Brick and mortar seems to be in vogue again with area banks.
About half of metro Augusta's banking institutions are developing, or are planning to develop, new branch offices through this year and early 2001.
This comes after a two-year period marked by modest construction activity, downsizing by big banks and a continued industrywide effort to steer consumers toward "branchless" Internet banking.
Industry followers say the construction mini-boom that's occurring in Augusta-Aiken primarily is driven by growth in the small-bank sector and the continuing maturation of suburban markets, particularly Columbia County.
Not all cities are experiencing Augusta's rash of bank construction.
"It's market specific," said Joe Brannen, president of the Georgia Bankers Association. "What's going on in Augusta is not representative of what's going on across the country."
And not all banks are building for the same reasons.
First Union, which lately has closed more branches than it has opened, plans to build a new office off Furys Ferry Road, a major corridor to Columbia County's sprawling subdivisions.
First National Bank & Trust Co., a mostly agricultural lender with headquarters in Louisville, is converting a former mortgage office on Columbia Road into a full-service branch to attract customers in more urbanized areas.
Aiken-based Security Federal Bank simply decided to develop a new branch in Lexington County, S.C., after discovering some prime real estate at an affordable price.
Columbia County's hot
All banks want branch offices located on developing, high-traffic arteries close to shopping centers and other places consumers congregate. So it's no surprise most new construction in the area is planned along Furys Ferry Road in Columbia County.
At least three banks - First Union, Georgia Bank & Trust Co. and First Bank of Georgia - have disclosed plans to build new branches along the expanding suburban road that is widely expected to see tremendous commercial development in coming years.
"They see some future potential for growth out there. Obviously, we do, too, or we wouldn't already be out there," said Jimmy Rigsby, area president for Regions Bank. Regions built the first bank office on the Columbia County side of Furys Ferry in 1995, followed by SouthTrust Bank the next year.
Groundbreaking for Georgia Bank & Trust's proposed 3,500-square-foot branch in front of the Furys Ferry Publix is scheduledfor November.
The company's nearest branch, at the intersection of Furys Ferry and Washington Road, will remain open to drive-through traffic, but most services are expected to be transferred to the new location.
"We're trying to increase our presence in a developing area," said Dan Blanton, Georgia Bank & Trust's president and chief executive officer.
In the spring, First Bank will break ground on its branch near the Baston Road intersection. Construction on First Bank's medical district branch, a separate project located on Walton Way, already has commenced and should be complete by fall.
First Union's Furys Ferry location, across from the existing SouthTrust branch, at the foot of the recently completed Bi-Lo shopping center, is expected to see construction start in December or January and should be finished by March or April.
First Union, which has spent the past two years struggling to make its major acquisitions work, announced earlier this year it would sell more than 80 branches (including one in Waynesboro and four in Macon) to focus on more profitable locations.
"That's our philosophy right now, to be where the growth is," First Union's Augusta President Paul Menk said. "(Furys Ferry) is such a good, vital area, it was time to expand our coverage there."
Bank branch shuffle
Although Bank of America said last fall it would develop new corporate offices in Augusta sometime this year, First Union is currently the only large bank in the market with plans for new brick-and-mortar branches.
The new First Union branch is somewhat of an anomaly considering most big banks have been slow to expand in Augusta, and in just about every other market outside metro Atlanta.
In fact, many cities and towns have seen big banks leave altogether, similar to what First Union is doing in Waynesboro and Macon.
Thomaston, Jessup, Dalton, Vidalia, Washington - all have seen regional banks pull out in recent months.
"Large banks open and close branches pretty often," said Julian Hester, president of the Community Bankers Association of Georgia. "If (the branches) don't live up to their strategy plan back home, they'll close them."
What's happening in the second-tier cities and rural markets is that community banks are filling the banking void by purchasing the regional branches and running them as their own.
As a result, the number of community bank branches has increased from 650 to more than 800 in just three years.
"The community banks, through their way of banking, have taken unprofitable branches and made them profitable," Mr. Blanton said.
Also contributing to big banking's problems are the financial and administrative troubles associated with mergers and acquisitions. Most institutions won't expand unless the market's economy is ultra-hot.
"The larger banks are focusing on cost-cutting, merger assimilation and improving earnings - which have been pretty bad - more than serving customers in smaller markets," said Rich Perkey, a financial industry analyst for Spencer Stuart Inc. in Atlanta.
"I have community bank presidents who will come up to me and whisper, `I can't wait for the next big merger."'
Who needs 'em?
Banks, both small and large, would love to be able to grow assets without building new branch offices.
For one, brick and mortar are expensive.
"The minimum you spend these days is $1 million," said Bill Thompson, president of SunTrust Bank in Augusta, adding that the price tag sometimes can reach as high as $3 million. "The hard part is the fact that the branch is not profitable for the first two or three years. That's a loss you have to be ready to absorb."
Banks much rather would have everyday consumers (known in the industry as "retail customers") do their banking through ATMs and electronic banking options, both of which are cheap compared to in-person service at physical locations.
With direct deposit, Internet banking, telephone banking, electronic bill paying and ATMs, there's not much reason to set foot into a bank anymore - not even to apply for a mortgage or a commercial loan.
"We'll come to your house," said Robert Osborne, president of Wachovia Bank in Augusta. "It's gotten so competitive that we can't wait for people to come in - we go to them."
While it's true that changes in technology, the banking industry and consumer behavior have reduced demand for physical bank locations, no one in the industry can envision a branchless future.
After all, many speculated in the 1970s that the paper check would be obsolete before the turn of the century.
"There are more bank branches now than ever before," said Catherine Pulley, spokeswoman for the Washington-based American Bankers Association, commenting on the country's 62,000 bank branches.
Europe, Mr. Hester points out, is much more advanced in electronic banking than the United States, and it still has brick-and-mortar branches.
And human contact may become even more important in the future, as banks evolve into diversified financial service providers offering everything from investment products to insurance to estate planning.
"If you've got $50,000 or $100,000 to invest, you kind of want to know the person you're dealing with," Mr. Osborne said.
Banks have announced the following projects this year:
Bank/Branch location/Projected completion
First Bank of Georgia/Furys Ferry Road, Columbia County/Winter 2000
First Bank of Georgia/Walton Way, Augusta medical district/Spring 2001
First National Bank & Trust Co., Columbia Road, Columbia County/Fall 2000
First National Bank & Trust Co., U.S. Highway 278, Thomson/Fall 2000
First Union/Furys Ferry Road, Columbia County/Spring 2001
Georgia Bank & Trust Co./Furys Ferry Road, Columbia County/Summer 2001
People's Community Bank/Park Avenue, downtown Aiken/Spring 2001
Security Federal Bank/State Highway 378, Lexington County, S.C./Fall 2000
Source: The Augusta Chronicle research
Reach Damon Cline at (706) 823-3486.