By: Elaine Day
December 2, 2022
It’s July 30, 2022, and First Carolina Bank President and CEO, Ron Day, is unwrapping a commemorative gift of a framed poster signed by all 100-plus employees of the Bank, many of whom are in attendance with their families at the day’s festivities. The signatures surround a special Bank logo, its column modified to include a 10 with 10 stars below it to mark each year of operation—the occasion, of course, is the Bank’s 10-year anniversary.
The day, hosted by Chief Operating Officer Kristen Brabble on the Tar River Reservoir, is a celebration complete with water activities, food, and community, and of just how far the Bank has come in its decade of existence. The Bank has a unique history that drives its culture and, as the story continues to be shared with a wider audience, its current operating success.
BUYING THE BANK
During the last week of December in 2011, Day was consulting in Asheville when he received a phone call from Bob Mauldin, a former chairman of Centura Bank. Mauldin, along with a group of Rocky Mount-based investors, was preparing to buy a failing local bank with the hopes that it could fill a growing void of community banks in the area, and he wanted to know if Day was interested.
“Yes,” Day said, reminiscing on the call in a recent interview. “The thesis was good. I knew that there was a lot of business in motion and transition in central and eastern North Carolina, and I thought we had a good group of people, so yes, I was.”
In addition to Mauldin, that group of people included John Williams, Jett Ferrebee, Chuck Robbins, Don Stallings, and Tom Betts, and Day met with them in January of 2012 to discuss the status of the purchase. At the time, they had First Carolina State Bank, which was headquartered in Rocky Mount and had secondary offices in Reidsville and Greenville, North Carolina, under contract in addition to a separate Asheville bank, and they had not raised the level of funding needed to apply to the Federal Reserve to become a bank holding company. The contract for First Carolina State Bank had already expired once and was set to do so again a few months after the meeting, so as Day came on board, he first set about working with attorneys to get it extended and let the Asheville bank contract expire.
In doing so, Rocky Mount investors “actually got more confident, because they felt like we had a more well-defined plan,” Day said. “That was a boost to us in our fundraising efforts.”
The team continued to raise money, and by April, they had reached the 75% threshold of their target $13 million, at which point they could apply to become a bank holding company. Approval from the Federal Reserve came through on July 10, the capital call was made in the following days, and First Carolina State Bank was acquired on July 30, 2012.
BRANDING FIRST CAROLINA BANK
With the purchase finalized, stability was the theme—and it was a theme that did not only apply to the actual day-to-day operations of the Bank, but also to the brand itself. The legacy name of the failing bank was somewhat tarnished, and Day felt a simplification to First Carolina Bank would pay the proper homage while also providing a platform for the new chapter.
Maintaining “Bank” was important, Day said, as “most people try to run away from the name ‘bank’ because they want it to be new and contemporary. The reality, though, is that while banks have their ups and downs in terms of public opinion, people move towards FDIC insurance and the stability that is inherent in a bank, institution-wise.”
Then, desiring to create a “classic, local North Carolina feeling and brand,” the team worked with Lewis Advertising in Rocky Mount to develop a color scheme reminiscent of the state’s university system flagship school and display it via a column logo to symbolize that stability.
THE EARLY DAYS
With the legacy bank being just weeks away from failing, First Carolina Bank began its operations having inherited a regulatory consent order from the FDIC; the process of transferring ownership and leadership did not automatically nullify it. As a result, the original group of just over 20 employees implemented wholesale policy and procedural changes, including the institution of Jack Henry systems, while working to remedy the Bank’s credit problems. It turned out that a number of the loans on the books were still current and just needed updated financial information, and gathering that information allowed the team to get a better picture of the Bank from an accounting standpoint. After a few months of losing money, the Bank posted its first profitable month in December of 2012.
The original team—made up of still-familiar faces like Brabble, Debra Medlin, Stokes Suiter, Maxie Coker, J.R. Johnson, and Shannon Sutton—then understood that they had something they could work with and started 2013 with another smaller capital raise. Local customers realized that the once-failing bank was not, in fact, going to fail, and that confidence allowed the team to engage with previous clients from their networks.
An additional key player in that process was Mahler Thorp, who was killed in a car accident in July of 2013. His death was a “big emotional setback,” Day said, and while there was no one to replace Thorp, he also knew that no competitor was going to fill the void, either. Day credits Coker and Suiter for maintaining Thorp’s business relationships and pulling them in despite the tragedy, ultimately enabling Thorp’s legacy to live on at the Bank.
Having the right people is a common theme that Day discusses in most any conversation about the Bank, and any new location or venture of the Bank is people-led and chosen with intention. By 2015, Day, a Raleigh resident, was ready to expand into his home market, the largest in the state. The Bank first opened a loan production office (LPO), a practice it would replicate in the coming years in Wilmington, NC and Virginia Beach, VA, before converting it into a full-service branch in 2017. In opening the Raleigh office, the Bank decided to close the satellite legacy location in Greenville, North Carolina.
