April 24, 2025
Dear Stakeholders,
I’ve divided this letter into two parts: 1) The Usual Stuff, and 2) The Backstory of our Vision, Mission, and Values.
Part 1 The Usual Stuff
There was good, bad, and ugly, and a lot of it in 2024. I think 2020-2022 could be described as the Wonder Years. COVID, bad as it was, filled our coffers, soothed our borrowers, and thanks to PPP, revealed us to be the top of the heap among our peers. It also atrophied our diligence and discipline in managing nonprime consumer credit. 2023-2024 brought us back to the real world, but still near the top of the heap, and on a firmer foundation than ever before.
Without a doubt, the good of 2024 would be “The Conversion.” After 45 years on the same core software, (Yes, software was a thing 45 years ago.), we upgraded to our vendor’s flagship product, Silverlake. This assures us we’ll be at least a “fast follower” in new technology and product offerings. A core conversion is a massive burden for our employees. It started in earnest in the summer after a year of deliberation and months of preparation. Amazingly, this process didn’t completely wrap up until the spring of this year with the launch of the best-of-breed cash management system, Treasury Manager. Our leadership team and employees decided on, prepared for, completed, and implemented this project. Thank you for taking “ownership” of this crucial project for our future! (And sparing me the need of asking!)
Now for the bad and ugly, our consumer lending has presented many challenges in recent years, from inflation, cyber breach of a key vendor, and management missteps. What our consumer lending has lacked in performance, it’s made up for in creativity, of an expensive kind. We are now emerging from a series of tripwires starting with soaring inflation in 2022, a cyber-breach of a key vendor in 2023, and a breakdown in loan collections in 2024. If it sounds like I’m blaming others for our performance, I would if I could, but unfortunately, I could have moved faster, smarter, and been more diligent, and significantly reduced the pain and the cost.
Dealer Services founder and leader Micky Watts retired at year's end but agreed to stay on part-time to help rebuild our Collections Department, so vital for a successful program. Thankfully, Micky left us a great team! Jody Lambert and Darrell Campbell as co-leaders of Dealer Services, a new Collection Manager, Alan Krensavage, and a new Re-marketing Manager. I predict that consumer lending will again supercharge of our profits by year-end!
Our growth in facilities continues to reflect our opportunities and increasing administrative demands. As I write this, we are moving into a new 40-office administrative building on Main Street in Conway. We will immediately fill 26 offices with personnel flung all over Conway in rented facilities. Our latest branch in Carolina Forest will open in May; we just received regulatory approval to open a branch in Sumter, an expansion of our IT facilities in Mullins is approaching completion, we’ve begun renovations for a new branch in Dillon, and we're in the hunt for a lot in Latta for a drive-up branch. Adding new facilities was once a rare occasion; now it’s business as usual.
Commercial banking is the foundation, growth engine, and guarantor of our future. It fuels our “manifest destiny,” i.e., the westward pull across South Carolina, driven by our competitive and proprietary advantages and our commercial banking leaders. We’re 4th of 43 in total assets of all SC banks, closely held and managed, and have the Best Bankers. This means we’re big enough to service most small and midsize enterprises (revenue <$200 million), and our owners are part of the senior management team, which simplifies and expedites doing business for us and our customers. Our ‘Best Bankers’ is not a patronizing expression but a statement of fact resulting from a successful recruitment strategy.
The famous Russian bad guy Leon Trotsky warned, “You may not be interested in war, but war is interested in you.” The same can be said of Artificial Intelligence (AI). Get ready—it’s coming, and you will be impacted. We’re embracing AI's promise and have recently entered into a three-year contract with a global leader in IT and AI consulting. This engagement will assist in AI governance, implementation, management, and strategy. AI's promise and potential are too big and powerful not to embrace. We are, with both hands.
Financially, it was a so-so year, meaning not awful but uninspiring. We have high expectations for ourselves, and in many ways, we fulfilled those expectations; loan growth, nailed it, up 12%, deposits up a respectable 9%. Net Income was $20,470,171, down almost $4 million, nearly all attributable to consumer loan losses. We could have managed it better. (Ya think?) The good news is that for the 1st quarter of 2025, Net Income is above 2024 by 16%. It’s a good start, and I’m optimistic that the gap over 2024 will widen as the year progresses and management of our consumer loans improves.
Our annual stock evaluation by Southard Financial of Memphis, Tennessee, came in at $855.00, up from $780.00, a respectable increase of 9.6%.
Part 2 The Back Story
Our in-house, proprietary program, Lead Now, promotes personal and professional growth, strengthens relationships, and boosts our culture. Most of this work is done in weekly book clubs, where our Vision, Mission, and Values (see the bottom of this letter) are regularly mentioned. Jeff Williamson leads many of these classes and suggested I memorialize how these came about. I didn’t have to be asked twice. Thanks, Jeff!
(I believe developing our Vision, Mission, and Values is solely my responsibility, so “I” appears more frequently than usual.)
Vision
Several years ago, I attended a John Maxwell conference when John instructed us to jot down our company’s vision statement and share it with the others at our table. I didn’t have one and wasn’t sure what it was or why we needed it. My tablemates felt differently. They sprang to action like a caffeinated kangaroo on a trampoline. (Careful what you ask AI!) Bowing to peer pressure, I quickly jotted “To be a bank where people love to work and do business.” I wish I could claim a higher power or a noble effort inspired this. It wasn’t. I stole it. It stuck. Crime pays.
