Georgia’s smallest bank has new tech and big dreams

The transformation of Barwick Bank began in 2019 with a note left in Chad Bowling’s unlocked Range Rover.

Bowling, a 22-year veteran of community banking who began his career as a teller, was ready for a change. The de novo Reunion Bank of Florida he had helped found and grow with his business partner and friend, Jim Bange, was going through its second acquisition and losing its community feel. Despite receiving a “really good offer,” for a new job, Bowling said he didn’t want to be at a large bank and loved “the way community banks can function in these smaller towns.”

Community banks across the United States are suffering. Squeezed out by larger competitors with growing footprints, or fintechs with better apps, the neighborhood bank model is slowly going extinct. 

Earlier this year, the American Banker reported banks with assets below $500 million declined about 70% between 1990 and 2018, leaving something of an opportunity for the surviving community banks to reach the local banking deserts left behind. Bowling and Bange still see life in the community banking model, and they are putting it to the test in the small town of Barwick, Ga., which has a total population of 372. Their quest to overhaul and grow the tiny Barwick Bank, which sits in a small brick 1906 storefront, might seem quixotic, but the longtime community bankers believe a little technology can go a long way.

Bowling wanted to buy or start his own community bank and it just so happened a friend knew of the sale of the $22 million-asset Barwick Bank, the smallest bank in Georgia. The friend left a note in Bowling’s car with contact information for the bank, and Bowling eventually met with Fred Jones, the bank’s CEO and majority shareholder, who had been with the bank since the 1970s. It was the first in a series of steps that led to Bowling, Bange and their partners buying the bank and initiating the complete technology overhaul that is set to launch next week.

Timing is everything

Bowling and Bange, Barwick’s new president and CEO, respectively, began working together in 2004, when Bange hired Bowling at St. Augustine, Fla.-based Colonial Bank. In 2007, the duo helped create Reunion Bank, which received its charter in October 2008 in the early days of the Great Recession. Reunion grew to $350 million in five years and was sold to National Bank of Commerce in 2015. It was around the time of Reunion’s second acquisition, to CenterState bank in 2018, that the note in Bowling’s car led him to Barwick Bank.

“It took us about an hour of due diligence to figure out we wanted to buy it,” Bange said. “We had to get the regulatory approvals from the state and the FDIC, which worked out well. They didn’t want to see a bank close in that town, so they were very helpful with us. We all want to see underserved communities have community banks.”

Bange said a Chinese national company and an Atlanta-based company had both expressed interest in buying Barwick Bank, mostly for its charter. Jones, however, didn’t want to sell his bank for parts, and when Bowling and Bange came calling, he was impressed by their willingness to keep the bank in the community while trying to simultaneously grow in new markets. Jones insisted on a nonrefundable down payment to show commitment, which the new buyers accepted. 

Technology tightrope 

With the purchase complete, Bange and Bowling were faced with the real challenge: pushing a bank with no online banking or debit cards into the 21st century. The business partners turned bank-flippers chose Finastra’s Fusion Phoenix core to build out its digital offerings, somewhat deviating from the mainstream in doing so. According to March data from FI Navigator, Finastra has just over 3% of market share among bank core providers. FIS has 15.2%, while Jack Henry has 19.3% and Fiserv has a whopping 40.9%. Barwick’s new owners interviewed three core providers when overhauling Barwick, but they had used Finastra to launch Reunion and were comfortable with its open-source technology. 

Next week Barwick will go live with online banking and customer account opening for the first time in its 113-year history, with mobile banking slated to launch after that. The bank will finally offer debit cards and remote deposit capture. These new solutions are table stakes for banks that dwarf Barwick’s size and can allocate more money to technology, and Barwick’s small size, even by community bank standards, is one of a dying breed. Of the 4,965 banks in the U.S., only 34 have asset sizes smaller than Barwick’s, according to second-quarter data from DepositAccounts.

The value of a bank isn’t always determined by its size, but rather its impact on a community. In recent years, larger institutions have been rushing to keep up in the innovation race, while banks of Barwick’s size have struggled to offer tech advancements. However, a small step for some is a big leap of faith for others.

