By: Felipe Rivas
2 min read January 2020 — After its recent acquisition of Carolina Bank, regional North Carolina financial player First Bank wants to keep its focus on the smaller side of business finance. The bank is relying on a combination of market expertise and speedy response to cater to companies with revenues up to $100 million that could fall through the cracks of larger, national institutions, First Bank Charlotte Market Executive Douglas Smith told Invest: Charlotte
What have been the main impact from the 2017 acquisition of Carolina Bank?
Carolina Bank was a $700-million to $750-million bank at the time of acquisition, so it was not insignificant from a balance sheet perspective. That operation has had a high impact. We had an opportunity to relocate some of our operations people from Troy, North Carolina, to Greensboro, which has had a positive economic impact there. Carolina Bank was dominant in real estate and we have been able to capitalize on its market share in Greensboro. We were also able to keep some very good bankers from the Carolina Bank team, and hired really good team members with experience in the Commercial and Industrial (C&I) business since the acquisition.
Which niche is First Bank trying to fill within the Charlotte market?
In 2017, there were five banks headquartered out of Charlotte and now there is one, Bank of America. The landscape has changed a lot. Most regional and national banks are swimming upstream from a client perspective. They are looking more for midmarket clients with half a billion dollars in revenue or higher. Our opportunity is with operating companies that have $5 million to $100 million in revenue. I think there is a void there, not just in banks but also regarding the expertise of bankers in that market. Other regional banks offer business banking or a smaller commercial focus, but I don’t think they have our background or our emphasis on commercial banking. We also have a lot of knowledge in commercial real estate and look for project opportunities ranging in size from $2 million to $25 million.
As a community bank, we have the opportunity to be nimble and quick in our decision-making. We make sure that we have a credit partner in every metropolitan market and we always have a treasury management product officer in every major market, providing all the commercially-relevant pieces that you need to offer quick answers, go to market together and have quick engagement. If we get a full financial package on a prospect, we can have a term sheet in our prospect’s hands within two or three business days. We have heard stories that in the regional bank space, some banks can take four to five weeks to put a term sheet in the hands of a prospect. That speaks to a client.
Which financial services are most in demand by your clients?
Aside from commercial, the mortgage space is hot right now, given where interest rates are. For a while, we were slowing down on refinances but I think that even those people who refinanced two years ago now see that rates could have dropped to 1% or 1.5%, and they are back at play in the market. Acquisition activity is still decent, but the rates environment is definitely driving a lot of activity to the mortgage side. We have a Small Business Administration (SBA) division, which does very well for us from a fee income perspective.
The retail group has also done a great job. We hired a team within the last 18 months that is focused on the oversight of the retail function. Our First at Work product provides the employees of new commercial clients with benefits like free checking, free closing on loans, discounted prices and general financial wellness seminars for their employees. That has been a very meaningful deposit-gathering tool for us.
What programs are you supporting at the community level to educate the public?
We focus on supporting anything regarding youth education. We try to help with math education, for example, and we put a great emphasis on kids in less developed suburbs of Charlotte who need financial assistance with school supplies. As kids get older, we also look for opportunities to help with financial literacy, making sure that high-school kids understand what a credit card is, what a checkbook is, and making sure to foster the right kinds of behaviors.
What is the near-term business outlook for the city and the bank?
I would like to believe that the lion’s share of the M&A activity in the community banking space is slowing down, just because there are fewer of our types of banks out there. Because there has been so much consolidation in the community banking space, the North Carolina commissioner of banking has been a little bit more generous with the issuance of charters, which offers opportunities for new capital groups to buy charters. As a result, I think we are again building up that base of true, smaller community banks that would be $100 million to $500 million in size, and the community needs that.
To learn more about our interviewee, visit: https://localfirstbank.com/