Ambitious community bank senses its moment
John Asbury, CEO of Union Bankshares in Richmond, Va., is one step closer to his dream: building a regional power in the middle of the East Coast.
Union recently completed its $500 million purchase of Access National, adding 15 branches and about $2 billion in loans in northern Virginia. In a few months, the $17 billion-asset company will integrate Access and begin a methodical process of rebranding itself as Atlantic Union Bank.
Access was “the last piece of the jigsaw puzzle” for Union’s Virginia operations, Asbury said during an interview ahead of American Banker’s Retail Banking Growth Strategies conference in March. Asbury and Laurie Stewart, CEO of Sound Financial in Seattle, will also discuss the pros and cons of buying banks or hiring lenders and executives.
Union’s expansion is far from over, as its new name implies. Over the long term, expect Asbury to keep hiring lending teams while looking at other acquisitions in Maryland and perhaps elsewhere. Ultimately, he says, he envisions an operation that extends from Charlotte, N.C., to Baltimore.
“As we move forward, Maryland could potentially be of interest to us for future acquisitions,” Asbury said. “We have the opportunity to continue to push toward Baltimore.”
The discussion with Asbury covered his long-term plans, strategic decisions and the work that preceded the rebranding announcement. Here is an edited transcript of that conversation.
How do you strike a balance between acquisitions and strategic hiring?
JOHN ASBURY: It starts with being very clear about the corporate strategy and what you’re trying to accomplish. I was hired a little over two years ago. … The company saw itself as a large community bank, and I saw the potential to recreate a Virginia-based small regional bank. I wanted to do it on an accelerated basis while I thought we had the opportunity to press for advantage and drive it to scale.
As for M&A or a buildout with new hires, we concluded we could do both simultaneously. The right answer is going to be company specific. You have to be clear with your vision. … We needed to expand in northern Virginia and coastal Virginia. They’re the most populous parts of the state, and Union was very thin there. The acquisitions of Xenith Bank [in Richmond] and Access National really completed the jigsaw puzzle. Both of those bank’s had dedicated [commercial-and-industrial lending] strategies, so as they come on board they bring dedicated C&I teams.
Even though Xenith had operations in Hampton Roads, we had to go out with strategic hiring to complete the C&I platform. … That is where the combination [of deals and hiring] helped out. We also built out our team in Raleigh, [N.C.], a franchise we picked up from the Xenith merger that we used as a springboard.
Through strategic hiring we closed the gaps we had. In all cases, we targeted C&I talent from larger institutions. Over the course of 2018, we hired 26 C&I bankers across the system, including several market leaders.
Big picture, where we had density through our geographic presence, we leveraged strategic hiring. We relied on M&A where we lacked presence.
Let’s talk about your geography. Where you do envision the footprint in the future?
Virginia banking is dominated by four large players: Bank of America, Wells Fargo, SunTrust and BB&T. How did they get here? They bought up all of the Virginia regional banks.
Now there’s Union, the first statewide, independent regional bank in 20 years. We do have a small presence in Maryland and a modest presence in North Carolina. In North Carolina we operate as a branch-light business bank.
I see an opportunity to create something else that hasn’t been seen in 20 years — a mid-Atlantic regional bank. In this context, mid-Atlantic means Maryland and the greater Washington area of Virginia to North Carolina. Those are natural extensions to our franchise. I think we have what makes sense for us in North Carolina at this moment with only seven branches and commercial teams in Charlotte, Raleigh and Greensboro. That state has been so decimated by bank acquisitions to the point that not much down there is on our radar in terms of potential M&A.
As we move forward, Maryland could potentially be of interest to us for future acquisitions. We maintain a commercial team and a [loan production office] in Baltimore. We have the opportunity to continue to push toward Baltimore. That strategy was once referred to as the Golden Crescent, starting in Baltimore and moving through Washington to Richmond and Hampton Roads. No other franchise has the opportunity to do that.
What’s your advice for community banks that are in hiring mode?
Hire people you know. One of the more uncommon benefits that we’ve had from our very dense, compact franchise … is that you know people. Look at Union’s executive leadership team. Every executive leader, with no exception, have come from a large bank environment. We have representation from all four of the majors that dominate market share in Virginia, plus a few more.
We know people, and we’re very networked. In almost all cases of hiring … we generally hire people we know and have actual experiences with. As you think about the commercial banking effort, where we’ve had so much focus, we’re not taking risks on people being introduced to us by recruiters, in general. I’m not saying that we never do that, but usually these are people that we know.
We know they’re good cultural fits, and we know their performance. We’ve become a talent magnet, particularly for folks coming out of larger institutions.
You just closed on Access and announced a new brand. How do you minimize risk during integration and rebranding?
The most important part of M&A is to execute, and to execute it well. We converted Xenith onto our platform on Memorial Day last year … and there was great debate as to were we able to [again] execute on a meaningful M&A transaction. We had not done M&A in about four years and, while I wasn’t here, I understand there were a lot of lessons learned from the last combination.
It all starts with making sure you have the right talent, beginning with the executive team. We all come from much larger environments, so we’re used to dealing with more complexity. You then get into all the planning around communication, process and rigor. I take the lead on communication, and there’s a whole team that supports that effort.
You have to educate. I’m talking about the new teammates who are coming on and joining our company. You have to control the message — if you don’t do that immediately and clearly, your competitors will likely try and do it for you. And you have to make sure concerns are addressed. We used everything from in-person market visits to video to get the message out and create the dialogue.
We only do M&A on a negotiated basis. We don’t engage in competitive auctions. Because of that, we have management from the banks joining us, standing there shoulder to shoulder, telling the story and engaging the teams.
We manage all programs, not just M&A, through a program management office. Merger integration is very tightly controlled under the purview of an integration management office that I chair and has representation from management of both sides. In the case of Xenith, we scheduled two simulated conversions … and we concluded after the first mock conversion that a second one wasn’t necessary. It identified a lot defects in the process and data integrity errors. It caused the actual conversion to go rather smoothly.
All lessons learned from the Xenith conversion are being applied to Access. … What’s interesting from my standpoint is that the Xenith conversion was arguably the best one most of us have ever seen in our careers. It wasn’t perfect, but it was very, very good. But if you were to review the lessons-learned document, you would think it was a disaster because of the extensive list of things that can be done even better. That’s what reaching higher looks like.
For the rebranding, you actually involved customers in the process, right?
We did. The rebranding into Atlantic Union seems obvious. I wonder if people think we spent 10 minutes on it. In reality we spent over a year. We first looked at the rebranding issue in the fall of 2017. We had support from the board and intended to rebrand Union before the Xenith combination closed because we had a problem in North Carolina where we were prohibited from operating as Union Bank & Trust.
We ran out of time, so we kept the project going. … As it became clear that the Access merger was going to happen, we picked up speed. We knew that as we entered Northern Virginia that this was going to be a great opportunity for us. We wanted something that fit us for the long haul and not be confused with anyone else. We wanted a unique identifier that wouldn’t be confused with anyone else.
We did extensive market research as we narrowed the field. The whole process was led by the chief marketing officer. We went through hundreds of concepts. … We didn’t want to just guess at market reaction. We feel really good about Atlantic Union Bank, and we think that keeping the equity in Union was really important. At the same time, we love the combination with Atlantic since we envision ourselves as the mid-Atlantic bank. It’s a good fit and a natural progression.