Monroe native led investor group to buy ailing Security Bank

Aug 30, 2009 (The Macon Telegraph - McClatchy-Tribune Information Services via COMTEX) -- SYBJF | Quote | Chart | News | PowerRating -- Joe Evans, who led the group of investors that bought the failing Macon-based Security Bank last month, said a lot of what he knows about business principles he learned from his father on the family's farm in Smarr.

"You have to be willing to get your hands dirty to create value, and one of the great ways to create value is to repair something that's broken," Evans said during an interview at his office on Forsyth Road in Macon. "If your business involves expansion by acquisition, I think you have to soberly conclude how you are going to add value to that transaction."

Evans is chairman and CEO of State Bank & Trust Co., which now owns Security Bank Corp.'s six bank subsidiaries shut down by the government July 24. Three of the six Security Bank offices are located in Bibb, Houston and Jones counties.

Evans has a reputation in the banking industry for buying troubled banks that no one else wanted and turning them around.

Early in his life, Evans thought he might be a biologist, but by the time he graduated from high school, "my sense was I would be in business in some way," he said.

After leaving his family's dairy farm, Evans spent his summers working at a number of jobs including doing inventory at a manufacturing plant, flipping hamburgers at Hardee's, installing heat-reflective window trim and pumping gas at a Shell station.

Evans, 60, now owns the family farm in Monroe County.

His first job out of college was with what is now SunTrust Bank, then after working a short time for a consulting firm, he went to Monroe County Bank in 1974, where he was vice president/secretary.

In 1980, Evans went into business with Billy Anderson at the Bank Corporation of Georgia, the holding bank for Bank of Fort Valley.

"Our goal was to grow a banking organization and we did," Evans said.

The company bought a number of small and/or problem banks in Georgia, and by 1997 it owned banks in Macon, Savannah, Newnan and in a number of rural locations.

"We built the banking organization very much the way a cattle farmer builds a herd of cows," Evans said. "Hopefully, you buy skinny cows in a cheap market, you put a little weight on them and sell them in a better market. Then you go back and buy a couple more."

Anderson said he has known Evans since he was a little boy on the farm.

"He impressed me early on in a number of ways," said Anderson, chairman of Macon-based Southern Trust Insurance Co. "He had enough self-confidence not to let his ego get in the way. ... He's extremely creative and very, very intelligent yet he remains very down to Earth. ... He combines a business brilliance with a committed Christian life."

Anderson said when he bought the Bank of Fort Valley, it was "a $10 million bank and by the time Joe finished fooling with it, it was close to $2 billion. ... We've had a great run."

In 1997, Bank Corporation was merged with Century South Bank and the headquarters moved from Fort Valley to Atlanta. The combined company was worth about $1 billion, and "we grew it to about $1.6 billion and in 2001 sold Century South to BB&T," Evans said.

One significant thing that came out of that deal, he said, is when he met Tony Collins who was part of Century South. Last December, Collins was named president/CEO of Security Bank.

"A great relationship formed with Tony that became instrumental to our putting (the State Bank) transaction together," Evans said. Collins is now the chief banking officer at State Bank.

After Century South was sold, most of the management team then invested in and simultaneously went to work for Flag Financial Corp. in 2002, he said.

"By the end of 2005, we were the largest community bank headquartered in Atlanta," Evans said. The bank was sold to Royal Bank of Canada in 2006 and Flag became RBC Centura.

UNUSUAL DEAL CREATED FOR SECURITY ACQUISITION

Despite decades of buying and selling banks, the deal Evans helped put together to buy the Security Bank franchise was so different that it could be a model for future failed bank acquisitions.

After Flag Financial was sold, some of its executives, including Evans and Dan Speight, who is now vice chairman of State Bank, and Kim Childers, who is now chief credit officer at State Bank, formed Capital Bankers Group. The executives set out to invest in distressed debt and do consulting work.

At about the same time, the veteran bankers formed a joint venture with Seattle-based Vulcan Capital, a company founded by Paul Allen -- a co-founder of Microsoft -- for the purpose of finding recapitalization opportunities in the Southeast.

In the process of looking for joint-investment opportunities the group began discussions with Security Bank as early as 1997 about various possibilities but nothing ever materialized, Evans said. But the joint venture with Vulcan ended prior to the work on the Security takeover.

"Going back to the years we were in Macon, we always viewed the Security franchise as a very good community banking enterprise," he said.

This spring, "when it became apparent that there was not going to be a solution without FDIC involvement, we started to focus in on putting together the necessary pieces to be able to bid on that transaction from the FDIC if and when that eventuality materialized," he said.

Only banks can participate in FDIC auctions, so Evans, Speight and Childers arranged to acquire control of Pinehurst-based State Bank in order to obtain a bank charter for the purchase of the Security Bank franchise. A Washington, D.C., investment group, Friedman, Billings, Ramsey & Co. Inc., helped line up interested investors.

"We got about 90 investors in eight days, of which 22 ultimately invested in the transaction," Evans said.

When he started the road show meeting with investors, he presented a generic concept and couldn't disclosed the name of the bank. Besides, the group wanted flexibility if they were not successful in this transaction, they might try to invest in something else, he said.

"We got expressions of interests that would only become real investments after a live prospect could be identified, at which point and time, with the FDIC's blessing, the individual prospective investors would sign confidentiality agreements and learn the intended bank, have access to the due diligence information and hear our plan and actually hear our proposed bid. Based on that, they could make a decision to invest," Evans said.

The road show was exciting and exhausting. Evans took pictures with his camera phone from the windows of investors' offices.

"I have the San Francisco Bay, a view of Central Park, looking out on New York Harbor, looking out on a harbor in Greenwich, Conn.," Evans said. "I don't know that I've spent eight more interesting days than getting in front of pretty sophisticated investors in that many different places in that short period of time."

Investors came up with $300 million so it could buy Security Bank Corp.'s six banks through State Bank & Trust.

"About 48 hours before the bid was due, their investment money was wired into escrow in the Bank of New York, which became our evidence of financial strength to be able to submit our bid. It all worked out."

The investment deal was unique not just for Evans who has helped put together a number of banking deals during the past 30 years.

"I personally don't know of any transaction that has been put together exactly like this," he said. "This is all passive money. ... These investors don't have board seats, they don't have any particular control rights, other than just owning common shares just like everybody else. The largest investor in our deal owns 7.5 percent."

While State Bank is not able to save every employee from Security Bank, "we certainly saved the preponderance of jobs," Evans said. "Some jobs moved, some new jobs were created. I guess the net loss will be less than 30. We really haven't gotten through the evaluation process."

The bank plans to close three locations in Atlanta and open a new location there.

"We plan to have fewer, larger locations and a somewhat different configuration," he said.

Anderson, with Southern Trust Insurance, is an investor in State Bank.

"Only Joe would have thought up this wild scheme with Security," he said. "It is unusual -- it's even unusual that he thought this could be done. I've learned through the years that whatever Joe thinks can be done, I would go along with. ... One of the great things, we saved about 300 jobs (at Security Bank)."

Tom Wiley, president and CEO of The Coastal Bank of Savannah, who has known Evans and been a partner with him for about 30 years, also is an investor in State Bank.

"I trust him implicitly," Wiley said. "It was not a question as to my desire to be an investor along side any venture he might enter into. I had a lot of skepticism, but knew if anyone could do it, he could.

"There is no doubt he has a high degree of intelligence. He lives by a strong sense of values and how you should treat other people. He is so true to his partners, his employees."

To contact writer Linda S. Morris, call 744-4223.

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