In Feature

By David Dykes

The banking leaderboard in North Carolina reads like a who’s who of national financial institutions: Bank of America, BB&T, First Citizens Bank & Trust and Wells Fargo, which have deep roots in the state.

But bigger banks based outside North Carolina also are competing aggressively to attract deposits, loans and other services in the ninth-most populous state — and one of thefastest-growing with more than 10 million people and deposits in excess of $347 billion.

Banks that made the biggest acquisitions in North Carolina in the last year are smaller companies. Pennsylvania-based F.N.B. Corp., the nation’s 75th-largest bank, bought Raleigh-based Yadkin Financial for $1.4 billion, while Nashville-based Pinnacle Financial Partners Inc. is acquiring High Point-based BNC Bancorp for $1.9 billion, creating a $20 billion institution. The biggest deal, announced in early May, was First National Horizon Corp.’s purchase of  Charlotte-based Capital Bank Financial for $2.2 billion. Memphis-based First National will have about $40 billion in assets.

To understand how the out-of-state banks distinguish themselves, Business North Carolina interviewed executives of several key companies.


Suntrust Bank
David Stevens, President, Carolinas Division
Headquarters: Atlanta

Atlanta-based SunTrust Banks Inc. paid about $7 billion to enter North Carolina in 2005, buying the parent company of Durham-based Central Carolina Bank after outbidding Fifth Third, according to press reports at the time. The deal came three years after Winston-Salem’s Wachovia Corp. spurned SunTrust’s takeover bid, opting to merge with First Union Corp. Timing of the CCB purchase wasn’t great, with the 2007-09 recession sending bank stocks plunging.

A dozen years later, SunTrust is again highly profitable, while North Carolina remains a vital state with 144 branches, 1,400 employees, 358,000 consumer clients and nearly 50,000 business clients. It ranks sixth in deposit market share.

“We continue to invest in the state, both in terms of adding talent and investing in infrastructure and buildings,” says David Stevens, Carolinas division president since 2014. It offers the gamut of banking services for small businesses to Fortune 500 companies. The bank’s regional headquarters in Charlotte is one of the few cities where all lines of business are under one roof, Stevens says. A similar approach is planned for Raleigh.

SunTrust’s emphasis is serving as “more strategic advisers to our clients” rather than promoting specific products, he says. SunTrust has called on industry specialists to partner with relationship managers, a client’s primary contact. “It’s a game changer for us,” Stevens said. “We work together as one team across all of the lines of business very seamlessly.”


First National Bank
Vincent Delie Jr., President and CEO
Headquarters: Pittsburgh

No offense to the Northeast, but North Carolina’s growth makes it a more enticing place to expand. That was a key factor in F.N.B. Corp.’s $1.4 billion acquisition of Raleigh-based Yadkin Financial Corp. in March. “We’ve been operating in areas where there hasn’t been significant growth,” says Vincent Delie Jr., CEO of the Pittsburgh-based bank. “Now we have 190,000 new prospects to pursue,” he says, citing the middle-market companies in the Carolinas.

Six weeks after the merger closed, F.N.B. had drummed up twice as much potential business as Yadkin staffers had previously recorded, Delie says. That’s a credit to F.N.B.’s larger size and increased confidence by lenders and clients, he says.

F.N.B. brings coherence to Yadkin, which was cobbled together through deals led by Raleigh investor Adam Abram and former CEO Scott Custer. The 2014 merger of Yadkin and Raleigh-based VantageSouth Bancshares created the state’s biggest community bank. Two years later, it bought Greensboro-based NewBridge Bancorp. At the time of its sale, Yadkin had $7.3 billion in assets and about 100 branches.

“No matter what the intent was at Yadkin, what they had accomplished would have taken us 10 years,” including top 10 market shares in Charlotte, Raleigh and the Triad, Delie says.

It’s not F.N.B.’s first stab at the South. It moved its headquarters to Naples, Fla., in 2001, then struggled before selling its Sunshine State offices to Fifth Third Bancorp
in 2004.

Since Delie became CEO in 2012, the Pennsylvania bank has expanded its assets by 150% to about $30 billion. Profit is expected to grow by 15% annually over the next five years, according to analysts’ estimates. F.N.B. has shown it can compete against much bigger peers such as Pittsburgh-based PNC Financial Services Group, with assets of $371 billion.

