Gulf Coast Bank and Trust opened in 1990, after Guy Williams and a group of investors took over the century-old American Savings. At the time, the nascent community bank had assets of just $300 million. Today, it is one of the largest community banks in Louisiana with assets of more than $3 billion and a regional footprint that stretches from Baton Rouge to St. Bernard Parish.
Williams, the bank’s president and CEO, has been at the helm throughout and has led the bank on a slow growth strategy, centered on diversifying its portfolio through the acquisition of specialty lenders around the country. It’s a way of helping the bank weather the cycles and downturns that have hurt other institutions.
Williams has a long history in New Orleans’ banking sector and came up in the industry when New Orleans was home to several corporations and three big local banks — Hibernia, First National Bank of Commerce and Whitney Bank. In this week’s Talking Business, Williams discusses the changes he’s seen over the years and why he believes Gulf Coast’s business model will enable it to continue growing.
Interview has been edited for length and clarity.
Gulf Coast has developed a niche as a specialty lender and is the largest acquirer of specialty lenders in the U.S. What does that mean?
Specialty lending is anything other than plain vanilla commercial or consumer lending. So, leasing, factoring, (Small Business Administration) lending. Through the years, we have acquired a number of companies that specialize in those kinds of loans.
What kind of companies?
Nobody you’ve heard of probably. In Phoenix, we own Phoenix Capital, which finances the trucking industry. In Minneapolis, KLC Leasing, which does equipment leasing nationwide. Another Phoenix company we own, Spectrum, does workout restructuring. In Orlando, we own a firm that helps small manufacturers and in Dallas, a company that does (Small Business Administration) lending. Those are few examples. They operate under their own name and lend nationwide but they belong to us.
Is that unique?
It is not that common for community banks, but it’s something we have done through the years and it gives us good diversity. In Louisiana, we are subject to cyclical downturns that don’t affect Minneapolis, say, or Phoenix. So this gives us good diversity and stability of earnings.
A lot of community banks say they want to serve the community but really want to get acquired and cash out. Is that your strategy?
That’s not our goal. We’re locally owned. We’re not publicly traded so we’re not pressured to do quarterly earnings. We want to do a good job every quarter but we’re not under pressure than the Wall Street folks are.
A lot has changed in the local economy in the 30 years since Gulf Coast hung out its shingle.
In the old days, you had three big banks and it was really good for New Orleans because young bankers would go through rigorous training programs and it provided a talent pool for their banks. It also provided good local lenders for specific projects. Unfortunately, they’re all gone. We’re the largest, locally owned bank in New Orleans now. It’s good for us. But I sort of wish we had some big banks here.
Around the country, banks are tightening up on commercial lending. Is at going on here?
With interest rates higher than they were a few years ago, there is going to be a period of adjustment and a number of banks have cut back on lending. That’s because when rates go up rapidly, typically your loans have fixed rates so if you made loans at low rates, suddenly those loans are not generally worth as much money and you need capital to grow. So you just stand pat. That is a national trend.
Where do you see it heading?
There is a growing credit crunch, and it’s going to get worse before it gets better. Neither political party is serious right now. We have a big structural deficit. During COVID, bills were passed that permanently altered the trajectory of spending and when the Congressional Budget Office looks forward, they don’t see anything that will make the deficits less than $1 trillion a year for a long time. That really challenges the market.
How is Gulf Coast Bank responding?
We are not reigning in our lending. One reason we do diversified lending is because it supports the local lending. We’re in good shape and we’re going to keep lending and keep growing. It’s just a different business model. We didn’t know it would work out but it did and because we’re diversified in other areas we’re able to support local borrowers.
What is your outlook on the local economy?
We’ve got challenges and opportunities. We’re facing an insurance crisis and we have to get a handle on that. We need to improve our infrastructure. We need to demand more accountability of elected officials. We have tremendous amenities, but we have to improve the streets, schools and public safety. That is critical. It hurts us in recruiting. It’s a challenge in businesses and it’s a reason that Louisiana is the only southern state that is shrinking. We became content living in the past. We need to start living in the future.
How do you do that?
You invest in education and in the community. We have advantages. If we provide good amenities, the city will thrive again. People want to be here. It is an interesting, fun place. We’re a unique city; we’re not Atlanta. But people need to do the right thing and show up and get involved.
What about leadership in the business community? It does not exist like it did 30 years ago.
Look, Freeport McMoRan is not moving back. Shell Offshore is not moving 2,000 jobs back to New Orleans. Because of the hurricane risk, we’re not going to attract big headquarters here. We need to get the young people involved. We need to create a butterfly garden — that is, our skill set of creativity, food, culture, music, arts, all things people want — and we need to remember that tourism is not the problem. Name a great world city that is not a tourist city. They’re all big tourist cities. But we need to support our tourist industry and diversify.
Email Stephanie Riegel at [email protected].
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Gulf Coast Bank head talks financial changes, economic challenges – NOLA.com
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