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Spirit Community to combat NC's lack of 'locally owned and operated banks'

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Spirit Community to combat NC's lack of 'locally owned and operated banks'

The former CEO of Yadkin Valley Financial Corp. is re-entering the banking industry to reboot North Carolina's de novo scene.

Spirit Community Bank has filed applications to open in Statesville, N.C. If approved, it would be the first new bank in the state since 2009. Another group is rumored to be evaluating the possibility of opening a new bank in Monroe, N.C.

William Long, who retired as president and CEO of the former Yadkin Valley in 2011, is the proposed president and CEO of Spirit Community. He said Spirit Community will serve individuals and small businesses. Long, 71, said he is re-entering the banking space to combat the "decrease of locally owned and operated banks."

"The founding members felt that the large banks were really gobbling up the smaller ones," Long said in an interview, "and that they didn't provide the level of service in a smaller community that they felt like a bank should."

Long said community banks are able to provide faster credit decisions and solve problems quicker than their larger counterparts. "We've all pretty much got the same products," he added. "The only difference we can make is in service."

Yadkin Valley Financial rebranded as Yadkin Financial Corp. in May 2013. In July 2014, Yadkin Bank merged with the former VantageSouth Bancshares Inc. unit Piedmont Community Bank Holdings Inc. In March 2017, Yadkin sold to to Pittsburgh-based F.N.B. Corp.

"When the bank sold out to [F.N.B. Corp.] in Pennsylvania," Long added, "I think we lost a whole lot. They've still got some good people there, but when your decisions aren't made locally, it's a different world."

There has not been a new bank in North Carolina since Jacksonville-based Coastal Bank & Trust opened in April 2009. Both Statesville and Monroe are considered part of the Greater Charlotte area.

Long said Spirit Community will eventually look for growth opportunities outside of Statesville as well.

Peter Gwaltney, president and CEO of the North Carolina Bankers Association, said it makes sense organizers would start the bank in Statesville rather than Charlotte proper, since it is an area where they have "deep roots" and "deep business connections."

He said several small banks are beginning to branch into Charlotte from small towns and surrounding counties. But Bank of America Corp. is the only bank domiciled in Charlotte, since Newark, Ohio-based Park National Corp. agreed to buy NewDominion Bank in January.

"There's so much opportunity," Gwaltney said in an interview. "The question is, will there be a de novo in Charlotte? That's just an open question at this point."

Gwaltney said bankers and investors are encouraged by tax reform, and renewed hope for regulatory relief.

In a recent interview, Brittany Kleinpaste, director of economic policy and research at the American Bankers Association, said de novo formation is "a sign of a healthy industry." She said the number of de novo approvals "definitely needs to get above single digits."

Gwaltney said he would not be surprised to see new banks form in Raleigh, Wilmington or Greenville. Byron Richardson, a senior consultant with Bank Resources Inc., said he has heard rumors of two banks in organization in Raleigh, and one in the Winston area.

"Quite frankly, I am seeing some really qualified CEOs and other executive level talent that look like they are willing to start a bank and want to get into that type of arena," Richardson said in an interview. "... The other question is always capital, and I believe that the investing market is beginning to look favorably upon those types of investments."

Spirit Community's Long said the application process is much more challenging than when he founded Piedmont Bank around 1997 [a separate entity not to be confused with Piedmont Community Bank Holdings], but said the regulatory stringency is necessary and "good for us." He anticipates the bank will need to raise $20 million to $30 million in capital, which it plans to do through a public offering.

"I think there are going to be a lot of people that would like to open a bank," Long said. "How many [are regulators] going to let open, I don't know. I don't think the floodgates are opening."