Three groups that were looking to form de novo banks in North Carolina have scrapped those plans.
Organizers of
While two groups still plan to open banks in the state, the withdrawn applications show just how challenging it remains to obtain a charter. Raising capital can be a major hurdle, and it can still be quicker and easier to buy an existing bank rather than create a new one.
It is difficult for one geographic area to sustain multiple de novo efforts, and it can be particularly challenging to raise capital from a limited pool of investors, said Donald Musso, president and CEO of FinPro, which is working with a number of organizing groups.
“We are overemphasizing" to organizers "how important it is raising capital,” Musso said. “We have to make sure they're very confident that they can raise the capital.”
Spirit, which received approval from the Federal Deposit Insurance Corp. in mid-December, struggled to reach its capital goal, said William Long, who led the proposed bank’s efforts. The FDIC's
In the beginning, organizers felt there was enthusiasm around their plans, Long said. Over time, the excitement faded as the group faced reluctance from local investors. A charter request with North Carolina's banking regulator was pulled on Dec. 31.
“When we started talking about it, everyone said, ‘Let’s do it. Let’s do it.’ Everyone felt good,” Long said. “We all felt like selling our common stock would be the smallest of our worries — it turned out to be the biggest of our worries.”
Long, who had hoped to open the bank in March, declined to say how much money his group raised. He expressed a belief that stock market volatility in recent months worked against his group's capital-raising efforts.
Spirit’s organizers considered combining efforts with other efforts to form banks in North Carolina, but nothing materialized, Long said. Organizers also hired a firm in the fall to help with the capital raise. While they made some headway, it wasn’t enough, Long said.
“The plan was to try it and it didn’t work,” Long said. “Now we think the plan is to save our at-risk shareholders as much money as we can and see what’s out there for us.”
Dogwood State, which withdrew its charter application in November, is pursuing another path to obtaining a bank.
Scott Custer, who would have been Dogwood State's chairman, said his group plans to recapitalize the $219 million-asset Sound Bank in Morehead City, N.C.
Custer has experience recapitalizing banks. With funding from Stone Point Capital and Lightyear Capital, he co-founded Piedmont Community Bank Holdings and
There were no issues with the group’s de novo application, Custer said.
“The opportunity to invest in an already existing platform — that’s the plan right now,” Custer said. “We have a letter of intent and there's some work to be done to finalize it. We're working through all the details of it right now.”
Community Bank of the Carolinas in Winston-Salem and American Bank & Trust in Monroe are the
American Bank, which applied for FDIC approval in August, is still waiting on approval.
Community Bank of the Carolinas received conditional FDIC approval on Dec. 3 and is in the process of
“Things are still going very well for us,” Brown said. “We're closing in our goal.”
