Rural Georgia bank primed for growth under new ownership

For more than seven decades, Rochelle State Bank in rural Wilcox County, Georgia, stuck to a simple strategy favored by its owners: Collecting deposits from local citizens and small-business owners and investing them in securities.

But now the tiny bank is under new ownership and its new chairman and CEO have big plans to transform the $46.4 billion-asset Rochelle State Bank from a sleepy local bank to a modern, tech-savvy institution with operations stretching across south Georgia.

Job one for the new ownership group — led by investor Rajib Das — is leveraging Rochelle State Bank’s strengthened capital position to boost growth in its home market, primarily by boosting lending. While the $46.4 million-asset, one-branch institution controls about 26% of Wilcox’s $138 million deposit market, its loan portfolio amounted to less than $10 million on June 30, according to the Federal Deposit Insurance Corp.

From there, Das and his team have set sights on expanding Rochelle’s footprint beyond the borders of Wilcox County. They’re open to buying other banks to drive their strategy.

Rochelle State Bank has “been a safe-and-sound institution, which means I can focus on growth,” says Rajib Das, the lead investor in a group that bought the bank from its longtime owners.

“We are exceedingly well capitalized,” Das, who serves as Rochelle’s chairman, said last week in an interview. “I think mathematically we are one of the highest capitalized banks by ratio in America, so if someone wants to talk to us, we’re open for business.”

Rochelle’s 26% leverage ratio as of June 30 was nearly three times the industry average of 8.8%, according to FDIC.

In a press release last week announcing the Das group’s acquisition of Rochelle, Len Davenport, who Das hired as CEO, said fresh capital injected by the group will create “more and larger opportunities to serve the community.”

“We take tremendous pride in being a community bank and are making significant investments in technology and local talent to further enhance our customer experience,” Davenport added.

According to Lee Bradley, senior managing director at the Duluth, Georgia-based Community Capital Advisors, Das and Rochelle are edging toward the M&A market at a timely moment. Bradley is predicting a substantial pickup in the number of Peach State community banks seeking a buyer.

“There are a lot of small banks in Georgia that are generationally owned, but they’re dying out,” Bradley said Friday in an interview. “The younger generation doesn’t want to modernize the bank.”

Ironically, that same scenario appears to have played out at Rochelle.

The Estes family owned the institution from 1947 until this summer, when control passed to the Das group. Former CEO Matt Estes Jr. worked at Rochelle for more than four decades, “but he really didn’t have a next-of-kin to take over,” Das said. “I was connected to [Estes] by a mutual investment banker friend.”

For Das, the single biggest driver behind his move into community banking was the sector’s ongoing consolidation. The Orlando, Florida-based Lexington Park Group, where Das serves as CEO, is a longtime investor in financial services, so he is familiar with banking trends. Still, the full significance hit him only recently, after a series of conversations with friends.

“I’d be at a kid’s birthday party,” Das said. “People would come up to me and ask me for advice on getting a loan or they’d ask me for a loan. I had to tell them, `I invest in banks. I’m not a banker.’”

Those talks opened a window into the effect consolidation among community banks is having on small-business owners and other natural clients of hometown banks. “It kind of got us thinking that we need a bank,” Das said. “New charters have been few and far between. Larger banks are not really focused on filling the void left by the disappearance of community banks.”

There were 154 Georgia-based banks on June 30, down from 353 on June 30, 2006, according to FDIC.

Under Estes, Rochelle employed an exceedingly conservative strategy, favoring investing in securities over lending. Though lending picked up after deposits spiked last year, the loan portfolio still totaled just $9.4 million on June 30. Meanwhile, equity capital, which totaled $4.9 million at year end 2020, jumped to $10.7 million following the ownership transition.

The situation—more capital on the books than loans—isn’t unique, “but it isn’t something you see very often,” Bradley said.

Rochelle’s annual earnings have been modest over the past five years, never exceeding $250,000. For Das, however, the bank’s squeaky-clean loan book with zero nonperforming assets proved more important.

“It’s been a safe-and-sound institution, which means I can focus on growth,” Das said.

To spearhead his move into community banking, Das formed a holding company, ST Hldgs. ST’s purchase of Rochelle closed June 4, but the group waited until Tuesday to make it public.

After acquiring Rochelle, Das installed a new management team, led by Davenport, who served as CEO at Gwinnett Community Bank from 2017 until its sale to Raleigh, North Carolina-based First Citizens BancShares in 2020, and Executive Vice President Bryan Wilder.

For the past few months, broader expansion plans have taken a back seat to Rochelle’s need for a technological makeover, as well as an effort to solidify the bank’s position in Rochelle and Wilcox County. Das said he is in the process of hiring several local lenders.

“These are small towns and people know everyone,” Das said. “You bank with the people you know, so we wanted to make sure we had the best and brightest in-market.”

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