Why North Carolina is de novo central
William Long is stepping off the sidelines to launch a new bank in Statesville, N.C.
Long, former president and CEO of Yadkin Valley Financial, said Iredell County needs a community bank to serve individuals and small businesses. That's why he is leading a group of 30 organizers in forming Spirit Community Bank.
“With the decrease in locally owned and operated community banks that has taken place in the last year due to mergers, the organizers and I felt that very large banks are not providing a level of service that a community bank could provide,” Long said in an interview.
While 54 banks operate in Iredell, Wells Fargo, BB&T and Bank of America control about 57% of the county's deposits, based on June 2017 data from the Federal Deposit Insurance Corp. Spirit's organizers are counting on regulators and potential investors to see the need to create the first new bank in North Carolina in nine years.
Spirit isn't the only bank being considered in the state, which has been a focal point of consolidation in recent years and which has a deep roster of talent from its biggest institutions.
The North Carolina Commissioner of Banks has had several conversations with groups interested in forming new banks, Rowe Campbell, chief deputy commissioner, said in a presentation Monday at a conference hosted by the North Carolina Bankers Association. As a result, Rowe said, he expects several bank applications in coming months.
“There’s room" for more banks, depending on the market and business plan, Rowe said in an interview after his presentation. "We’ve had so much consolidation — there's definitely a market, a need and a desire in a lot of the communities."
Spirit's group hopes to receive preliminary approval from state and federal regulators by midyear. Then the plan is to open during the third quarter.
Regulators will determine how much capital Spirit must raise to cover its initial costs. Long estimates the bank will need to raise $20 million to $30 million.
“We're in a distinctive market here and we think most of the capital can be raised right here in Iredell County,” said Long, who formed Piedmont Bank in 1998. “It’s a vibrant community. If people want a community bank here, they’ll get one.”
Spirit, which plans to raise capital through a public offering, is the second group to propose a new bank in North Carolina. David Cuthbertson, a homebuilder in Union County, is aiming to open a bank in Monroe, a community east of Charlotte. That group plans to file its application in the next couple of months.
There is room in North Carolina for more than one new bank — as long as the target markets and business plans don’t overlap too much, industry observers said.
“If two wanted to pop up in same geographic location, we’d have to look at it real close,” Rowe said.
“For the number of banks being acquired, there's always demand ... for good, veteran-led community banks,” said Jeff Adams, managing director at Banks Street Partners. “I don’t know how many de novos will ultimately come out of the gate [in North Carolina], but I do think there's certainly opportunity for new banks to do well and fill in around the disruption caused by mergers and acquisitions.”
Statesville and Monroe are both prosperous markets, said Tony Plath, a finance professor at the University of North Carolina at Charlotte. Having two community banks already based near Statesville — the $406 million-asset Aquesta Bank and the $204 million-asset BlueHarbor Bank — makes it harder to justify starting another community bank in Iredell than in Union County, Plath added.
Still, the time is right to see if de novo banks can thrive in North Carolina, Plath said.
“I'd just like to see this market test occur in a cautious, deliberate manner ... where we dip a toe or two at a time into the de novo water, rather than diving whole-hog back into the new bank-creation business," Plath said.
Long has been out of the banking industry since leaving Yadkin Valley Financial in 2011. He decided to reenter the industry because of a strong feeling that his hometown should have a bank that makes local decisions and serves small businesses.
“My bank went away from me,” Long said about Piedmont Bank, which was sold to Yadkin Valley in 2002. The bank is now part of F.N.B. Corp in Pittsburgh.
Spirit has drawn interest from bankers in the market so far, Long said. Kristi Eller, a former chief information officer at Yadkin, would serve as the bank's chief operating officer. Thomas Kincaid, previously a vice president of wealth management at BB&T, would become chief lending officer.
Spirit plans to focus on rural communities in Iredell, although Long said the bank could eventually add branches in larger cities, including Charlotte.
“My vision for this company would be to be in multiple communities. Some of those would be very small, rural communities,” Long said. “Others would be one large branch in another city like Mooresville, Charlotte or some of the other larger cities — but still be in some of the rural communities where we will be able to support our growth with a sound deposit base.”
Paul Davis contributed to this report.