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number one in the nation for heart care
blue cross and blue shield of south carolina probably serving south
carolinians since nineteen forty six
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sunoko
a global manufacturer of consumer and industrial packaging products and
provider of packaging services with more than three hundred operations and thirty
five countries
the american economy feels like it's on its ear toder one-week greatness the
next back
at as we tend to recover from the great recession
one industry that's become a four letter word
the financial industry took much of the blame for the recession anna still being
blamed for the slow growth
welcome take carolina business review the longest running a most widely
watched source for carolina business and public policy on sean flynn in for chris
william today we talk dollars and cents we'll take a look at banking regulations
and what it means for banks we'll take a closer look at community banks pandit
days are numbered for small banks and later we'll be joined by john dwindling
president of south carolina *** contrast and how his small community
bank is becoming original powerhouse
major funding also by the duke endowment a private foundation in charlotte
enriching communities in the carolinas through higher education health care
rural churches and children's services
and by blue cross and blue shield of north carolina
who was responsible for rising health care costs join blue cross and blue
shield of north carolina and many others in a candid discussion at let's talk
cost dot com this addition of carolina business review was recorded june twenty
ninth twenty twelve
pop this week's program
doctor tony clark of the university of north carolina at charlotte
rainwater of the south carolina board of economic advisers has special guest john
wins
off south carolina for us
hi welcome to the show thank you both for being here tony frank uh... we're
going to talk a lot about banking regulations on the show but we'd be
rebbe remiss not start off with the hot topic right now
the supreme court just made its landmark ruling on the affordable care act
uh... frank let's start with you what is your initial take on this and i guess
what does it mean for
the futures economy of what they have a lot of businesses and it's not going to
sidebar as the uh... suits like this where through the process i think a lot
of people may have put off hiring decisions
all waiting to see what the outcome of this uh... decision was going to be
now that we have some fun that would be to what we're gonna see the uh...
uh... what impact how business is going to comply with us to work on the closely
watching to see what might be a hiring practices might change
co-op within the next several months
uh... back but i i won't go into a lot of the details with you on this budget
a lot of the big banks obviously uh... it it just means a lot of mp money
dollars and sense for them
and you do you think this cuts into the bottom line eventually if if this is the
way it and again what's right for moving toward a single-payer system so as we
move in that direction we have about thirty million people of the health
caroll school cost of health care is bound to go up
plus you know with the no longer having a waiver increases to conditions that's
been away from raise the cost of health insurance as well so
i think over the next few years if it holes and we don't overturn it at the
ballot box in november then in fact the cost of health care is going to rise
four all of the businesses that currently have plans it'll be
interesting to see if they maintain their plans or if they go to the
risk-based pools at the state level them for now they're saying they're gonna
maintain insurance as a corporate benefit but
it'll be interesting to see how long that lasts if obama care really is fully
implemented in twenty four t
i don't think it'll be the case washer and they'll be several several other
c_v_r_ stis dealing with that issue
let's get back to the economy frank
economists are all over the map right now when it comes to predictions right
now with the economy where do you stand on it right now specifically here in the
carolinas of schools discipline south carolina were doing pretty well
on we hear though several years of they'll turn with twenty four
months of negative employment growth year over year
and now we've had a period of twenty four months of positive growth year over
year
uh... granted it is not as fast as it was part of the recession but uh...
we're seeing sustainable growth that than one percent range in employment our
income is growing around the four four and a half percent
not great compared to the eight percent we saw when the uh... decades of two
thousand but uh... but it is growth and its good growth i think that it right
now will take rest period period
um... tell you what does it mean for the banks right now when you see an end and
nbsp your news good news bad news
what i guess where's economy right now in the next president is that it's a
mixed picture for banks but at the end of the day i think the most problematic
future the economy is so slow rate of growth that we're having
the overhanging inventory of foreclosure properties in the fact that the labor
market is not recovering and sufficiently rapid peso
but that does is it limits the opportunities for growth in banks
although
you know some banks are doing pretty well as first loan growth is concerned
wells fargo's posting really good numbers
bank america's not so it's a mixed picture
but if anything the slow rate of growth in the overall economy
slows down the rate at which banks are recovering because they just can't grow
their loan portfolios that quickly
there isn't that much loan demand out there
uh... and that's what i want to acted out frank uh... when it comes to loans
and loan demand how critical are the banks
uh... in china restart this economic engine that had been sitting on both
server they're an important part part of the economy uh... people don't have the
assets and their in their accounts that would go by their homes
small businesses and horrible needed for the capital they need
uh... we're looking to see uh... you know with its new regulations how that's
going impact uh...