The appeal is simple but powerful. If employees and customers love the bank, you’re doing a lot of things right, and good things are ahead!
Mission
In 1986, I was tasked with writing a mission statement for the bank. Admittedly overly ambitious, probably superfluous for a tiny $50 million bank with one branch, but I was overly ambitious and superfluous, so I dug right in. In those days, the conventional wisdom held that a business had only one purpose: to maximize shareholder wealth. Surprisingly, that did little to inspire or encourage me and would do even less for anyone else. I was challenged: What then is the mission of ABB? What is ABB here to do? Our prosperity and well-being are the work of many, so our mission must be broad and inclusive and hopefully speak to the motivations of all who have a stake in ABB.
Aha! An epiphany! Providing value for our stakeholders is what we’re here for!......... Better yet, we’re here to create value! Whatever value means to you, however you define it, whatever floats your boat, that’s what ABB creates for……….who?
If value creation is the mission, who is this value created for and by? Who are our stakeholders? Employees, first and foremost. Not only does value creation start with employees, but we can only flourish by their engagement, effort, and commitment. It all begins with happy employees. If employees ain’t happy, ain’t nobody happy. Our employees are here only because they want to be here, i.e., employees are volunteers. The message I sent to all employees on Employee Appreciation Day sums it up.
“The Best Bankers have options. They are here because they want to be.
Striving to be the bank where people love to work is more than a clever line; it's key to our survival and prosperity!
Thank you all.”
Customers. We need those, too, so what value do we create for them?
For many years, I would revise the mission statement to itemize how and what value we create for employees and customers. Good jobs, advancement opportunities, excellent service, comfortable chairs, etc., but it was too mundane, conventional, and dull, much less inspiring. And worst of all, it sounded like the crap other banks put out. Finally, decades later, in a flash of inspiration, I saw the answer had been in front of me all along in our Vision Statement! We create value for our employees by providing a job they love and customers a place where they love to bank! If employees love their job and customers love banking with you, you’ve caught lightning in a bottle! It’s one helluva competitive advantage!
What business is more a part of and dependent on its community than a community bank? “Community bank” is a term that is typically applied to all banks below $10 billion. It ain’t true. Many, if not most, “community banks” today mainly serve their markets' commercial interests. For good reason, it’s easier, more efficient, and the fastest way to leverage capital and generate returns than “taking all comers” in the community. However, that’s what we do, mainly because we didn’t know better. Thus, we stumbled into a unique and high-performance business model. In short, our consumer loan portfolio, both by volume, (35% of our loans versus our peers <3%) quality, (We serve customers with credit scores as low as 580, while other banks can only clutch their pearls and envy our performance), product and service (Loans as small as $1,500, walk in with a request, walk out with a check!)
I digress. We create value for our communities by serving the whole community and by our contributions, participation, and leadership. We are community boosters!
Finally, our stockholders. This is where the magic happens, and it all comes together. Value is created for our stockholders only as a result of the value created for our employees, customers, and communities. It’s a beautiful and unique thing—continuous value creation for employees, customers, communities, and shareholders. A compounding flywheel of value creation! Turn baby, turn!
Values
We have five. They were ‘discovered,’ not selected by a committee or decreed from on high. I set out to discover the values we naturally hold and aspire to greater expression of. So, our values have two roles: they define who we are and who we aspire to be. They are our “better angels.”
Leadership and Teamwork; these were easy. They were essential, low-hanging fruit, part of me and part of us……..then, writer's block. No more values until……..I struck gold! The Golden Rule, that is! I had never known the Golden Rule to be a company value, but it was a perfect fit! Universally applicable, user-friendly, true to our character, and aspirational! Three down, two to go!
“Going the Extra Mile” has stuck with me since I read Napoleon Hill’s Think and Grow Rich in 1978. He defined it as "rendering more and better service than that for which one is paid.” Emerson encourages us to “put God in your debt” for unpaid compensation. Payment, with interest, guaranteed by God, for “going the extra mile!”
Shortly after we had acquired 100% of an over-mortgaged, undercapitalized, money-losing, festering regulatory blister of a bank, my daddy told me I could do anything in the bank I wanted except sell it. This was no endorsement of me; he was washing his hands of a difficult situation. Years later, I realized I was given an enormous advantage: Ownership! Not ownership of the business but the problems, solutions, and results. What fun! I loved it! Management gold! This is how to lead leaders: give them ownership of problems, solutions, and results; stand back and watch them “Run it like they own it!” It’s the only way to lead leaders!
You may have noticed I addressed this to the “Stakeholders” rather than the “Shareholders.” Now you know why.
Our Jill of all trades, Joanne Joyner, retired after 50 years in the spring of 2024. Joanne handled payroll, HR, BSA, compliance, audit, teller, and secretarial duties, many simultaneously! She was a member of the “enablers,” women who needed a job, found a career, and enabled ABB to climb to the next level. Good luck, Joanne. Enjoy your retirement and your new puppy!
Our annual meeting will be held at 11:00 a.m. on May 29th at our Conference Center on Main Street in Mullins.
