Trailblazer Award: Community Bankshares Inc., Cornelia, GA

When Community Bankshares Inc. was considering opening a supermarket branch back in 1983, its board of directors was skeptical that it would ever amount to more than a glorified check-cashing facility. But the bank’s chief executive officer at the time, 44-year-old J. Alton Wingate, was brimming with new ideas. Banks were being deregulated, and Wingate reasoned that supermarkets were one of the few places that customers must visit on a regular basis, which guaranteed lots of foot traffic. Despite having “butterflies the size of elephants” in his stomach, as he later confided to a colleague, Wingate won the board over on the strength of his conviction.

And look at the company now. From just $45 million in assets and four branch offices in 1980, Cornelia, Georgia-based Community Bankshares now has $930 million in assets and 41 branches in Georgia and Alabama, including 27 branches in Wal-Mart Supercenters and various grocery chains. Wingate took the concept one step further and opened a consulting firm, Financial Supermarkets Inc., to help other bankers develop their own in-store branches, which earned him the moniker of being the “father of supermarket banking.” Today, FSI is one of the leading in-store branch vendors, with 192 in-store facilities among 27 retailers in 28 states. Another 80 locations are under contract to open by 2008.

“When the concept first came up, we had mixed emotions,” says Dean Swanson, an independent director who has served on Community Bankshares’ board since 1972 and is now chairman of the audit committee. “Yet Alton never wavered. He had the vision. He saw that [supermarket branches] could become almost a full-service bank. He certainly had the concept of moving the bank where the customers are.”

Edwin B. Burr was a regional director at the Federal Deposit Insurance Corp. in Atlanta at the time the board approved the first supermarket branch. Burr could find no reason to turn down the idea. The financial condition of the bank was strong, as was the character of the management. And the foot traffic inside a grocery store was a sure-fire way to meet the community test. “The regulator is always skeptical of everything,” Burr says. “So I looked at it and said, ‘Well, it’s a good bank. They are not putting out much money for this. And there’s no prohibition to do it.’ It met the factors that you would use to approve a branch, so I approved it.”

Often described as gregarious and indefatigable, Wingate brought a can-do attitude to the board. Sadly, he died of cancer in August 2005. Burr, who had joined FSI’s Financial Solutions subsidiary and was president at the time of Wingate’s death, was appointed to succeed him as president and chief executive officer. For their collective vision and shared commitment to a new idea that has dramatically reshaped their company, the board of directors at Community Bankshares are this year’s winners of Bank Director magazine’s Trailblazer Award.

The in-store banking concept has been one of the main drivers of Community Bankshares’ rapid growth and profitability in recent years. Consolidated income grew to $8.9 million in 2004, up 46% from a year earlier. Income for the first nine months in 2005 rose to $6.9 million, up 7.4% for the same period a year earlier.

When the bank opened its first in-store branch in an Ingles Market Inc. grocery store in Cornelia, Georgia in 1984, the branch was a success overnight, recalls Annette R. Fricks, vice chairman and chief operating officer of the holding company. Fricks started working at the bank in 1967 as Wingate’s secretary, and soon became both his right and left hand. “The branch was immediately accepted by our customers,” she says. “In fact, we had customers come into the main office and say to us: ‘Just because we are using the supermarket bank doesn’t mean we don’t love you anymore. It’s just that it’s so convenient to do our banking where we do our shopping.’”

To be sure, Wingate had tapped into something many banks generally hadn’t supplied to customers: convenient hours. Its first branch at the Ingles store was open Saturdays, and until 7 p.m. on Thursdays and Fridays. “That gave us an edge over the competition,” Fricks says.

Other bankers took notice, and Wingate quickly saw the opportunity to start franchising the concept. Branching laws in 1984 still made out-of-state banking cumbersome, so Wingate saw FSI as a chance to open branches in supermarkets on behalf of other banks. FSI was off and running. Financial institutions liked it because dealing with grocers required a sales knack and an expertise of sorts. And supermarkets liked dealing with one provider rather than numerous banks across a geographic footprint.

Much of FSI’s growth in recent years has come through relationships with some of the nation’s largest retailers, including Wal-Mart and the Kroger Co. Wingate aggressively pursued Wal-Mart, based in Bentonville, Arkansas, and won business for FSI starting in 1998. As Wal-Mart has grown, so has FSI. “That has helped us move forward,” Burr says. “It has been a real good delivery mechanism for us. You get a lot of traffic in those stores. With all the foot traffic and being in the front of the store, they are very successful as deposit gatherers.”

There’s no question that the store locations have fed Community Bankshares a steady stream of deposits, which grew to $727 million by yearend 2004, up 8.4% from 2003. Meanwhile, future growth for in-store branches looks good for FSI, which won the exclusive right in 2003 to install in-store branches for Kroger, headquartered in Cincinnati. Kroger, the nation’s second-largest grocer behind Wal-Mart in terms of revenues, covers eleven states, offering up to 180 in-store locations for FSI in the years to come.

In essence, FSI’s success has come from perfecting the supermarket model over the years, helping it beat the competition. Swanson recalls a project in Phoenix some years back where FSI went head-to-head with another vendor for placement in one of the nation’s largest retailers. The retailer split the rights to build between FSI and the other vendor. Over time, the retailer started sending the lion’s share of business to FSI. The reason was simple: FSI was meeting its schedules while the other vendor was not, director Swanson says. “We started getting more of them,” he says. “Our people have faced it so many times. They foresee the problems. They can overcome them and get their stores in and operating. They know how to keep retailers happy.”

Those abilities helped FSI expand to the West Coast in 2003, with the opening of sales and service offices in Los Angeles and Portland, Oregon. And FSI is the preferred provider for the Food Marketing Institute, a major trade group for the grocery industry. The company also struck a deal in 2004 with Coinstar Inc., a vendor based in Bellevue, Washington, to be the exclusive provider of coin-counting systems to banks nationwide.

Over the years Community Bankshares has also trailblazed in other areas. In 1998 Wingate persuaded the board to buy a local real estate broker, which now operates as Financial Properties Inc., a subsidiary that uses the Century 21 brand. Over a four-year period ending in 2004, production increased 343% in listing inventory and 396% in commissions, according to the company’s annual report.

And in 2004 the company opened its first Hispanic branch in Gainesville, Georgia-“BancoLatino”- to tap into the region’s fast-growing ethnic market. Hall County, where Gainesville is located, was 23% Hispanic in 2004, according to the U.S. Census Bureau. The branch is designed to appeal to customers, with décor that features bright color schemes. Lobbies have Spanish language newspapers, and the location is staffed with fluent Hispanic employees, from many countries including Mexico, Guatemala, Columbia, Puerto Rico, Peru, and Venezuela. Country flags adorn teller windows that allow customers to interact in a dialect that feels closer to home.

Now Community Bankshares looks to Burr to continue its pioneering path. Burr was a unanimous choice to lead the company forward after Wingate’s death. He was already a director and had served as president of Community Bank & Trust in Alabama prior to moving over to FSI. When asked to take the reins, one of Burr’s first reactions was to tell the board he couldn’t fill Wingate’s shoes, recalls Lois Wood-Schroyer, a director since 1990. The board reassured Burr that he was up to the challenge. “We said to him, ‘You’re a different individual. You just have to do what you can do,’” Wood-Schroyer recalls. “With Mr. Burr already on board and being the knowledgeable person that he was, it really lifted the burden of all the employees and the directors, too. And it gave them the assurance that we can go on because we have a leader that is qualified.”

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