Assets: $328.1 million (1997)
Stock Exchanges: NASDAQ
Ticker Symbol: HABC
SICs: 6712 Bank Holding Companies; 6022 State Commercial Banks; 7374 Data Processing and Preparation
Established as a holding company in 1984, Habersham Bancorp combines Habersham Bank—a northeast Georgia financial institution incorporated eighty years earlier—with a number of other bank and non-bank holdings. In addition to Habersham Bank itself, Habersham Bancorp’s banking subsidiaries include Security State Bank, a financial institution chartered in 1988 in Cherokee County, Georgia; and BancMortgage Financial Corp., a full-service mortgage and construction lending company located in the northern part of the Atlanta metropolitan area. Non-bank subsidiaries include The Advantage Group, Inc., which manages a children’s banking program called Kids’ Advantage, and develops personal computer software and other services; Appalachian Travel Service, Inc., a travel agency in Cornelia, Georgia; and Advantage Insurers, a Cornelia insurance agency. With its base in a fast-growing part of the country, Habersham Bancorp places a large portion of its lending dollars in home mortgages and construction.
Beginnings in the Back of a Store
Habersham County is located in the northeast corner of Georgia, near the North and South Carolina state lines. Named after
Georgia statesman Joseph Habersham, the county was founded in 1818, and for many decades thereafter, it was relatively removed from the life of Atlanta or of the cotton-growing lowlands. The Civil War had little effect on the area, whose soil was not suited to large crops. Even with the coming of the automobile age, the county was several hours’ drive north of Atlanta. Nonetheless, Habersham County built its financial base on an unlikely combination of tourism and recreation on the one hand, and manufacturing and processing on the other. The county’s two principal towns long represented these seemingly contradictory trends: Clarkesville, the county seat in the north which serves as a gateway to the mountains; and Cornelia in the south, which would one day become home to a number of manufacturing companies. Among these companies was Fieldale Farms Corporation, a chicken-processing operation owned by the Arrendale family, who would come to retain an almost 40 percent share in the eventual Habersham Bancorp almost a century later. At the time that Habersham Bank was founded, however, the establishment of Fieldale Farms—which would become Habersham County’s largest business—lay two generations in the future.
One night in the early part of the twentieth century, many of the prominent men of the area gathered to discuss Habersham County’s greatest need. Their names—West, Asbury, Burns, Erwin, Furr, Mauldin, Bass, and McMillan—would remain prominent for many years to come in Clarkesville. These community leaders agreed that Habersham County was in need of a bank. Putting together their funds, they began to hammer out a charter, which Robert McMillan, an attorney, formalized and presented to the Georgia Secretary of State.
On May 13, 1904, Secretary of State Phillip Cook granted a charter to Habersham Bank (the founders chose the name to signify its mission of serving the entire county), and the bank commenced operations. With the pooled assets of its founders and others, the new bank had $25,000, and offered stock at $ 100 a share. Its location, however, was not very bank-like: one of the founders, Dr. E. P. West, had a store on the county square in Clarkesville, and the new financial institution operated out of the back of his shop.
Growing Through the Depression and Boom Years
Three years after its founding, in 1907, the bank was moved across the square to a structure known as the Martin Building, which remained standing nearly a century later. Ten years later, the United States entered World War I, and in the years following the Armistice, Habersham Bank experienced rapid growth. During that period, as the county welcomed a number of new residents, the bank made numerous agricultural loans.
This boom period, however, came to a halt with the stock market crash of 1929 and the Great Depression that followed. In the aftermath of the Wall Street crash, Habersham Bank experienced considerable losses. Yet the citizens of the county, much like the residents of the fictional Bedford Falls in Frank Capra’s It’s a Wonderful Life (1946), rallied around their local bank, and purchased shares of stock. Just as Jimmy Stewart’s character in the film managed to keep the Bailey Building and Loan open during a period of widespread bank closings, Habersham Bank’s customers saw to it that their bank stayed closed only for a few days. On February 13, 1934, the bank’s charter was renewed, this time under the newly-established Federal Deposit Insurance Corporation (FDIC), which protected depositors against possible future bank failures.
