A: We've got four main challenges this year: Deposit growth in a flat-yield curve environment. Two is to more fully integrate our complementary businesses [banking, personal casualty insurance, mortgage group, wealth management]. We want to make sure we have all the referrals going in those businesses. Three, we want to make sure we're being prudent stewards of shareholder capital, meaning we have to be very mindful of watching our expenses. Fourth, our Raleigh initiative. We came into Raleigh in in early 2005, opened a full-service branch in October right across the street from Rex Hospital and we were able to get three more branches in mid-February. Opening in Raleigh is the cornerstone of what we're trying to do this year.

With regard to Raleigh, we went in with a loan production office in the first quarter of 2005 to see if our products and sales technique would work. It was a sales strategy to get some name recognition in the market and when we had a full-service branch, you could have a portfolio you could drop in there and have a credible discussion about the other banking products you can offer. We were fortunate to get three more banks from the Wachovia-SouthTrust divestiture. So by going into Raleigh with four branches and 24 ATMs, we were able to go in with a sizeable presence.

Q: What's the one thing you didn't see coming?

A: The flat-yield curve has been difficult for all banks in general ... It's about managing expenses, making sure your credit culture is strong. It forces us to pay more attention to maybe the less sexy part of banking.

Q: What's the most innovative thing you've seen or heard another company doing?

A: What Capital One just did when they purchased Hibernia and with the recent purchase of North Fork. You've got asset generators like a Capital One in search of low-cost funding that the banks have. In the past banks have been spinning off credit card portfolios. They've taken that whole idea and turned it upside down, where the asset generators are looking for low-cost funding. It's one of the reasons why there's a recognition in today's environment of how important deposits are to the lifeblood of a bank and it's true for a company like Capital One.

Q: How about your own company?

A: Moving into Raleigh. We were a traditional Charlotte-area bank. But demographically, Raleigh looks a lot like Charlotte.

Q: Who or what is your biggest competition? Why?

A: We're kind of a hybrid. We're smaller than the BofA's and the Wachovias and the BB&T's, and we're larger than your start-up local banks. I think we're uniquely positioned to avoid competing with the biggest ones and we can offer more products and more sophistication than the local banks. But we've got competition on all sides.

Q: What is the biggest issue facing the state?

A: Education from the 12th grade level and below. In order to have a vibrant economy, you've got to have vibrant cities and vibrant markets. It doesn't matter where you are. The one issue you hear time and again is the quality of the schools and quality of education and being able to keep people in their markets and grow and invest.

Q: North Carolina sees biotechnology and service companies as a key to its future. Is that the right path? Should we be giving incentives to attract them here?

A: Labor jobs have been migrating from the rust belt to the South and form the South to Mexico or Africa or China. So with manufacturing jobs, it's very difficult to compete in the global marketplace. Service jobs, knowledge-based jobs are absolutely the right way to go, which is why I think education is so paramount to our success.

Other states are [offering incentives]. You have to either get involved with that or you're going to miss a lot of opportunities. If you don't invest there, you're never going to get those chances.

Q: What's the biggest change in business today compared to when you started?

A: The flow of information and the speed and the amount of information you can get at your fingertips. In 1987, if you wanted to communicate or send documents back and forth, you had to hire a courier, you had to ship them across town or whatever. Now with e-mail and fax and the Internet, the massive amount of productivity is light years ahead of where it was 20 years ago.

Q: Why should an investor invest in your stock today?

A: It's a company that is uniquely positioned because of our size. We're bigger than the smaller local banks, which allows us to offer a high degree of sophistication to a broad set of customers. But we can be much more friendly and feel much more like a community bank than the Bank of Americas and the Wachovias.

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