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Gulf Coast Bank posts record year after earnings nearly double

Gulf Coast Bank & Trust is flying high these days.

Thanks to diversified services and a unique ad campaign featuring pigs with wings, the bank weathered the tough economic conditions of the last three years.

Now, its business is taking off. Gulf Coast Bank reported 2003 earnings of nearly $8 million, a 77% increase over earnings of $4.5 million in 2002. Earnings in 2001 totaled $2.9 million.

Guy Williams, Gulf Coast Bank president and chief executive, attributes his bank's success to a multitude of little things.

Low interest rates and the boom in mortgage refinancing last year boosted the company's mortgage lending operations. Gulf Coast Bank's full-service investment department, trust department and loan productions in Atlanta and Houston all did well in 2003. The bank has loans in 48 of 50 states, Williams said. It also buys distressed loans and works with borrowers on payment options.

On the investment side, we counsel people to steadily and methodically invest money, to pick an asset allocation, stick with it and rebalance their asset allocation, Williams said. It's not a glamorous philosophy, it's dollar-cost averaging, portfolio rebalancing. It's Investment 101. But people who stick with it have done really well.

Gulf Coast Bank's base has grown 10% in the past year to 14,000 customers, Williams said. Assets increased from $315 million in 2001 to $343 million in 2002 to $365 million last year.

According to the latest Federal Deposit Insurance Corp. report, the bank's return on assets was 2%, up from 1.5% in September 2002.

The benchmark for return on assets is usually 1%, said Keith Leggett, senior economist for the American Bankers Association. Anything above 1% means they're doing well as far as earnings.

Return on equity was 32.21%, up from 22.72% in September 2002. The net interest margin was 6.36%, up from 5.62% in 2002 - well above the 4% industry standard, according to the ABA.

With deposits of $317 million as of June 30, 2003, Gulf Coast Bank ranks ninth according to market share out of the 39 FDIC-insured deposit institutions in the New Orleans metropolitan statistical area.

Community banks don't try to compete with big banks on every line of business but they do offer a wide variety of products, said Dan Digby, president of Community Bankers of Louisiana in Baton Rouge.

Community banks in New Orleans have to be broad based, he said. No one just does agricultural lending. No one is just a car loan specialist. No one does just strip shopping centers. You don't want just one type of loan in your portfolio.

Charlotte Birch, ABA spokeswoman, said Gulf Coast Bank is not alone in its success.

Community banks are thriving, she said. The banking industry as a whole has done very well despite the economic downturn a couple of years ago.

Often a community bank's success is tied to its ability to differentiate itself from others in its market, Birch said. Two years ago, Gulf Coast Bank started an ad campaign featuring flying pigs. The bank bought time during the past two Super Bowls to air flying pig commercials.

We were surprised how much our customers liked it, Williams said. It's really been a hit.

Hoffman/Miller Advertising Inc. in Metairie came up with the campaign. With The Whole Hog, Gulf Coast Bank's check card program, customers can earn points redeemable for retail gift cards, air travel, hotel stays, rental cars and cruises.

Gulf Coast Bank has eight locations: six branches in Louisiana, a loan office in Atlanta and a loan office in Houston.

Gulf Coast Bank was originally founded in 1886 as American Savings, a small savings and loan. Its name was later changed to American General. In 1990, during the savings and loan crisis, a group of local investors led by Williams bought American General, Security Homestead, Southern Savings and Central Savings. They assembled Gulf Coast Bank from the savings and loans.

One of the greatest challenges the bank still faces is trying to grow in a slow-growth market, Williams said.

It's a lot easier if you're somewhere like Atlanta, where the market is expanding 15% to 20% a year. Our market is not expanding so you're basically having to take customers from somebody else, he said.

The bank is building a new branch at Williams Boulevard and West Esplanade Avenue. It will start as a loan production office and become a full-service branch by the end of 2004. The bank will develop another branch on Veterans by early 2005.