Local, for the long term

By Dick Hughes  

JUNE 23, 2011 10:01 a.m. (0)

CertusBank has gone from acquisition of a failed bank in Easley to the nation’s largest black-controlled bank, but any distinction as a “minority” bank is dismissed by its principals. The preferable adjective is “community.”

Charles Williams, vice chairman, put it simply:  “We are a bank. We are involved in our communities.  Like everyone else, we happen to look the way we look.   We’ve all had stellar careers. We consider ourselves great bankers.  That’s how we view this.” Click here to read about the officers and directors of Blue Ridge and Certus.

With financial help from the FDIC, CertusBank on Jan. 21 took over CommunitySouth Bank and Trust in Easley, planting headquarters there until it can move to downtown Greenville as an anchor tenant in the first phase of a $100-million office and retail complex.

Last month, it acquired two larger insolvent Georgia banks, First Georgia Banking of Franklin and Atlantic Southern Bank of Macon, in FDIC-assisted transactions.

The combined assets of the three banks total $1.8 billion, more than twice that of Carver Federal Savings of Harlem, which had claimed to be the largest African-American controlled bank.

CertusBank is a subsidiary of Blue Ridge Holding, which was formed by former senior officers of Bank of America and Wachovia with an investment fund of $500 million to build a regional network of community banks along Interstate 85 from North Carolina to northern Florida.

“Five billion is our goal within two years, but we never said we would stop there,” said Walter L. Davis, vice chairman and a Greenville native.

Williams added that while Certus will continue to seek more failed banks through FDIC receivership, the company does not rule out buying assets or pursuing mergers through the open market.

“We are not trying to build the biggest bank in the world,” he said. “I wouldn’t want anyone to walk away thinking that. We want a bank that will be meaningful and able to withstand the next tsunami.  You can’t do that unless you have some scale and the appropriate risk-management.”

Milton Jones, chairman and chief executive officer, who participated with Davis, Williams and Chief Administrative Officer Angela Webb in a conference call interview with the Journal, said Certus’ growth will be disciplined and grounded in community relationships and civic involvement.

Their mantra is local core deposits, the mother’s milk of lending, rather than the costly bundled wholesale or brokered deposits from outside investors that many banks used in the go-go years to fund real estate loans.  They paid, are paying, dearly in the crash.

“Core deposit, small business lending, commercial and industrial lending are all elements of those fundamentals,” said Jones.

As an example, Davis noted, in the first 90 days of taking over CommunitySouth, Certus grew core deposits by 40 percent.

“That’s a significant number, but of course that is starting off with a smaller base but still gives you an idea of what we are trying to do in our relationships with our customers.”

If more money is needed to fund growth, Williams said, “our investors are happy to put more money into us should we ask.  We have access to a significant amount of capital, but we want to do things prudently.”

Davis said going public, as Certus plans to do, “will allow us to raise more capital.”  He said Certus will make application for an initial public offering before the end of the year but won’t commit to actually doing it “until the market settles down.”

Timothy Koch, professor of banking and finance at the Moore School of Business at the University of South Carolina and a recognized expert on community banking who sits on an FDIC advisory panel, is impressed with the group’s educational backgrounds, banking experience with large organizations and their business plan.

“They are gravitating to more metropolitan areas with organizations that have some branch networks and market presence and at a low price are building their franchise from the top down.  It is very clever.”

“The other piece of it is that they are telling their investors that this is not a short-run – acquire these banks and flip them to some big institution like HSBC or Wells Fargo.  They are not in this business to flip them quickly and take out a profit.”

Koch believes more banks are going to fail and Certus will be able to “cherry pick” from among those, as well as from those stable enough to survive but short of capital to grow.

He sees Certus setting a new model for minority owned banks.  Typically, he said, minority banks have operated “like community development banks serving a community that is underserved.  That’s not (this) group’s perspective.

They are going to be bankers, and they are going to do the same thing banks have been trying to do for years – build a franchise where you are representing all customers.”

Koch added that minority owned banks on average “have not been high performers, so they are going to set an interesting standard for an African-American institution if this works.”

Koch knows Davis, has had him speak to his graduate students, has discussed Certus strategy with him, has met other Certus officers and is a “community bank advocate.”

Webb, the chief administrative officer, said Certus is looking forward to moving into the new ONE mixed-use complex being built by developer Bob Hughes at the corner of Main and Washington streets.

“In our planning for the space downtown, our needs already are continuing to grow, and that building has yet to be built,” she said.  The 350 employees Certus committed for occupancy of 26,000 square feet of space in five years “was a pretty conservative number.”

Certus expects to reach its $5-billion goal “over the next couple years and we are looking well beyond the two years,” she said.  Certus now employs 440 in the 32 offices of its three bank locations.

 

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The officers and directors of Blue Ridge and Certus are a who’s who of experienced African-American bankers, including directors who served in the Reagan, Nixon and Clinton White Houses.  All directors also sit on boards of at least one Fortune 500 company.

Milton Jones Jr., chairman and CEO, was with Bank of America for 32 years in various executive capacities, including market president for BOA’s Georgia operation with $12 billion in deposits, 155 branches, and 7,000 employees. Jones will remain in Atlanta where the holding company is based.

Walter L. Davis, a Greenville native, started his banking career with First Savings Bank before moving to Charlotte where he had a 14-year career at BOA and Wachovia in senior executive leadership positions, including managing Wachovia’s $70 billion consumer credit portfolio. He will relocate from Charlotte to Greenville.

Charles Williams, vice chairman, was managing director and chief officer of the BOA’s global corporate and investment bank, a member of the board of managers of Bank of America Securities and a senior member of the global markets risk committee. He will stay in Charlotte.

Blue Ridge’s lead director is Edward J. Brown III, who became president of Hendrick Automotive Group, the nation’s second largest privately held dealership group, after retiring from a 32-year career in executive positions at BOA.

Other board members are:

Robert J. Brown, chairman and chief executive officer of B&C Associates, a management consulting and research firm he founded in 1960. Brown was a special assistant to President Nixon from 1968-73.

Robert L. Wright, who founded Dimensions International, a technology company, is lead outside director. He is chairman of the audit committee of AFLAC.   President Reagan appointed him associate administrator for minority small business at the Small Business Administration.

J. Veronica Biggins, managing partner of Hodge Partners, an Atlanta-based headhunting firm, was special assistant and director of personnel under President Clinton.  She also had 20 years of executive experience with NationsBank, the predecessor of BOA.

Howard C. Bluver, founder and president of JDS Financial Group of Port Washington, N.Y., is a former executive vice president, general counsel and enterprise risk officer for GreenPoint Bank. He was an attorney for the Office of Thrift Supervision and branch chief for the Securities & Exchange Commission.