With its digital offerings, Barwick plans to better serve its existing hometown customers while attracting new customers in Georgia and Florida. Barwick has grown from three employees to 12, and the longtime employees are excited to finally offer modern services to customers, Bange said. Still, the technology overhaul required training employees on new systems. Barwick employees had to learn new ways to make transfers, look up balances, open accounts and make deposits. Finastra offered online tutorials to get employees up to speed, and the core provider held instructional Microsoft Teams meetings. 

The overhaul also creates something of a tightrope walk for the bank’s new owners. As they create features with their eyes on expansion, they must ensure none of the changes are so radical as to alienate the original hometown customers. “We don’t want to do a shock,” Bange said. “They’re going to have account number changes and things like that, but other than that they’re not going to really see any big changes. They’re just going to see more products available to them.”

Bange points to the example of new checking accounts that will come with Barwick’s online banking system, which he said will add enough value to existing customers’ financial lives to be worth any inconvenience.

While the account won’t have any additional fees, it will likely be a challenge to grow deposits remotely. Overhauling a bank’s tech infrastructure can be a lengthy, expensive project, and not always worth the trouble. Stephen Greer, senior analyst at Celent, said creating digital banking and trying to grow deposits remotely can be exceedingly difficult. Vendors often lock banks into long contracts and limit them on the features they can run in parallel. 

“Deposit gathering has been shown to be kind of a scale game,” Greer told Bank Innovation. “I’m not sure it’s that straightforward as just buying a bank, changing the technology — and suddenly it’s worth more.”

Greer added that banking is undergoing something of a technology democratization right now, where core providers are offering ready-made, affordable solutions to help community banks keep pace with big banks that have massive technology budgets. Greer said a hybrid model that seeks modest growth while still focusing on serving the community through better technology is a better model than a small bank trying to simply grow deposits remotely and be the next Chime.

From the old school

Fred Jones can recite Barwick Bank’s 113-year history pretty much by heart. The Barwick native and former mayor can reminisce for hours about individual loans from 30-plus years ago. In 1984 he loaned $600 to a farmer deemed too old by Farm Credit. The farmer paid the loan back in full, despite farming 40 acres with one mule during a brutal crop year, because he sold his milk cow. “He was from the old school,” Jones said. “If you borrowed money, you paid it back no matter what you had to do.”

Jones lives about 20 miles from the bank and still serves on its board of directors. He took over the bank in 1979 at age 34. His first computer at the bank was an IBM XT, which came out in 1983, and allowed him to create spreadsheets and calculate loan payoffs. He remembers check imaging, and using software from Ralston, Neb.-based Modern Banking Systems as some of the major tech overhauls he has seen in the past 41 years, but online banking was never worth the cost for a bank that relied on its deep knowledge of a small community to be successful.

Jones sees the bank’s expansion plans and hometown commitment as complementing initiatives, rather than conflicts of interest. If Bange and Bowling were to just focus on the Barwick area, a major tech overhaul wouldn’t be worthwhile; by growing into new markets elsewhere, the duo can make digital banking cost-effective, ultimately benefiting the local customers who have relied on Barwick Bank for decades.

The bank’s makeover could help fill a vacuum in the local Georgia market. Jones said many community banks in neighboring towns have been bought by large out-of-state competitors, leaving a thirst for local banking. As Barwick launches digital banking, some consumers in these neighboring towns may gravitate toward the bank, according to Jones.

The physical branch is not exempt from Bange and Bowling’s balancing act of history and modernization. Unlike Fifth Third’s attempt to create a branch that resembles an Apple Store or Capital One’s sleek cafe branches, Barwick is using the building’s age to its advantage. Bowling said they plan to keep the bank’s brick facade and wrought-iron bars at the teller windows, and pull up the carpet to reveal the original wood floors.

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Bange and Bowling have worked together for 16 years and have experience growing deposits, launching new technology and managing community banks. And while they may lack an in-depth familiarity of the Barwick community, they have a ringer in Jones and his deep local knowledge.

While consumers are becoming increasingly conscientious about shopping, eating and drinking local, the idea of banking local has so far lacked the same allure. The Barwick Bank experiment of mixing modern technology, modest growth plans and hometown knowledge is running on the idea that the storefront neighborhood bank model doesn’t need to die — it needs to evolve.

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