The Banc Corp. of Birmingham, Ala., is selling a host of luxuries acquired by its former management - an airplane, antiques, and art and car collections - and will spend the money on branch openings in its best markets.
At an investor conference Thursday in California, new chief executive C. Stanley Bailey unveiled a plan to restructure the beleaguered $1.4 billion-asset parent of The Bank. Besides shedding the $20 million worth of luxury items, the plan includes leasing most of the space in the company's $50 million corporate headquarters to other firms.
The proceeds will be used to open about a dozen branches over the next several years in the Birmingham area or on Florida's Gulf Coast.
"We want to optimize the northeast quadrant of Alabama - the healthiest quadrant of the state - and the west coast of Florida, where you can get 20% deposit growth just by opening the doors every day," Mr. Bailey said at the conference in Carlsbad, which was hosted by Sandler O'Neill & Partners LP.
Only six of The Bank's 29 branches are in Birmingham or nearby Huntsville. It has seven branches in the Florida Panhandle but wants to open more of them farther south along the Gulf Coast.
The new management also wants to change the loan and deposit mixes. Currently the company focuses on making commercial real estate loans through brokers on behalf of investors in other states; the loans are funded predominantly by brokered certificates of deposit.
The new management would like to beef up core deposits, do more commercial and industrial lending, and make more commercial real estate loans for customers who are actually in their markets, Mr. Bailey said.
He said that with these measures the company can grow to assets of $2 billion by 2009, possibly $3 billion if it is able to buy banks that can become accretive quickly.
Sandler O'Neill analyst Kevin P. Fitzsimmons said Mr. Bailey and his team have a good turnaround track record and should be able to add to it at The Banc Corp.
"This is a no-nonsense group who has stepped in to take strategic steps to improve the value of the franchise," Mr. Fitzsimmons said.
"The old management, to their credit, had spent time digging out of a hole due to credit quality problems, but the new management will be able to get the company to another level much faster."
In February 2003 The Banc Corp. discovered a series of fraudulent transactions that were made to cover up bad loans at one of its Florida branches.
As a result it charged off $26 million of loans and restated earnings, reporting a $5.8 million loss for the second quarter of 2002 and a $16.5 million loss for the fourth quarter that year.
To make up for the hit to its capital, the company sold seven of its Florida branches to the $8.1 billion-asset Trustmark Corp. of Jackson, Miss., in August 2003 for $46.8 million. It earned $1.2 million in 2004 but reported losses for the third and fourth quarters, largely because of the disposition of problem loans.
Mr. Bailey came on board in January after his deal with a group of investors to buy Gold Banc Corp. of Leawood, Kan., fell through.
He was asked to join the company by his longtime friend James A. Taylor, who was CEO at the time.
Mr. Bailey, along with three others who were given top management positions at The Banc Corp., acquired a 4.9% stake. Mr. Taylor, who founded The Banc Corp. in 1998, remains its chairman.
At the conference Thursday, Mr. Bailey also announced that he was shaking up the company's board and reducing its membership from 27 to 12.
So far investors appear to like what they are hearing from the new CEO.
The Banc Corp.'s stock is up 34% since the Jan. 24 announcement of his hiring. It was trading at $10.92 late Friday.