Soon thereafter came the advent of World War II, and the United State’s involvement in it. When the war ended, Habersham County—like much of the nation—experienced a period of economic growth that was greater and much longer in duration than the one that followed World War I. Habersham bank flourished.
In the 1960s, W. F. Holcomb became bank president, inaugurating a period in which the bank expanded significantly. In 1964, Clarkesville lawyer Steve Frankum, like Robert McMillan submitting the original charter sixty years before, submitted a petition for its renewal, which the state granted. During the 1960s, the bank finally acquired air-conditioning, along with something entirely new in Habersham County: a drive-through window.
Expansion in the 1970s and 1980s
In 1969, the bank moved into a new facility it had built on Washington Street in Clarkesville, vacating the location it had held since 1907. Toward the end of the 1960s, the fortunes of the Arrendale family grew. Tom Arrendale became bank president and chairman of the board, and the Arrendale brothers—Tom and Lee—established Fieldale with a third partner in 1972. Late in 1972, Habersham Bank opened its second office in Baldwin, at the extreme southern end of the county. Physical expansion continued in 1975, with the enlarging of the loan department at the Clarkesville main branch. The growth of the 1970s, however, would be dwarfed by that which occurred in the 1980s, when Habersham Bancorp was established.
Even in the 1970s, when interstates 75 and 85 crisscrossed Georgia, Atlanta seemed a long way from Habersham County. Travellers had to take a two-lane highway for many miles, and could seldom make the journey in less than two and a half hours. But with the opening of 1-985 and Georgia Highway 365 in the late 1970s and 1980s, the psychological distance to Atlanta—as well as the time it actually took to get there—was much reduced. Habersham County, semi-isolated from the larger world for many years, found itself increasingly linked to the growing hub of metropolitan Atlanta.
Symbolic of this shift was the establishment in 1980 of a central Habersham Bank location in Cornelia, overlooking Highway 365. With the extension of 365 past Cornelia in the late 1980s and 1990s, the county became part of a corridor from Atlanta to North Carolina, and tourist traffic increased many-fold. In May of 1989, Habersham Bank opened a hospitality center in its original 1907 office. In addition to offering tourist information, the Hospitality Center served as headquarters of the bank’s Golden Advantage Club and marketing department.
Another change, both symbolic and actual, was the establishment of Habersham Bancorp on December 31, 1984. In 1987, The Advantage Group became the holding company’s first subsidiary. The first merger came on June 30, 1995, when Habersham Bancorp paid $9.2 million for Security Bancorp, based in Canton, Georgia. Security Bancorp owned Security State Bank in Canton and Waleska, both towns of which are located on the northwest fringes of the Atlanta metropolitan sprawl—several counties away from Habersham. “Habersham’s acquisition of Security represents a very significant expansion for Habersham,” Arrendale stated in a company press release. “We are confident that we now have the best group of community bankers in Cherokee County, which is one of the best markets in the country.”
Such growth occurred in spite of state laws which, in the eyes of many, hampered the growth of small banks while failing to prevent takeovers by rapacious super-corporations such as North Carolina’s NationsBank. Among those who held this view was Habersham Bancorp President and CEO David D. Stovall, quoted in a Wall Street Journal article on the subject: “In the next few days, Georgia lawmakers will close out their legislative year having once again retained barriers to widespread banking in the state—protecting the interests of the protectionists … But while everybody’s talking, Georgia bankers, increasingly competing in a national interstate-banking environment, are left with a remnant from 1960 …”
The mission ofHabersham Bank is to become the financial services company of choice in the community which it serves. Its vision is to be a regional and multifaceted financial services company which provides superior customer service, innovative products, and consistent growth of investment for its shareholders.
This “remnant” dictated that a bank wishing to expand beyond county borders could only establish a branch in a county where it possessed a charter; or else it had to purchase an existing bank. Both options are “expensive and painstaking processes,” and the law was particularly detrimental in a state which has 159 counties—the second-largest number in the nation, after Texas. Moreover, according to the Wall Street Journal, the law failed to offer small-town bankers protection against acquisition by greedy superbanks; “Instead, the losers are people like David D. Stovall, who runs Habersham Bank in Clarkesville, a town of about 1,150 in northeast Georgia. Seven counties touch Habersham County and Mr. Stovall, who boasts that ‘I call my customers by name,’ wants to bring his community-banking spirit to those markets.”
