Regional Report Western December 2011
The feeling is not mutual when the bank takes stock of itself
In October, Asheville Savings Bank converted from a mutual association owned by its members to a financial institution owned by stockholders, selling more than $55 million of shares through subscription and a community offering. Though the money will help it meet new capital requirements set by the Dodd-Frank Act, the transition for some depositors was akin to handing over the keys to Bailey Bros. Building and Loan to Mr. Potter.
Raising that kind of money is difficult to do through organic earnings, says Lucy Reuben, a professor at Duke University’s Fuqua School of Business. Asheville Savings — founded in 1936 and now part of new, Nasdaq-traded ASB Bancorp Inc. — isn’t operating under a regulatory consent order, but it lost $9.4 million last year after writing off $22.4 million of bad loans. Barring any unforeseen events, the cash infusion should enable it to weather western North Carolina’s dire real-estate market, something two other local banks — the only ones in the state regulators shuttered this year — didn’t do.
Bank of Asheville closed in January, and Blue Ridge Savings Bank Inc., owned by former U.S. Rep. Charles Taylor, failed in October. Their presidents faced fraud and money-laundering charges, but what sank them were bad real-estate loans. Bank of Asheville advanced millions to developments that didn’t develop, and Blue Ridge had the highest percentage of nonperforming loans (39.6%) of any Tar Heel bank at the end of 2010. “The only land more overvalued than mountain property in North Carolina is beachfront,”says Timothy Martin, president of Duluth, Ga.-based BankSys Management Inc., a vendor of both banks. Only two other North Carolina banks have failed since the recession began, both based in Wilmington.
Going public might not improve Asheville Savings’ chances for survival — at least not as an independent entity. As the region’s largest financial institution, with $755 million of assets, it might prove too juicy a morsel for a bigger bank not to gobble up. As a mutual, depositors got first crack at buying shares, which could return a hefty profit. Asheville retiree Amina Spengler, who likes Asheville Savings’ conservative ways — it stayed away from subprime mortgages — declined the offer: “It’s like a bribe to say, ‘Go ahead, ruin our bank.’” But ever-changing regulatory and market forces, experts agree, make it hard for community banks to go solo.
“What the people are saying is, we want Jimmy Stewart to run our savings and loan,” Chicago banking consultant Tim Anderson says. “But that’s evolution. The key was: Why didn’t you buy stock as it was being sold?” About 5.6 million shares priced at $10 were bought before ASBB began trading Oct. 12. On Nov. 14, the stock, which had traded as high as $11.99, closed at $11.55.
RUTHERFORDTON— Charlotte-based Gourmet Group acquired the assets of cabinet manufacturer Geppetto Kitchens. Terms were not disclosed. The company plans to invest more than $2.3 million during the next three years and add 136 employees, bringing the workforce to an estimated 180 and making it eligible for about $270,000 in state incentives.
ASHEVILLE — The Asheville Area Chamber of Commerce did not renew its membership to the U.S. Chamber of Commerce, saying the national organization has become too partisan, particularly on such issues as climate change and health-care reform.
ASHEVILLE — Twenty-five percent of Biltmore Estates’ energy will come from solar panels after it spends about $5.2 million to install 5,000 by year-end.
ASHEVILLE — Janet Moore resigned as vice president of marketing at Mission Health System after representatives of Hendersonville-based Park Ridge Health disclosed taped comments she made to an audience at an Arizona conference about “lots of hillbillies” living in western North Carolina. She also said Mission held a “monopoly” on mountain health care.
ASHEVILLE — Kelly Miller resigned as executive director of the Asheville Convention and Visitors Bureau to become CEO of Tampa Bay & Co. in January. He has been with the Asheville bureau since 1999.