The Banc Corp.’s James Taylor and C. Stanley Bailey last worked together 40 years ago, when Mr. Taylor, fresh out of college, was coaching a high school basketball team and Mr. Bailey was one of his players.
The two crossed paths again in the 1980s when both were bankers in the Birmingham, Ala., area. They talked about reuniting but, it was only two months ago that they finally got the chance to do so.
Mr. Bailey had just pulled the plug on a deal to buy Gold Banc Corp. of Leawood, Kan., and Mr. Taylor, The Banc Corp.’s chief executive at the time, was thinking about retirement and was looking for a way to revive his struggling $1.4 billion-asset company.
This week, after a month of discussion Mr. Bailey and three other executives joined The Banc Corp.’s management, with Mr. Bailey as CEO. Mr. Taylor, 62, remains the Birmingham company’s chairman and largest individual shareholder but has turned over day-to-day duties to Mr. Bailey’s group. Mr. Taylor’s son, James Jr., has resigned as president and chief operating officer but remains on the company’s board.
“We’d chatted over the years about maybe someday getting together, but the opportunity never presented itself until the Kansas deal fell through,” Mr. Bailey said in an interview this week. “And I think this partnership will be beneficial to everyone.”
Investors are clearly pleased that Mr. Bailey has joined the company. Its stock is up more than 11% since his appointment (announced before the market opened Monday) in very heavy trading. The stock was trading at $9.10 late Thursday.
Mr. Bailey, 55, has a track record for building shareholder value. In 1998 he and a group of investors acquired Superior Federal Bank in Little Rock from what was then NationsBank Corp. (NationsBank had acquired the assets a year earlier with its purchase of Boatmen’s Bancshares.) Mr. Bailey created Superior Financial Corp., which at the time had $1.3 billion of assets, and took it public, selling each share for $10. Five years later Superior was sold to Arvest Bank Group Inc. of Bentonville, Ark., for $23.75 a share.
Mr. Bailey did not rule out an eventual sale of The Banc Corp.; he will do whatever is in shareholders’ best interest, he said.
But right now he is concentrating on speeding the company’s growth and improving its credit quality. His group acquired a 4.9% stake The Banc Corp., and he says his goal is to more than double its assets within five years.
Specifically he wants the company to expand in Huntsville and Birmingham — only six of its 29 branches are in those cities — and the Florida Panhandle, where it has seven branches. And eventually he wants to add branches on that state’s west coast — in “the real Florida,” as he calls it.
Mr. Bailey says that particularly in Birmingham, The Banc Corp’s growth will be fueled by runoff from Wachovia Corp.’s November acquisition of SouthTrust Corp.
There were similar conditions when his group bought Superior soon after Regions Financial Corp. of Birmingham bought the $7.3 billion-asset First Commercial Corp., then the largest banking company in Arkansas. Superior’s assets rose 40% in the five years that Mr. Bailey ran it, without making an acquisition.
“With the Wachovia acquisition we see the potential for the same type of phenomena, especially in the Birmingham market where the SouthTrust Tower is right up the street from our headquarters,” Mr. Bailey said.
He is also counting on bringing in business from his many Alabama contacts. He was vice chairman of Birmingham’s AmSouth Bancorp from 1971, when the holding company was formed, until 1994, when it topped $16 billion of assets. He also played a key role in AmSouth’s entry into Florida.
The Banc Corp.’s new president is Marvin Scott, who worked with Mr. Bailey at Superior and AmSouth. Mr. Scott was also part of Silver Acquisition Group, which Mr. Bailey formed in last February’s bid to acquire Gold Banc. A $672 million deal was in place, but it collapsed in the fall after Silver sought to renegotiate its price and Gold refused. (Mr. Bailey’s group had cited a reduction in the Gold’s value due to a $16 million lawsuit settlement.)
The Banc Corp. has its own set of problems.
In February 2003 it discovered a series of fraudulent transactions to cover up bad loans at one of its Florida branches. As a result the company charged off $26 million of loans and restated earnings to report a $5.8 million loss for the second quarter of 2002 and a $16.5 million loss in the fourth quarter. To make up for this hit to its capital, The Banc Corp. sold seven of its Florida branches to the $8.1 billion-asset Trustmark Corp. of Jackson, Miss., in August 2003 for $46.8 million.
For last year’s third quarter The Banc Corp. reported a loss of $830,000. It put the blame mainly on its sale of $32 million of problem loans, which resulted in a $2.8 million charge.
James Schutz, an analyst with Sterne, Agee & Leach Inc. in Birmingham, said that because of Mr. Bailey’s past accomplishments he is confident the CEO and his team will improve The Banc Corp.’s financial performance and get it back on track for expansion.
“It’s a very positive move,” Mr. Schutz said. “This gives the whole bank a lot more focus and gives everyone a chance to start with a clean slate.”