is at the bottom line is it will take where resources back to him for the
uh...
for the for the economy
it is is that what do you think the hold up is that the banks are loaning or is
it so there's too much relations bergen talk more about that but
what what do you you know it is it is the hope that you can they do you need
good growth in the economy and employers are hiring
the head of will cover didn't go to the bank to the media the banks to have
capital
to help stimulate small businesses
multimedia our our banks making those loans we keep hearing all these people
saying that banks are making loans that's what's on the economy that when
we talk to
the bankers are sent were making love on a large prolly liquidity the banks are
well-capitalized accreditation serbia kind of sorts
you know the banks stand ready to land the real problem in the lending market
is file finding well-qualified borrowers
uh... so the companies that are in a position where they were able to borrow
are reticent to do so because they're not certain economy he's going to
continue to grow an alum demand that's in the market the people who do want to
borrow money to start that will qualify for credit so you know as frank said a
minute ago it's a chicken and the economic what we really need to see the
banking industry stabilize and begin to grow as a recovery in the labor market
once people get back to work in our confident that they have a job will
start spending once they start spending they'll start borrowing again on the
banks will start to grow
ta seems like we keep adding this data where
our consumer confidence starts increasing and then and something
happens whether it's europe or
or something happens where that goes away in the spring it was gas prices
lately it's been staying before that it was grief so had the rate of growth in
the overall economy is so slow that almost anything can upset the apple cart
right now so
higher oil prices will cost us to slide back into a recession then the crisis in
europe and the banking issues in europe could cause us to slide back into
recession again what we need is sustainable growth isn't excess of about
two two and a half percent and right now we're just not saying that in the
american economy after that you have the uh... federal budget deficit situation
and the tax increase tax effect in january
you know cutting government spending or raising taxes going to drag on only
economist he does'nt pressing me and
frank what do you see as the path to getting us back onto a good economic
recovery
uh... workgroup tony and it's going to job growth
uh... what we have seen in the numbers that small businesses have a continue to
on
uh... higher and has been a major source of or one of the leading sources of
employment growth
in their car were starting to see more broad-based of growth and all the
senators except for the uh... haha construction in uh... in the financial
industry especially bay those implements of not god
i think i think more by this is about perception uh...
or relatively to are also
everything in the mood in the two thousand going great
and they were growing at a very good right now we're in a slow-growth peers
are thinking and look at consumer confidence
who may be about more expectations member that they could have a great time
in the two thousand when things were going gangbusters and there were just a
little bit slower growth peter
did the perception of the banks is not good right now respond right up there
with
attorneys journalists come up
you know who speak for yourself
out of it
as the special in the president is calling a lot of these bankers faq at
bankers i mean they're obviously need to do you think the perception of banks and
bankers is changing or is that still kind of look down and look at the
reputation of capital back specially the big macs there's a lot of public anger
out there
you know it's particularly directed at the banks that are doing a lot of the
foreclosures and like bank of america the responsible for
or at least perceived to be responsible for a lot of the problems that we see in
the mortgage market so you know the banks do have a lot of damage control
had a lot of reputation will care that they need to do
sort of fixed their public perception but having said that remember other
companies
have been perceived badly by the public as well we can talk about tax on we
could talk about d_p_
you know we could talk about johnson and johnson back in the trial all scarecrows
companies all came back in the banks will too
this is going to take time and they're going to have to work at repairing the
damage
finally to talk to just see above the estimate for the full half-hour bets
ricky gone the panel so you can be a the journals and help us questions but
many state banking is not now are all about politics and politics is what will
be talking about next week
on the next c_v_r_ we'll be joined by
for mares across the carolinas snare terry bellamy from asheville
mayor steve benjamin from grad columbia
mare roddy perkins from greensboro and mayor steven mckellan from florence
will go in depth on the issues basing their cities and why it now seems
they're competing against each other
rather than trying to work together
and that will be on the next c_v_r_
some call the frank dot act as small bank killer we're seeing more and more
of these community-based go wander or be sold
one bank seeing some of the benefits is south carolina bank and trust
joining us now president a seed bt john when lee
thanks for joining us first ball that with you
how are things going right now with a you with us you just heard us talking
about the perception of banks how are things that i see bt
for example one pretty well for our company you know we've been uh...
