Looking Back at 2016's Community Bankers to Watch

The Community Banking team at American Banker caucuses every fall to discuss which bankers will be among the leading newsmakers the following year.

We always settle on five bankers from across our coverage that we think will make headlines.

As 2016 draws to a close, we decided to take a look back at our selections to see how we fared. Most years our picks deliver on expectations but, admittedly, many of our choices for this year seemed content to lay low and deliver reliable financial results.

There were exceptions, of course.

Eugene Taylor, chairman and CEO at Capital Bank Financial, had to display patience as he waited for regulators to bless one of the biggest acquisitions in his company's short history. And Greg Garrabants, CEO at BofI Holding, emerged victorious in the first round of a legal bout with a supposed whistleblower.

Our team has also selected five new bankers that we think will be worth following in 2017. Stay tuned for those names in coming days.

For now, here is a recap of how our 2016 bankers performed.

Eugene Taylor, Capital Bank

When we interviewed Taylor last year, his company had just announced an agreement to buy the $2.4 billion-asset CommunityOne Bancorp in Charlotte, N.C., a deal that would nearly put Capital Bank over the $10 billion-asset mark, where it would face higher regulatory standards.

Taylor, however, was hopeful about the potential for more deals, expressing an interest in scooping up more "scratch-and-dent banks." Instead, Capital Bank waited for most of 2016 to gain regulatory approval to buy CommunityOne. The deal finally closed in late October, nearly a year after it was announced.

Capital Bank, which officially moved its corporate headquarters to Charlotte early in the year, also reached an agreement with the Federal Deposit Insurance Corp. to exit loss-share agreements tied to three failed-bank acquisitions.

Taylor, meanwhile, outlined plans in October to stay below $10 billion in assets, including a decision to sell $200 million in loans during the fourth quarter. The company also rolled out new debit and credit card offerings in the latter half of the year.

All that being said, it wouldn't be surprising to see Taylor being involved in some form of industry consolidation after integrating CommunityOne early next year.

Thomas O'Brien, Sun Bancorp

O'Brien, CEO of Sun Bancorp in Mount Laurel, N.J., made it clear last year that his goal in 2016 was to keep the company profitable in hopes of earning back a valuable deferred-tax asset.

Recapturing the DTA is contingent on proving to auditors that Sun's profitability is sustainable, and it seems the $2.2 billion-asset company stayed on course for doing that. Of course, we won't find out for certain until Sun reports fourth-quarter results next month.

O'Brien, who made gutsy cuts to help Sun survive after the financial crisis, kept a close eye on expenses this year. While such leadership rarely makes for good headlines, it does set Sun up for bigger things in 2017.

O'Brien may have avoided splashy headlines, but one of his biggest shareholders did not. Sun had to say goodbye to billionaire financier Wilbur Ross, who is stepping down from the board as part of his nomination to become Commerce secretary. (WL Ross & Co., the private-equity firm that helped recapitalize Sun in 2010, will remain a major investor.)

Ken Karels, Great Western Bancorp

Karels, CEO of Great Western in Sioux Falls, S.D., didn't make things easy for us.

Great Western, less than a week after we selected Karels for our 2016 list, agreed to buy HF Financial in a deal that put the company over $10 billion in assets. It was a curveball since we planned to follow Karels as he pursued a meaningful bank acquisition.

The bank deal, which closed in May, did provide an opportunity to take a closer look at Karels' detail-oriented approach to negotiations. For instance, horse trading for HF Financial included at least six changes in the proposed price and five proposals for the termination fee.

Mariner Kemper, UMB Financial

Expense control was also a major narrative for Kemper, chairman and CEO of UMB Financial in Kansas City, Mo.

Kemper vowed to cut costs late last year after the $19.7 billion-asset UMB reported subpar earnings that largely reflected outflows and a sharp decline in fees at its Scout Investments unit. He delivered; noninterest expenses fell 3% in the third quarter from a year earlier.

UMB also came tantalizingly close to making its goal of having a 70% efficiency ratio, lowering that metric to 70.2% at Sept. 30 from 80.8% a year earlier.

Kemper was also one of the first bankers to publicly announce plans to retool his company's sales incentives following the phony account scandal that rocked Wells Fargo this fall. (The company, however, said it had been contemplating changes before the Wells fiasco made headlines.)

UMB also participated in M&A by buying a portfolio of health savings accounts from The Bancorp in Wilmington, Del. UMB snagged about 40,000 accounts with $76 million in deposits as part of the deal.

Greg Garrabrants, BofI Holding

Garrabrants, BofI's chief executive, also made headlines with a small, strategic acquisition, agreeing in April to buy certain assets and operations of Pacific Western Equipment Finance, including about $140 million of equipment leases.

The $7.9 billion-asset company also has been working on ways to fully capitalize on last year's purchase of H&R Block Bank.

Most attention, however, focused on litigation issues tied to an October 2015 whistleblower lawsuit filed by Matt Erhart, a former BofI auditor who alleged that the company violated anti-money-laundering laws by making loans to certain foreign nationals. Erhart's lawsuit claimed that he was fired after complaining about the bank to regulators.

A federal judge in September threw out the lawsuit, determining that Erhart's account was too vague to satisfy specific requirements of the law.

BofI's stock, which was pummeled after news of the lawsuit first surfaced, has recovered as well. The company's shares are up more than 36% this year, though some of that bounce can be attributed to the broad run-up in bank stocks after the presidential election.