CRA Evaluation Charter No. 24789, Summaries of Financial Management

Download CRA Evaluation Charter No. 24789 and more Summaries Financial Management in PDF only on Docsity! i PUBLIC DISCLOSURE September 12, 2016 COMMUNITY REINVESTMENT ACT PERFORMANCE EVALUATION Touchmark National Bank Charter Number 24789 3651 Old Milton Parkway Alpharetta, GA 30005 Office of the Comptroller of the Currency Atlanta Field Office Three Ravinia Drive Suite 1950 Atlanta, GA 30346 NOTE: This document is an evaluation of this institution’s record of meeting the credit needs of its entire community, including low- and moderate-income neighborhoods consistent with safe and sound operation of the institution. This evaluation is not, nor should it be construed as, an assessment of the financial condition of this institution. The rating assigned to this institution does not represent an analysis, conclusion, or opinion of the federal financial supervisory agency concerning the safety and soundness of this financial institution. Charter Number: 24789 1 INSTITUTION'S CRA RATING: This institution is rated Satisfactory Touchmark National Bank (TNB) has a satisfactory record of meeting community credit needs. We based this assessment on the following: • The average loan-to-deposit ratio is more than reasonable given the bank’s size, financial condition, and assessment area (AA) credit needs and exceeds the standards for satisfactory performance. • The majority of the bank’s loans are inside its AA and meets the standards for satisfactory performance. • The penetration of loans to businesses of different sizes is reasonable and meets the standards for satisfactory performance. • The geographic distribution of loans reflects a reasonable dispersion within the AA and meets the standards for satisfactory performance. SCOPE OF EXAMINATION This performance evaluation is an assessment of TNB’s ability to meet the credit needs of the communities in which it operates. Examiners conducted a full-scope review of the bank’s Assessment Area (AA). The bank was evaluated using Small Bank examination procedures. CRA performance was determined by analyzing the bank’s primary lending activities. The evaluation period for this assessment was October 2010 to September 2016. Lending data was evaluated using the 2010 census. The bank has no lending affiliates. The bank’s primary business is commercial lending. Bank management provided a list of loans originated and purchased since the last CRA review. Commercial loans accounted for approximately 92 percent of loan originations. A sample of 20 business loans originated from January 2014 to June 2016 was selected to evaluate the bank’s performance under the lending test. TNB is subject to the Home Mortgage Disclosure Act (HMDA), which requires the collection and reporting of application data concerning home purchase, home refinance, and home improvement loans. The bank originated only four HMDA loans totaling $2.2 million in 2014. In 2015, the bank originated one loan totaling $445 thousand and purchased $9.8 million. Due to this limited activity, further analyses was not conducted on home mortgage lending. DESCRIPTION OF INSTITUTION TNB is a small community bank, wholly owned by Touchmark Bancshares, Inc., a one-bank holding company. The bank’s only location is a full service branch and deposit accepting ATM located in Alpharetta, Georgia. During this evaluation period, the bank closed two full service branches. A branch in Duluth, Georgia was closed on February 28, 2013 and a branch in Doraville, Georgia was closed on June 18, 2013. No branches have been opened since the last CRA examination. The bank offers personal and business online banking at its Internet website Charter Number: 24789 4 the county’s annual average unemployment rate for 2015 at 5.5 percent. The ten largest companies in Fulton County include AT&T Services, Delta Air Lines, Emory Healthcare, Georgia Institute Of Technology, Georgia State University, SunTrust Bank, The Coca-Cola Company, and Turner Sports. Cobb County Cobb County is the fourth-most populous county in Georgia. The largest city in the county is Marietta, which is the county seat. The US Census Bureau ranks Cobb County as the most- educated in Georgia. It has ranked among the top 100 wealthiest counties in the US. SunTrust Park, the future home baseball park of the Atlanta Braves, is currently under construction in Cobb County, and scheduled to open in 2017. According to the 2010 US Census, the population of Cobb County was 688,078. The median household income in the county was $65,522 and the median family income was $78,920. Approximately 8 percent of families and 11 percent of the population live below the poverty line. Annual averages for 2015 from the Georgia Department of Labor show the county’s unemployment rate at 5.4 percent. The county’s largest public employers include the Cobb County School District, Home Depot, Kennesaw State University, Lockheed Martin Corp, Publix Super Markets, The Kroger Company, and Walmart. Gwinnett County Gwinnett County is the second most populous county in Georgia. It is named for Button Gwinnett, who signed the US Declaration of Independence. The county seat is Lawrenceville. Gwinnett County has the largest public school system in Georgia. According to the 2010 US Census, the county had 805,321 residents. The median household income in the county was $63,219 and the median family income was $70,767. Approximately 9 percent of families and 11 percent of the population live below the poverty line. Annual averages for 2015 from the Georgia Department of Labor show the county’s unemployment rate at 5.5 percent. The ten largest companies in