When the federal government took over most direct student loan programs nearly a decade ago, Tennessee's biggest private provider of college loans bought a commercial bank to diversify its operations and expand its lending into consumer and business loans as a conventional bank.
Educational Services of America, which was doing business as Edsouth Services, acquired Community Bank of the Cumberlands in Cookeville in 2009 and bought the SouthEast Bank in Athens three years later to deploy its equity into FDIC-regulated banks.
In January, SouthEast Bank expanded to downtown Chattanooga with a branch in Liberty Tower and tapped veteran banker Ron Jones as its first city president for Hamilton County. The 55-year-old Birmingham, Alabama, native trained as a manager at the former First American Bank in Nashville in 1985 has been a commercial lender for First American and then First Volunteer ever since.
"This was a great opportunity to build a bank and put together a great team for all aspects of our business," Jones says of his move to SouthEast Bank, which already had a branch in Ooltewah and more than $90 million in bank deposits in metro Chattanooga.
Even with 28 commercial banks operating in Chattanooga, Jones sees opportunities for growth, especially for a well capitalized community bank eager to serve small and growing businesses in the area. The non-profit Edsouth still has more than $2 billion of student loan assets (primarily ELFI loan consolidations) and has grown the bank to over $1.2 billion of assets, including more than $90 million in deposits in Hamilton County. Jones is eager to grow local loan volume by more than 20 percent a year and the bank could expand with five or six branches in the Chattanooga area over the next five years or so.
The bank has created an employee stock ownership plan for bank employees "which has created a lot of energy and support for each other to serve our customers and help us grow," Jones says.
"The branch system works well for us as a community bank if we are smart in our approach," Jones says. "We want to be bankers, not just sales people, and we think there will always be a market for a community bank dedicated to serving the banking needs of local consumers and businesses."