Commenting on the current state laws governing bank expansion, Stovall said, “Let’s get real … Everything is for sale at a price. But I can’t afford to pay two times book [value] to grow my market. On the other hand, if BankAmerica wants to come into Georgia, they have the capital to pay that.” Bankers such as Stovall were opposed by the State Community Bankers Association, whose chief executive, Julian Hester, offered an “if its not broken, don’t fit it” explanation of his position. An interesting footnote to this disagreement between Stovall and Hester: Hester had once held Stovall’s job, having served as president of Habersham Bank in the 1970s.
The Late 1990s and Beyond
Against challenges to expansion, Habersham Bancorp continued to grow. On May 6, 1994, it celebrated its ninetieth birthday with a party on the lawn of its Cornelia office, complete with birthday cake, ice cream, fireworks, and entertainment by country and western singer Larry Stewart. “On May 4, 1904,” noted a brochure announcing the event, “Habersham Bank opened its doors to its first customers in Dr. E. P. West’s store in Clarkesville, now Carey’s Department Store … In those days, all our entries were done by hand. Interests and dividends were figured on paper.....Now, we are serving the great-grandchildren of some of our original customers.”
A little more than a year later, in July 1995, Habersham Bancorp stock began trading on NASDAQ. On January 2,1996, when it acquired BancMortgage, a full-service mortgage lender in the northern part of metro Atlanta, Habersham Bancorp grew even further from its Cornelia base than it had with the purchase of Security Bancorp the previous year. Calling Habersham Bancorp “growth-minded,” the Atlanta Journal and Constitution reported that the mortgage company would open an office in the north Atlanta suburb of Dunwoody, and planned to take on some thirty employees in the next year.
The acquisitions continued. On September 9, 1996, Habersham Bancorp acquired a travel agency, Appalachian Travel Services of Cornelia. A few months later, in February 1997, it purchased Advantage Insurers, formerly Cornelia Insurance Agency. “Our company’s vision is to be a regional and multifaceted financial service company,” Stovall observed in a press release, “and this acquisition is an opportunity to expand our company’s operations in order to provide customers a broader base of services while increasing our shareholders’ value.” Also in 1997, Habersham Bank opened a branch in the nearby town of Cleveland, in White County—the first Habersham Bank location outside of Habersham County. Finally, on October 23 of that year, it bought Prestwick Mortgage Group and established BancFinancial Services Corporation in Alexandria and McLean, Virginia. Thus, it spread for the first time outside the borders of its home state.
In its May 18, 1997 edition, the Atlanta Journal and Constitution recognized Habersham Bancorp as one of the top 100 companies in Georgia. The company ranked tenth in the banking size category, twenty-fourth among companies in revenue growth, and twenty-fifth in stock value gain among public companies. Clearly the company was, in accordance with a slogan echoed by Stovall in his letter to shareholders in 1998, “Reaching New Horizons.” Among other developments, mortgage operations had grown to $422 million in loan closings, and BancMortgage had opened new offices at Town Center in Cobb County outside Atlanta, and in Gainesville. Between its various mortgage operations, including those in Virginia, the bank would end the year with $600,000 in net deferred earnings. Clearly Habersham Bancorp, which started life with a little more than four percent of that figure in total assets, had come a long way since its beginnings in the back of Dr. West’s store.
Habersham Bank; Security State Bank; The Advantage Group, Inc.; BancMortgage Financial Corp.; Appalachian Travel Service, Inc.; Advantage Insurers, Inc.
Habersham Bancorp, “History of Habersham Bank,” Cornelia, GA: Habersham Bancorp, 1998.
Higginbotham, Mickey, “Business Report on Financial Services: Seasoned Bankers in New Venture,” Atlanta Journal and Constitution, January 5, 1996, p. E2.
Salwen, Kevin G., “Georgia’s Banking Laws Protect the Protectionists,” Wall Street Journal, March 15, 1995, p. S1.
Stovall, David D., “Habersham Bancorp Acquires Security Bancorp Inc.,” PR Newswire, July 12, 1995, p. 1.
——, “Habersham Bancorp Announces Pending Acquisition of Cornelia Insurance Agency,” PR Newswire, February 28, 1997, p.1.