Gwinnett County include Cognizant Technology Solutions U S, Gwinnett Hospital System, NCR Corporation, Primerica Life Insurance Company, Publix Super Markets, and Waffle House, Inc. DeKalb County DeKalb County is the third most populous county of Georgia. It contains approximately 10 percent of the city of Atlanta (90 percent lies in Fulton County). According to the 2010 US Census, there were 691,893 people residing in the county. The median household income in the county was $51,349 and the median family income was $60,718. About 12 percent of families and 16 percent of the population live below the poverty line. Annual averages for 2015 from the Georgia Department of Labor show the county’s unemployment rate at 5.8 percent. Major employers in DeKalb County include Children’s Healthcare of Atlanta, DeKalb Medical Center, Emory Healthcare, Emory University, International Hotels Corp, State Farm Mutual Auto Insurance Company, and United Parcel Service. Charter Number: 24789 5 Forsyth County Forsyth County is one of the fastest-growing areas in the US. Contributing to the population growth is the county’s proximity to Atlanta. Forsyth County has a highly regarded school district and is one of Georgia’s largest. According to the 2010 US census, the population was 175,511. The median household income in the county was $87,605 and the median family income was $96,501. Approximately 5 percent of families and 6 percent of the population live below the poverty line. Annual averages for 2015 from the Georgia Department of Labor show the county’s unemployment rate at 5.3 percent. Forsyth County Schools is the largest employer in the county. Other major employers include Healthport Technologies, Koch Foods of Cumming, Northside Hospital, Resourcing Edge I, Scientific Games Products, and Tyson Poultry, Inc. In conducting this assessment of the bank’s performance, we contacted a local community organization. The contact indicated "cost burden" as the primary housing problem facing low- and moderate-income families and individuals in Fulton County. Although several banks (large and regional banks) and mortgage lenders participated in Fulton County's homeownership initiative, there is a need for more lender support. Touchmark NB was not a participant primarily because the bank's lending focus in on commercial loans specific to small businesses. CONCLUSIONS WITH RESPECT TO PERFORMANCE CRITERIA TNB’s performance under the small bank test is satisfactory. This conclusion is based on the following: a more than reasonable loan-to-deposit ratio; a majority of loans in the AA; lending to businesses of different sizes reflects a reasonable penetration, and a reasonable dispersion of loans within the AA. Details regarding these findings are addressed below. Loan-to-Deposit Ratio The bank's average loan-to-deposit ratio is more than reasonable given the bank's size, financial condition, and assessment area credit needs. The bank's loan-to-deposit ratio averaged 93.50 percent over the 23 quarters since the last CRA evaluation. The bank's loan-to-deposit ratio compares favorably with other community banks of similar size, location, and product offerings. TNB ranks second among six similarly situated banks serving its AA. The other five banks had loan-to-deposit ratios averaging 78.55 percent and ranging from 46.09 percent to 98.81 percent over the 23 quarters since the last examination. All of the similarly situated banks are located in counties, which are part of the Atlanta-Sandy Springs- Roswell MSA. Lending in Assessment Area Charter Number: 24789 6 TNB originates a majority of its loans to borrowers located inside its AA and meets the standard for reasonable performance for the evaluation period. Sixty-one percent of bank’s lending by number of loans is within the AA. A slight majority of the bank’s loans by dollar volume is outside the AA. As a Small Business Administration lender, the bank originates many large dollar commercial loans outside the bank's AA. At the time of this review, the bank had seventeen hotel loans totaling $39.3 million. Fourteen are located outside the bank's AA and total $31.8 million. Lending in Assessment Area Number of Loans Dollars of Loans Loan Type Inside Outside Total Inside Outside Total # % # % $(000) % $(000) % All Loans 128 60.66 83 39.34 211 112,526 48.25 120,676 51.75 233,202 Source: Bank reported originations and purchases during evaluation period. Lending to Businesses of Different Sizes Lending to businesses of different sizes is reflects a reasonable penetration and meets the standards for satisfactory performance. Per Dunn and Bradstreet data, 80 percent of businesses within the AA report annual revenues of less than $1 million. The bank originated 76 percent of loans to businesses with annual revenues less than $1 million. Borrower Distribution of Loans to Businesses in AA Business Revenues (or Sales) ≤$1,000,000 >$1,000,000 Unavailable/ Unknown Total % of AA Businesses 80.01 4.13 15.86 100% % of Bank Loans in AA by # 70.00 30.00 0.00 100% % of Bank Loans in AA by $ 75.77 24.23 0.00 100% Source: Loan sample; Dunn and Bradstreet data. Geographic Distribution of Loans The geographic distribution of loans reflects a reasonable dispersion within the AA and meets the standards for satisfactory performance. Based on the loans sampled, the percentage of loans made in low- and moderate-income tracts exceeds the percentage of businesses located in low- and moderate-income tracts. TNB’s AA is large and lending in each census tract is not expected, particularly given the size of the bank. There were no concerns related to gaps or areas of low penetration relative to the bank’s lending patterns.