Just over a year ago, as the economy cratered during the worst financial crisis since the Great Depression, tiny NOA Bank opened its doors in Duluth.
No new bank has set up shop in Georgia since then. For all of NOA’s short life, the local economy has been in a tailspin marked by record foreclosures and mounting job losses.
The bank’s founders didn’t plan it this way. The effort to launch the bank began during boom times, but by the time they raised funds and cleared regulatory hurdles, the Great Recession was in full bloom.
Despite the challenges, NOA — the name stands for North of Atlanta — is not only surviving, it’s on track to turn a profit by early next year. NOA, which targets the area’s growing Korean and immigrant communities, is even moving ahead with plans to open a second branch in Doraville.
On one hand, the bank’s timing was spot-on. Because the bank opened after the real estate collapse, NOA’s balance sheet is not weighed down with bad loans like so many Georgia lenders.
That’s not to say it’s been a smooth ride. The rough economy has made it more difficult than ever to evaluate prospective borrowers for potential risk, said Jerry Lewis, the bank’s CEO.
“We’ve had to be very cautious about the folks that we take on,” he said. “It has been a bit like trying to navigate a minefield. But we have very experienced and talented people who are up to the task.”
For years, Georgia has been a fertile ground for new bank formation. This decade, 99 banks have opened, including 19 in 2006 alone.
But the steady flow dried up after NOA opened, as groups struggled to raise start-up capital amid the recession. Several bankers with cash already in hand, meanwhile, said they were ready to launch but could not win approval from federal regulators for deposit insurance.
The rotten economy has made it tough for new banks, said John Kline, a Decatur-based bank consultant who helped two banks open in 2008, a few months before NOA’s arrival.
The biggest problem NOA and other young banks face, Kline said, is finding enough business to meet growth projections.
“Loan demand is just so off all around, because businesses are shrinking, not growing,” he said.
NOA’s growth has been more sluggish than anticipated. The bank has $45 million in assets, short of its $55 million goal, Lewis said, although he remains hopeful of meeting his three-year target size of $150 million.
So far, 650 customers have opened deposit accounts, putting a combined $32 million in the bank, Lewis said.
NOA’s lending strategy is conservative: target small businesses, not the real estate deals that have proved toxic for so many local banks.
Of course, NOA’s road to success is far from guaranteed. Much depends on the economy, which appears to be slowly on the mend but remains fragile.
“We don’t know what’s going to happen, so we have to be cautious,” he said.
Upbeat and energetic despite a cold, steady rain beating down on a recent afternoon, Lewis bounded about the bank’s home office, set in a small strip mall on Pleasant Hill Road near Gwinnett Place Mall.
It’s a clean, modern space with lots of glass and cool blue hues. Several signs are in Korean, including a large placard near the teller counter congratulating the bank on its first-year anniversary.
Though only an accident of timing left NOA the state’s last bank to open, Lewis said he feels an extra responsibility to make sure the bank does well‚ “to be the best bank we can be, make good decisions and grow prudently.”
While Koreans make up a large part of the bank’s business, NOA’s customer base is diverse, reaching into the area’s Chinese, Vietnamese and south Asian communities, among others, Lewis said.
NOA faces intense competition from two other banks targeting a similar clientele‚ Metro City Bank and First Intercontinental Bank. Dong W. Kim, CEO of First Intercontinental, said the area’s growing Asian community is large enough for all three banks to thrive.
“We have more than enough market for three Korean-American banks here,” Kim said.
And Kim said he’s hopeful the economy will rebound in 2010.
“I think we hit the bottom already,” he said. “It will be much better next year.”
Lewis, too, is optimistic.
“We’re making lots of friends, we are growing the bank,” he said. “We will prosper despite the economy. We’re just working an awful lot harder than we would have if times were good.”
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Meet the reporter
Paul Donsky joined The Atlanta Journal-Constitution in 1999, and he has covered banking, transportation and education. Donsky began reporting on banking in September 2008, just as the financial crisis was peaking. Since then, he’s covered some two dozen bank failures and has documented the industry’s struggles amid the downturn. He became interested in NOA Bank while reporting a story about the dearth of new banks opening in the recession.
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