An investor group originally planning to launch a new bank in the Atlanta area has changed course, opting to recapitalize an established Virginia institution instead. The move is designed to accelerate their entry into the market and avoid the lengthy process of starting a bank from scratch.
From De Novo to Strategic Partnership
The group behind Georgia Skyline Bank had received conditional approval for federal deposit insurance and was preparing to launch a de novo bank. However, a late introduction to the leadership of Highlands Community Bank in Covington, Virginia, led to a different approach. The investors will now inject significant capital into Highlands Community, merge management teams, and use the bank as a platform to expand into Atlanta.
Ryan Floyd, president of Georgia Skyline, explained that the partnership offers a faster path to growth. “Rather than building from the ground up, we’re aligning with an established, successful bank with two decades of history, a sound balance sheet, and a loan-to-deposit ratio that gives us real capacity to grow,” Floyd said. “This just puts us forward about two years.”
Why Highlands Community Bank?
Highlands Community Bank, with $189 million in assets, has $167 million in deposits but only $81 million in loans. This low loan-to-deposit ratio means the bank has significant liquidity to support new lending. For the Georgia investors, this was a key attraction, as they aim to deploy those funds into the Atlanta market where they see strong loan demand.
“The struggle for us in getting out of the gate fast as a de novo was to make sure we could get low-cost deposits to match our loan growth,” Floyd noted. Highlands Community’s strong deposit base in Virginia provides that foundation.
Cultural Fit and Due Diligence
Floyd said the initial meeting with Highlands CEO Robert Hemsath revealed a strong cultural alignment. “We felt the same way about credit quality, to servicing our communities, to relationship banking,” he said. Due diligence confirmed a clean balance sheet and a deposit base that was underutilized for lending.
For Highlands Community, the partnership brings new growth opportunities. “Georgia Skyline’s team brings the energy, market relationships, and growth vision to build on our foundation,” Hemsath said in a statement.
Operational Plans and Expansion
The combined institution will operate as Georgia Skyline in Atlanta and Highlands Community Bank in Virginia. An Atlanta loan production office is slated to open later this month, with plans to convert it to a full branch by the end of October.
While managing operations across two states might seem challenging, Floyd points out that travel is manageable. “Delta flies right to Roanoke [near Covington] in an hour-and-a-half,” he said. “Sometimes it takes me that long to get home in Atlanta traffic.”
Precedent for Success
This is not the first time an out-of-state bank has entered Atlanta through recapitalization. Hyperion Bank, based in Philadelphia, opened a branch in Atlanta’s Buckhead district in 2019 after a similar strategy. Hyperion’s CEO, Charlie Crawford, led an $18 million recapitalization in 2018, and the bank has since reported annual profits and loan growth.
Crawford, who knows the Georgia Skyline team, believes their approach is sound. “I think Ryan and his team will have a strong loan engine,” he said. “That’s going to let them deploy some of that liquidity from Virginia into Atlanta.”
Floyd echoed this sentiment, noting that generating deposits is often harder than generating loans. The partnership with Highlands Community provides a ready-made deposit base, allowing the team to focus on building relationships and growing their loan portfolio in Atlanta.