What can a Goldman veteran do for a small N.C. bank?

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Live Oak Bancshares in Wilmington, N.C., believes its latest nontraditional hire will help it grow faster.

The $2.8 billion-asset company has named Huntley Garriott, a Goldman Sachs partner since 2014, to run its bank. Live Oak, which had been keeping an eye on the investment banker for the past four years, is hopeful the new addition will help it expand its lending to more industries.

Garriott "is a step-on-the-gas kind of guy — and we want to step on the gas,” Chip Mahan, Live Oak's chairman and CEO, said in an interview. "We need more bench strength and Huntley certainly represents that."

To be sure, Live Oak is already growing at an accelerated rate. Its loan book increased by 48% in 2017 from a year earlier, to $1.3 billion, while loans held for sale rose by 73%, to $680 million.

While hiring a Goldman executive is unusual for a community bank, it makes sense for a company like Live Oak that has developed a reputation for thinking outside the box. The company, despite its size, is among the nation's biggest Small Business Administration lenders. It also developed the cloud-based operating system nCino, which it spun off in 2012.

“It is a traditional Live Oak hire, which is exactly how Chip has always done everything,” said Lee Burrows, CEO of Banks Street Partners, an investment bank in Atlanta.

The decision to bring in someone outside of community banking could gain traction, said Christine Barry, research director for Aite Group’s wholesale banking practice. As technology becomes more affordable, small banks will need nontraditional executives to oversee expansion.

Diverse leadership also helps banks innovate and stay relevant, industry observers said. Hiring from larger financial institutions also brings expertise or specialties that are hard to find at community banks.

“I wouldn’t be surprised if we start to see more announcements like this,” Barry said, adding that a Goldman partner could help a small bank broaden customer relationships in areas such as wealth management and advisory services.

Garriott’s investment banking background could come in handy if Live Oak decides to become an acquirer, Burrows said. He speculated that Live Oak eventually wants to reach the $10 billion asset mark.

The new hire could also help Live Oak add more deposits and create more franchise value, said Chris Marinac, an analyst at FIG Partners. The ultimate goal could be to “create more of a real bank underneath the SBA business," he said.

“Someone who has bigger company experience and has seen a large financial platform with many different tentacles certainly adds depth to the team,” Marinac said.

Scott Custer, who was named the bank's president last year after leaving Yadkin Financial in Raleigh, N.C., will remain in a senior post, focusing on strategic development. Mahan declined to discuss Custer’s new role, though he said the veteran North Carolina banker “isn't going anywhere.”

Custer could take on a bigger role with the parent company, Burrows said.

While there could be a slight learning curve for Garriott, most industry observers said they believe he can handle the switch to community banking.

"I bet he has a lot more fun," Burrows said. "He'll be a bigger fish in a smaller pond."

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