fortunate through this to be able to continue to grow our company uh... into
uh...
uh... can maintain you know level of strength uh... throughout the the entire
downturn uh...
when the positive things about our company is that uh...
you know we've been able to like aside maintain the growth uh... continue to
play are full dividend
uh... throughout the uh... the cycle and uh... growth is has has come it's always
digits its low it has been
buried very good for us is we've a as we come through this cycle
well i know i just past couple of years you've managed to choir merged with four
different banks tend to talk a little about that strategy and how
based on the stop on the size of stevie cain
well is this going to change within the industry opportunities have been really
two-fold others than opportunities for us as is bikes have gotten into trouble
for them
f_d_i_c_ insisted transactions and uh...
with uh... been able to move out of south carolina in into northeast georgia
through to acquisitions uh... that were assisted by the f_b_i_ silly in
acquiring two institutions over there that we're over a hundred years old and
so
that's been piano beneficial for us from the market expansion standpoint
uh... and then also there's been opportunities for us with the smaller
community banks are on the emanate side to do
what week what we call traditional in a day activity
line s acquiring
healthy smaller banks you know that are looking for of for different reasons are
looking for a a strategy you know to exit um...
nor to become a part of a larger organization
lifetime
johnnie really connected in the first quarter if you look at your numbers
profitability is way up credit quality
your charge off numbers look like it's two thousand sex again
how are you doing what's your secret
well haha darnell think there's any real secret to it you know on the you know we
throughout uh... the cycle we have uh...
maintain a level of of quality within our loan portfolio we've been challenged
through all of this uh... and
as we were through our problem credits um...
uh... and things have improved um...
you know arm bar business model is such that you know allot of folks are looking
for our our community bank and the opportunity to have
uh... relationships with individuals that are deeply involved in their
communities and uh...
we saying in a significant growth in some of our markets are throughout the
franchise
um... boffo said are moving away from other institutions and are moving to us
uh... for
uh... you know the community bike experience in that level of service
pressure loan book changing career move away from persia realestate move in and
uh...
in a commercial and industrial and they did tell you a couple things they are
you know if you if you look at our book over the last few years from
you know we have uh... minimized are our efforts in commercial real estate
uh...
uh... a lot of the problems that were traded throughout the southeast war you
know the aggressive uh... lending that was being done in the role of study a
sector and so
uh... construction in land development you know we strong car book of business
in construction a land development and commercial non owner occupier and now
what's been the real catalyst for us is has been there's been an uptick and and
consumer lending uh...
uh... consumer role state is up
uh... commercial owner-occupied facilities uh... we financed the number
of those across the carolinas in georgia uh... over the last uh... couple of
years
on and we're saying a little bit of improvement on the sea in our side uh...
lot of mine tour look in to diversify their portfolios and and to uh...
to grow there see in our business so it's highly competitive high out there
on but we are looking for opportunities on the scene outside if whale
i thanked if the economy gets going do you see the carolinas north and south
carolina being a better position
prepared to help for businesses small businesses
of industrial users
to get going
frank i really do army you know it what many all talked a little bit about it
earlier on the show uh... you know uh... the there's uh... a tremendous amount of
excess liquidity out there in the biking would be in the banking industry right
now and the bikes righteous
to the poor that excess liquidity and make lunch hum
and the challenges band you know a lot video or finding qualified borrowers in
folks that are they're looking for opportunities
you know a lot of the business is right now we're taking a little bit of a wait
and see
uh... about
uh... you know what's gonna happen with the election you-know-what what isdn
both before they pull the trigger
uh... and make those additional capital investments um...
as you looked as you visit with commercial and industrial companies you
know a lot of them were sitting on
significant amounts of liquidity
but they're reserved and and then there's they're just not
they want to see what's gonna happen and like i think tony said see some
improvement in the overall
hiring and an economic activity
uh... in order for uh... you know them too
turn that money loose and begin to expand them again to our folks so
there's
there's a good bit of uncertainty this out there in the market right now which
i think
is holding back folks from mom
uh... from
from making those investments t_v_ growing economy and employers employees
to have more qualified bikers uh...