F.N.B. looked at Virginia banks, but deemed them too expensive, Delie says. One factor favoring North Carolina is the pool of experienced bankers trained at bigger companies, he says. Steve Jones, who had been Yadkin’s chief banking officer, has the same job for F.N.B. in the Carolinas. Custer, the sole Carolina representative on F.N.B.’s board, resigned in March to join Wilmington-based Live Oak Banking Co.

“We’re very pleased with the leadership we’ve built through this merger,” Delie says.


Regions Bank
Terry Katon, Head of Capital Markets
Headquarters: Birmingham, Ala.

Regions Bank is taking a focused approach to North Carolina. While the Birmingham, Ala.-based bank operates about 1,455 offices in 15 states from Iowa to Florida, it has six N.C. branches. That’s fewer than any other state in which Regions operates and is surprising given that it entered the state 16 years ago by buying Charlotte-based Park Meridian Bank.

But the company is concentrating on capital markets and business banking in the Queen City, where it employs 200 of its 250 Tar Heel staffers. (Others work at offices in Raleigh and Highlands.) In 2015, Regions acquired BlackArch Partners, a mergers and acquisitions advisory firm founded in 2010. Other capital-markets products include interest rate and commodity derivatives, foreign exchange and loan syndications. It is now relocating some of its Charlotte-area business groups into about 63,000 square feet in downtown’s new 615 South College building.

The bank has more than doubled capital-markets revenue in the last two years, says Terry Katon, the Charlotte-based head of Regions Bank Capital Markets and a former Bank of America managing director. “In the face of a lot of competition coming into the market, we continue to be successful at attracting talent, retaining them,” he says. “It’s a constant – attract talent, build teams and go grow your business.”


First Tennessee Bank
Bill Holt, President, Mid-Atlantic Region
Headquarters: Memphis

For years, growth-minded North Carolina banks feasted on Tennessee peers. Now, the shoe is on the other foot. Nearly two years ago, Memphis-based First Horizon National Corp., parent of First Tennessee Bank, bought Raleigh-based TrustAtlantic Bank for $81 million, adding six N.C. offices. Then in May it announced plans to buy Charlotte-based Capital Bank Financial for $2.2 billion in stock. The transaction would add about $10 billion in assets, including 95 branches in the state. Capital’s largest markets include Charlotte, Miami, Nashville and Raleigh-Durham. In terms of deposit market share, the combined company will rank seventh in Charlotte, eighth in Greensboro and ninth in Raleigh-Durham. Capital CEO Gene Taylor, 69, a former top executive at Bank of America, will become First Horizon’s vice chairman, reporting to Chairman and CEO Bryan Jordan, 55. The Capital deal came only a few months after First Tennessee recruited former Wells Fargo executive Bill Holt as president of the bank’s mid-Atlantic region. In an April interview, he suggested the bank would build its commercial and business banking, commercial real-estate activity and corporate lending through selectively hiring talented staffers. Buying Capital obviously speeds up that process.

One of Holt’s first hires was Laura Bunn, who had been PNC Bank’s commercial market leader for the eastern Carolinas region. She joins Jim Beck, TrustAtlantic’s founder and now chairman of the Triangle unit. The team is seeking people who fit “this mold of building a business, rather than operating one — a little more entrepreneurial than most,” Holt says.


Fifth Third Bank
Tom Heiks, President, Carolinas Region
Headquarters: Cincinnati

Cincinnati-based Fifth Third Bancorp came to North Carolina in 2008 when it bought First Charter Corp. for about $1.1 billion. That deal provided Fifth Third an entrance into the Charlotte metropolitan market, though First Charter was a retail-oriented bank with roots in Cabarrus and Mecklenburg counties. Since the purchase, Fifth Third has shifted the focus to commercial banking, especially middle-market lending, capital markets and wealth management, says Tom Heiks, Carolinas regional president. When Heiks arrived in Charlotte seven years ago, Fifth Third had fewer than 25 commercial bankers; it now has more than 150. It then had no capital-markets and investment-banking professionals in the state; the count is now about 35. “That’s an area that we continue to grow, we continue to build,” says Heiks, who is based in downtown Charlotte and is also responsible for First Third’s commercial banking in Richmond, Va. Bob Marcus in Atlanta and Bill Tyson in Richmond are co-heads of the bank’s capital markets unit.

Retail banking has been less emphasized, and Fifth Third ranked 10th in deposit market share last year with less than 1%. But there are other measures of success for the bank, which has offices in 10 states from Illinois to Florida.