During that time, the Bank was also developing a partnership with Raleigh-based Capital Investment Companies to offer wealth management products to its clients. The partnership turned into a new trust division, First Carolina Wealth, by 2019. First Carolina Wealth, led by John Slayton, was designed to focus on client advice and service, while Capital Investment Companies served as the investment manager and back-office provider.
The pandemic-impacted 2020 brought continued growth for First Carolina, as its LPO in Wilmington was converted into a full-service branch, and a full-service branch was also opened in Cary, NC. Virginia Beach’s LPO became a full-service branch in 2021.
2022 marked First Carolina’s biggest year of physical growth, as the Bank opened its doors in two new states, South Carolina and Georgia, with centrally-located branches in Columbia and Atlanta, respectively. The Bank also has plans to expand into Upstate South Carolina in 2023, with construction on a branch in Greenville set to conclude late in the first quarter.
“That expansion was viable because of the experience of the people that we have,” Day said. “People like Gregg Ferrell and Doug Ford, who had worked outside of North Carolina as it relates to the job that they were doing. They’ve either managed people in other states or done business themselves in other states. It wasn’t completely a foreign idea to think that we could go land in Atlanta. I had been there and had been very successful there.
“We hire people who have been in their respective market for forever,” Day continued, citing David Rizzo in Wilmington; Mindi Bevington in Virginia Beach; Will Holmes in Columbia; and Thomas Forsberg and Steven Deaton in Atlanta as examples.
Day also noted that the community legitimacy inherent in such hires enables the Bank’s one-branch-per-market model—which, in turn, enables the Bank’s ranking as one of the most efficiently-run banks in the country.
THE IMPORTANCE OF HOME
In the midst of the Bank’s expansion, its leadership remains committed to Rocky Mount as a home market. So much so, in fact, that they doubled down on their investment in the community by buying a lot adjacent to their existing branch and corporate building and will be opening the doors to a third operational building on N. Winstead Avenue in late 2023.
“The legacy of Rocky Mount,” Day said, “is that it’s much bigger of a banking market than you would expect given its population size. There’s a lot of commerce there. There’s $2 billion in deposits in Rocky Mount, and we’re no. 1 with almost 30% market share. That’s really important.”
Rocky Mount is, and will continue to be, the hub of First Carolina’s operations department, from both a deposit and loan standpoint, in addition to its compliance and finance departments, among others.
“Rocky Mount is home,” Day emphasized. “You have to be strong at home to be good away from it, and you have to be able to go out in order to remain independent.”
A CULTURE OF SUCCESS
Today, First Carolina Bank is one of the safest and most efficient banks in the United States as measured by credit quality, liquidity, and overall operating practices. More specifically, the Bank is rated in the top 10% of all US financial institutions in terms of safety and soundness while being the fastest organically growing bank in the country over the five-year period ending in December 2020 based on composite growth in assets, loans, and deposits. In 2021, First Carolina was rated no. 31—and the only North Carolina bank—out of the top 100 US community banks with less than $3 billion in assets by the S&P Global Market Intelligence.
There is perhaps no better example of the Bank’s success than the capital raise completed in the first quarter of 2022. A private placement of its common stock, the Bank sold 4.6 million shares at $25.00 per share, resulting in gross proceeds of $115 million before deducting fees and expenses of the offering. It was the largest private placement of common equity in North Carolina banking history led by local investors, based on publicly available information.
Day says that the key to the Bank’s accomplishments is not a simple answer.
“It’s timing. It’s competency. It’s patience from our investors. It’s unparalleled support from the Board and investors who, once they invest, do business with us. We meet that with high skill, and we execute well. We focus; we don’t get distracted. We don’t really spend a whole lot of time talking about what the competition is doing. We have a lot of confidence in what we’re doing.
“It’s the culture of the Bank, which is very supportive. We let people fail. We put people who are younger—and maybe inexperienced—in positions of high authority and let them run. That’s worked out well. And then we have a lot of skill and experience, and we present those people with a very clean, easy platform to do business in, and that’s very attractive for them.”
It’s October 14, 2022, just 76 days after the Bank’s 10-year anniversary, and Day is preparing to send one of his now-signature Friday updates to the Board of Directors.
Usually, Day said, there are significant updates in each iteration, but this one featured a point that was especially so—the Bank had eclipsed $2 billion in assets, and they had done so less than two years after crossing the $1 billion mark on November 23, 2020.
Day then forwarded the email to the Bank’s investment banker, Chris Kochard, who promptly responded with a simple query: “When do you think you’ll hit $3 billion?”
“I told him it’ll probably be early 2024,” Day said, adding that the Bank has no ceiling in its newest markets in Georgia and South Carolina.
“Our ceiling is what we want it to be. Profitability, performance, and stability in another period of economic volatility that’s going on right now is more important. Growth was about getting to a critical enough size that we could be relevant. We’ve done that, to some extent, but it’s probably a little more important right now to be safe, secure, and profitable.”