Gratz Bank to focus on organic growth after recent acquisitions

REGION

It's been a big year at GNB Financial Services Inc. of Gratz.

The bank holding company for The Gratz Bank announced in August 2013 it would buy Schuylkill County-based Liberty Centre Bancorp Inc. for $28 million. By the end of March, the two sides had merged, with the two Liberty Savings Bank branch locations in Pottsville consolidating and taking the Gratz Bank name.

But the community bank, currently with $212.6 million in assets, wasn't done. On July 3, it announced it will acquire FNBM Financial Corp., the bank holding company of one-branch First National Bank of Minersville, in a strategic move the bank hopes will be complete in early 2015.

It's part of a new strategy at the bank to produce growth and help it compete in the new banking world of increased costs from regulation.

"Due to the costs associated with (the federal) Dodd-Frank (Act) the only way small banks are going to survive is to grow," GNB and Gratz Bank President and CEO Wes Weymers said. "We either grow and supplement our growth with acquisitions, or we will be acquired'

And being acquired is not the plan, though Weymers luiows it's easy to think that. As CEO of Cnrwensyule State Bank in Clearfield County, Weyniers presided over the sale of the bank to Northwest Bancorp Inc. in 2007.

When he came to Gratz in 2011, one of the first items on his plate was the acquisition of the First National Bank of Herndon. With the two most recent purchases, Weymers knows it's not a leap to connect the dots to a scenario where Gratz is growing to make itself more attractive to a potential buyer.

"People have thought, I'd say erroneously, that that's the plan. But I can absolutely say it's not. I really hope to retire at Gratz Bank," said Weymers, who turns 57 this week. "It's really not my goal to sell the bank but to preserve the independence of community banking."

First National Bank of Minersville's one branch had $69,487 in deposits between July 1, 2012, and June 30, 2013, according to the Federal Deposit Insurance Corp., making it the fourth-busiest bank branch in Schuylkill County. Only larger banks Fulton, Wells Fargo and M&T had busier branches.

The Minersville bank is the oldest in the county and is celebrating its 150th anniversary this year.

"Given the demands of a changing banking environment, the board of directors believes this transaction represents an opportunity for our shareholders, customers, employees and the communities we serve to join with a bank of like values and continue our community banking philosophy," FNBM President and CEO Bruce L. Lord Sr. said at the acquisition announcement.

Liberty Savings Bank wasn't as busy as the First National Bank of Minersville, but it was located in the county seat and population center of Pottsville, giving Gratz a recognizable presence. Liberty's two branches totaled $25,201 in deposits in 2012-13.

Jeremy Dobbin, a Gratz vice president and its senior agricultural and commercial lender, said growth is the only way small banks such as Gratz can survive independently.

"A bank our size, we really need to look for organic growth, but probably some inorganic growth as well," he said. "The cost of regulation on banks is huge, to say the least. Somehow, you need to cover that cost, and spreading it over a larger-sized bank is one way to do it." <

"The cost of regulation on banks is huge, to say the least. Somehow, you need to cover that cost, and spreading it over a larger-sized bank is one way to do it."