“If we look at the different lines of business that we’re in, whether it’s middle-market banking or what have you, we also look at growth metrics there,” he says. “We look at, on the commercial side, the number of new relationships, or on the private banking side, the number of households we have.”

Commercial banking and middle-market companies with $20 million to $500 million in revenue have been the largest driver of the bank’s North Carolina growth, he says. “That’s an area that we have really focused strategically on building out,” says Heiks, who came to Charlotte after 21 years in Michigan. In the state’s competitive banking market, “We have to bring our A game every day.”


U.S. Bank
Jim Kelligrew, Vice chairman and Co-Head, Wholesale Banking
Headquarters: Minneapolis

You won’t find any U.S. Bank retail branches in North Carolina, but the Minnesota-based company has made Charlotte one of its three hubs for wholesale banking, joining Minneapolis and New York. The nation’s fifth-largest bank now has 614 workers in the Charlotte area, including a capital-markets business led by Jim Kelligrew, vice chairman and co-head of wholesale banking. The head of the company’s commercial real-estate division, Rex Rudy, is also based in the Queen City. Like many of their colleagues, they worked for either Bank of America or Wachovia/Wells Fargo — or both, in Kelligrew’s case — before joining the smaller company.

The focus on business-oriented banking will continue in North Carolina, says Kelligrew, who joined U.S. Bank in 2009 and took his current job in 2016. “We’d rather just focus on where we already have a competitive advantage and just get deeper there.”

Charlotte’s pool of banking talent has helped U.S. Bank grow significantly in the last six years, particularly in capital markets and risk-related businesses. The bank helps companies sell bonds or participate in interest-rate swaps and foreign-exchange transactions. In addition, many N.C. employees work in the corporate trust group, which U.S. Bank acquired from Wachovia for $720 million in 2005.

U.S. Bank, which trails BofA, Citigroup, JPMorgan Chase and Wells Fargo, is in a “sweet spot” with more assets, products and capabilities than smaller regional banks yet not large enough to face onerous capital requirements facing the four megabanks,Kelligrew says. Despite its scope, U.S. Bank is not on the official global list of systemically important banks, which entail more regulations and oversight.

The bank is attracting people capable of building deeper client relationships, he says. “Given the growth that we’ve seen, and specifically in Charlotte, and the talent
pool that’s here, the wholesale bank’s had a real nice run as far as growing our fee-based income.”


PNC Financial Services
Weston Andress, Regional President, Western N.C.
Headquarters: Pittsburgh

Pittsburgh-based PNC Financial Services Group entered the state by buying the U.S. branch network from Royal Bank of Canada in 2011 as part of a $3.5 billion deal. It included dominant positions in eastern North Carolina, where predecessor Centura Bank was founded. Like its peers, PNC has focused on growing in the state’s metropolitan markets. “We’re taking the much bigger bank capabilities that PNC had and investment in products and services that PNC has made and trying to deploy that in the Carolinas,” says Weston Andress, regional president for western North Carolina. “Frankly, five years into it, it’s played out really well for us.”

PNC’s successes include convincing a number of old-line North Carolinians to do business with the bank, says Andress, who joined the company in 2012 after working for two big real-estate investment companies and Bank of America. “It’s easy to convince some of the guys that just moved to town, some of them we were already doing business with. But there are a number of clients today, where we hold a top-tier position, that have been here for 50 or 100 years.”

That includes customers attracted to PNC’s wealth-management business, which has been a key focus in North Carolina, along with a wide breadth of services for middle-market, large corporate and health care clients, Andress says.

PNC ranked fifth in the state’s deposit market share last year with 2.25%, far behind rivals Bank of America, BB&T, Wells Fargo and First Citizens. The big banks “have got terrific capabilities. There’s no question about that,” Andress says. “But there’s still a need and an appetite out there for the bank that is big enough to have those capabilities but also is small enough that it can provide a human being to work with you.”

Andress calls PNC a conservative, long-term oriented institution operating in 19 states and the District of Columbia. It remained profitable through the 2007-09 recession, when many banks reported losses or became insolvent. “Our model is we want to be here for our clients that we do business with in good times and bad. And the way to ensure that we’re there in the rougher times is to not get too far out over our skis from a credit perspective.”

Images courtesy of FNB Corp. and Business North Carolina
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