Small Business Administration.

So-called niche banking is what it takes to survive in the rough and tumble world of suburban Atlanta community banks. A rash of them appeared in the city's suburbs in the late 1980s, but many have run into trouble because of the downturn in the real estate market.

A recent study by the Georgia Department of Banking and Finance found that 25 of the 47 banks that opened in the Atlanta area since 1983 were losing money at the end of last year.

A Different Need

"Community banks have to focus on some kind of business that gives them a stream of earnings from something other than loans," said T. Stephen Johnson, a local consultant.

Summit was the brainchild of several former officers of Citizens and Southern Corp.'s international department. They founded the bank three-and-a-half years ago in the Atlanta suburb of Chamblee with the idea of serving that area's large Asian community, primarily Chinese and Korean immigrants.

The idea appeared sound, but the execution was flawed. Mounting losses led to a management change in January 1990, when William M. Galardi took over as president and chief executive. He inherited a bank saddled with excessive overhead and inflated salaries, which he pruned back. He also eliminated unprofitable mortgage and merchant banking operations.

A New Emphasis

To raise earnings, Mr. Galardi emphasized trade finance, which was already an element in Summit National's business plan. In 1989, when the bank reported a $969,000 loss, international transaction fees contributed $112,000 to the bottom line.

Mr. Galardi almost doubled that figure to $214,000 last year, when the bank earned $149,000, its first annual profit. The company expects to earn $300,000 from its trade finance activities this year.

"The larger institutions just don't want to fool with any [transaction] under $1 million. The economies of scale are just not there," Mr. Galardi said.

Because Summit National's market niche is not highly competitive, the bank can charge community bank prices for its products. Where the superregionals price their letters of credit in fractions of a percent, Summit National can charge fees of 1% or higher for this labor-intensive work.

Summit does not have the market all to itself. First American Bank of Georgia, a downtown Atlanta bank with $1.5 billion in assets, also offers trade finance services to small and medium-sized companies.

And more competition may be on the way. There is speculation that the Bank of Seoul and the Exchange Bank of Korea may open agency offices in Atlanta and lure some of the Korean international business away from from Summit National.

Experience Is Varied

An intense but soft-spoken executive, Mr. Galardi, 44, began his career with Trust Co. bank in Atlanta and later headed community banks in Columbus, Ga., and West Virginia. His most recent posting, before coming to Summit National, was president of a community bank in Cornelia, Ga., a small town north of Atlanta.

Mr. Galardi applied for the job at Summit National in late 1989, when the bank had rung up $2.3 million in losses after two years of operation. It's normal for startup banks to lose money in the first year or two, but Summit National's deficit was excessive.

Mr. Galardi soon determined that overhead rather than credit quality was the culprit. The previous manager had signed a lease at a pricey $19 a square foot for nearly twice the space the bank actually needed. Mr. Galardi said the bank was also overstaffed and had acquired more technology than it needed.

Mr. Galardi can't do anything about the lease until 1993, but he did reduce the number of employees to 33 from 40.

On the credit side, he was pleasantly surprised by what he found. The bank had never made real estate loans, so it has not come to grief in that market's downturn as have so many of its competitors.

In addition, the strategy of focusing lending efforts mostly on small- to medium-size Asian businesses proved to be a good one. Summit National's current ratio of nonperforming loans to total loans is a relatively healthy 1.76%.

PHOTO : LITTLE COMPETITION: William M. Galardi has led Summit into export loans shunned by big banks.

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