Carolina First: Overhaul

By Dick Hughes  

MARCH 15, 2010 9:00 a.m. (0)

The South Financial Group has shed several senior-level jobs to become a leaner company to help restore profitability and emerge from the recession as a more nimble bank, H. Lynn Harton, president and chief executive officer, said.

In the latest example, Christopher S. Gompper, 50, who had been executive vice president for corporate strategy, last week was named interim president of Carolina First, and his prior position was eliminated. Gompper joined TSFG in 2005.

Gompper retained some of his prior duties, and Ernest Diaz, president of Mercantile Bank, assumed others. TSFG is the holding company for Carolina First, which operates as Mercantile Bank in Florida.

“What we’re doing with his existing role is essentially splitting it,” Harton said in an interview. “He’s keeping corporate support for retail (banking) and Ernie Diaz is picking up corporate support for commercial.”

When Christopher T. Holmes resigned, effective Jan. 15, as executive vice president for financial services, his duties were absorbed by Richard Bradshaw, executive vice president for Small Business Administration lending.

Holmes’ total compensation totaled $648,000 in 2008, the last year for which compensation for top earners is available publicly.

At the end of January, Mary A. Jeffrey took early retirement as executive vice president for human resources, and her position has not been filled.

Harton said Jeffrey “has continued to work with us in a limited consultant role but represents a significant reduction in total costs.”

Under her separation agreement, Jeffrey is paid $350 per hour for up to 208 hours through June. Her total compensation was $573,894 in 2008.

When Mary Gentry resigned as executive vice president for investor relations the end of February, her duties were shared “within our existing structure and employee base, resulting in a position reduction,” Harton said. Gentry resigned to spend more time with her family.

“Overall,” said Harton, “our salaries and benefit costs were down 16.1 percent in the fourth quarter from where they were the previous year – $7.4 million reduction in the quarterly run rate or $29.6 million annualized – and we will continue to make decision to become leaner and more focused as we go forward.”

At the end of December, TSFG had 2,214 full-time equivalent positions, down 11.6 percent from the prior year.

The board of directors also has made cuts, not immediately filling three vacancies to reduce their number to 11, suggesting a further reduction in numbers is likely, and reducing director compensation by about half.

The expense savings are driven by the reality of two years of battering by the recession with losses totaling more than $1 billion, an erosion of asset value from nearly $14 billion to $11.9 billion and deterioration in stock value to below $1 a share.

Harton said promoting Gompper to interim rather than permanent president of Carolina First was because Gompper has special skills the bank needs right now to return to profitability as opposed to the “approach you take when you’ve made the transition.”

“What Chris is doing is strategy, a lot of business support, product development, all those kinds of things,” Harton said. I’ve never seen anybody as good at creating a sense of urgency, grasping the problem quickly, listening to all constituents and making a decision as to what needs to be done.”

Asked how he viewed being the third Carolina First president in two years, Gompper quipped, “I am the first interim one.”

Harton and Gompper said Carolina First is eager to increase lending but finds a lack of demand while seeing interest starting to pick up.

With the government guarantee on loans, he said, the pool of qualified borrowers is increased “without taking more risk on yourself.”

After years of being inactive in SBA lending, Carolina First wrote $4.2 million in SBA loan commitments in the three months ending Jan. 31, tops in South Carolina.

With the economy showing signs of recovery, Gompper sees the market improving.

“We’re seeing more discussions, more tire-kicking, which is necessary before the real thing hits. Obviously, we’d love to be making more loans.”

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