Raleigh-based Paragon Bank, which recently shortened its name from Paragon Commercial Bank to underscore that it has broadened its focus beyond business customers to include “private banking” for the well-heeled, is planning to open its second Triangle branch.
The bank is on the verge of signing a lease for a small branch office – about 2,700 square feet – in Cary at the corner of Davis Drive and High House Road, said founder and CEO Bob Hatley.
But don’t expect to see a typical bank branch with an ATM and a drive-thru window.
“That’s just not what we do,” Hatley said. (Paragon does issue debit cards and refunds any charges its customers incur when they use other banks’ ATMs. )
The Cary location, which Hatley said the bank hopes to open in June, will be “high-touch, very upscale offices to attract ... private banking clients.”
When Paragon opened in 1999, the thinking was that, given its focus on serving business customers, one branch for all of the Triangle – supplemented by a courier service – would be enough. It also has a single branch in Charlotte.
That strategy worked well before the recession hit because the privately held bank could rely on brokered deposits – certificates of deposit sold to customers nationwide through brokers – for funds that it could turn around and loan to businesses.
In the wake of the recession, however, regulators have been curbing brokered deposits.
Hatley said Paragon actually has been interested in broadening its customer base since 2008, but because of the challenges ushered in by the recession, it didn’t take concrete steps in that direction until the beginning of last year. Since then the bank created five private banking positions to cater to individual clients – three in Raleigh and two in Charlotte – and added a two-person marketing department.
Although Paragon has always offered banking services to individual customers as well as businesses, that wasn’t well-known.
“Our reputation is that we’re a business bank,” Hatley said. “A lot of our commercial clients didn’t even realize we had personal banking ... products.”
To alter that reputation, in addition to dropping “Commercial” from its name in December, Paragon also dropped its tagline, “the bank for business.”
Later this month, it’s also moving its Charlotte branch, currently on the second floor of an office building, into a 16,000-square-foot building it acquired in order to be more accessible and more visible.
“That should greatly enhance our brand in the Charlotte area,” Hatley said.
Hatley said that if the new Cary office is a success, Paragon may open a second office in Charlotte as well, but two branches could be sufficient in its two markets.
“The thing that we’re not going to change, the thing that has made us very unique that has gotten us through all these tough times ..., is our low overhead,” he said. “We’re not going to shoot that golden goose.”
Over the first three quarters of 2013, Paragon generated $4.1 million in net income, up 48 percent from the same span in 2012, according to data filed with the Federal Deposit Insurance Corp.
Hatley said he expects net income to jump another 50 percent in 2014.