Banks branch out in the Triangle

dranii@newsobserver.comJuly 11, 2013 

After a hiatus of several years, banks are once again moving into the Triangle or expanding their presence here.

The Bank of North Carolina, which had no local presence until three years ago, is leading the charge. The High Point-based bank recently announced plans to open its fifth Triangle office – and has set its sights on further expansion.

Rick Callicutt, CEO of the 35-branch bank, said he expects to add five more Triangle branches over the next three years, either via acquisition or by opening new offices.

“The demand we have seen for our brand of banking in the market is really what is driving our expansion,” Callicutt said.

In the wake of the recession and its slow-growth aftermath, expansion fell by the wayside as banks struggled and focused on cleaning up their problem loans. The number of branches in the Raleigh-Cary Metropolitan Statistical Area, which grew by 10 to 15 offices each year from 2007 to 2009, leveled off in recent years, according to data from the Federal Deposit Insurance Corp.

But today, many – although not all – banks are healthier “and they’re not focusing on just surviving,” said Bill Wagner, a Raleigh investment banker with Raymond James. “They’re focusing on growing.”

As those banks look to expand, the Triangle is proving to be irresistible because it’s a growing region with a vibrant economy.

“Raleigh is the most attractive market in the state, hands down, bar none,” said Tony Plath, a finance professor at UNC Charlotte.

Some banks are expanding through acquisitions, which is quicker, while others are taking the slower path of establishing new offices.

“There has been a lot of pent-up demand for mergers and acquisitions,” said John Anthony, chief administrative officer at Raleigh-based TrustAtlantic Bank. “You are seeing it boiling to the top.”

The activity in the Triangle also shows that, despite forecasts that branches would become obsolete in the face of the growing popularity of online and mobile banking and the ubiquity of ATMs, they have managed to evolve and remain an important component of a bank’s relationship with its customers. Indeed, some of the biggest players in the region – such as Wells Fargo and PNC – have been boosting staffing at their branches.

Branches are no longer essential for transactions, but they serve as “sales centers” that promote and provide the wide range of services and products that banks offer today, Plath said.

In addition, “they give visibility to the franchise in the market,” Plath added.

Although the Bank of North Carolina’s expansion plans are especially aggressive, it’s one of several banks that have either moved into the market for the first time or are upping their local presence.

“I know there is a lot of competition in that marketplace, but there is a lot of market in that marketplace with $24 billion in deposits,” said Thomas Combs, CEO of Oxford-based Union Bank and Trust. The Raleigh-Cary MSA had $23.81 billion in deposits as of June 30, 2012, according to the FDIC.

Union has opened two loan production offices in Raleigh and Cary in the past year and plans to use them as a springboard for two full-service branches. The bank also is expanding into Creedmoor with its pending acquisition of a Cardinal State Bank branch, which will give it a total of six branches.

Other banks expanding in the Triangle include:

• New Century Bank of Dunn, which announced Monday that it plans to expand its presence in Raleigh by opening a branch on Falls of Neuse Road. The bank, which has seven branches, entered the market last August when it opened a loan production office. Banks often debut in a new market with a loan production office, which doesn’t accept deposits, to establish a lending business that can help defray the cost of spending $2 million or more on a new branch.

• First Tennessee Bank of Memphis, which opened its first full-service local office on Oberlin Road in Raleigh in May. It has 170 branches total.

• TrustAtlantic Bank, which acquired a branch in North Raleigh from Chapel Hill’s Harrington Bank in May, giving it four branches.

• Raleigh-based Capstone Bank, which expanded its local presence by acquiring Patriot State Bank of Fuquay-Varina in January. It followed up in February by opening a new branch in Cary, giving it a total of four branches.

• Even Wells Fargo, which ranks No. 1 with 67 branches in the Triangle, is planning to open a new branch in Fuquay-Varina later this year.

“Other banks have awakened to the fact that this is a really good market,” said Jack Clayton, Wells Fargo’s regional president. “We welcome the competition.”

Some of the banks moving into the Triangle are operating in markets where the economy isn’t doing nearly as well.

New Century’s CEO, William L. Hedgepeth II, said the Triangle beckoned because loan demand in the bank’s existing markets is slow.

“You have to look elsewhere for growth,” he said.

Wagner anticipates that we’ll see other banks take the plunge and enter the Triangle market.

“I don’t think this is by any means the end of the cycle,” he said.

Ranii: 919-829-4877

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