linder learning opportunities yeah
john the stock regulation frank died
uh... i've heard that some us a bank as at least a billion dollars in assets
it's basically find in hafta go under
uh... talk about what these regulations mean for you and how i as c_d_t_ is
handling it
roman the biggest thing night bright now what's wrong with the regulation it is i
think the lack of clarity
uh... the the dog frank you know you can read different things
is four oh five thousand pages of of regulations or orga definitions of
regulations and some of those regular regulations have been
finalized and put in place uh... but there's over
a couple hundred that have not been written yet so that it's very
disconcerting and did not know
uh... which way things going to go with certain parts of your business and have
clarity around the regulatory environment and uh...
so that you know that right there on the isas is a significant challenge for us
when you start lookin' at the smaller organizations or the smaller banks uh...
but given example at ntsc bt ended a lot of lot has been written and said about
changing mortgage regulation and we have a very active
mortage department and have done very well for a number of years
and uh... you know we've we've had to add three uh... headcount to that
department
uh... just to track and and and work with new government regulations
that really in our opinion don't have the significant impact on improving the
level of service or making it safer
for mortgages and and and that type activity and so
that's just a you know that you could take that example and spread it across a
number of different areas within our business model annual you're going to
say that
require additional resources to manage government regulation
uh... which is going to take away you know opportunities uh... to be out on
the front line and uh... visting with businesses and making those small
business loans and things are going to get the economy going so it's it's a
challenge for actually heard that from other bank ceos saying that this is not
really about nicknamed industry safer has just been mostly congressional
overreached
over reaction to what happened
would you do it i would
can you talk for a minute about
they sort of of
relationship you have with your regulator some banks are saying that
you know the f_b_i_ stadium sincere becoming a little kinder and gentler
other banks are another venture saying they're still a lot of pressure from the
regulators to tighten credit quality in the examinations are really topf and
tight-*** from the regulators how are you saying relationships with your
regulators we've always said very solid relationship with our regulators
and um... you know what do we as a company i have always ask for it is is a
fair but i think siam is what we look for from arbor regulators feel like
you're getting at
we feel like we're getting it
you know we did a calm you know there
uh... is uh... a lot more discussion around credit
you know then problem perhaps in in previous arm examinations but com
you know we feel like the regular repertory group has been reasonable
uh... in the conversations that we had about specific credits and so forth so
on
you know we we we've we feel like that's that's very important for
an institution uh... remain you know sound and and so it's something that
firm
seventeen
they five years that we've been around we've always
value the relationship that we have with the regulators uh... are they engage in
your board and more extended discussions of credit quality of the mainstream
uh... not so much the board uh... but uh... they are extending uh...
conversations the in going in more depth with management about individual credit
and understanding in terms of credits i think there's a lot of death too
uh... understanding your your your
your loan portfolio in the credit book uh...
they have also you know they look at concentrations and and some of the
activities like we talked about construction land of element in
commercial real estate and
and have encouraged us to workmen that level of of of book down into focus on
others but
uh... we've been very fortunate to have a bug in a relationship with the with
the regulators that uh... that work with us
crimes like stealing better than foresight sts given that we've had this
regular but frank uh...
dot recover your girl named coming up on that
you see changes in their there things that will come up in the banking
industry in the next few years we will say we wish we would rest or maybe they
went to for without frank ur
any generally respond that you think they're going to come back to regroup
it you know it's it's hard to say front without with a lot of the rules not
being written yet you know this kind of an old adage in the banking industry
when
it isn't it that there's a pendulum their you know and when the pendulum
spins of dislodged to four to one side
the tendency is for you let the pendulum go with flat besides slides to sort of
the side
and and bites like for it to be in the middle initially understand the rules
and and understand you know exactly what's expected and
i think what we're experiencing right now is that pendulum got two for over a
year
and now with the regulatory environment is fee for over a year and uh...
i think it's just going to take time uh...
and and and and unfortunately you know along the way uh... because of trauma
question did you ask about
you know bikes there's gonna be
uh... community banks that aren't just not smaller community bikes that are not
going to be able to cope with the increased
regulatory burden and so
they're gonna look for piano an exit strategy uh... and uh... ended so you
going to see
concert continued aflac consolidation within the banking industry
and i think you know see that ah... consolidation accelerate for for a
number of reasons
all this additional regulation has defected bottom-line we've heard a lot
of big banks and some of the snap is that they've had trying to take increase
revenue
how do you address that issue how how your uh... how does that c_d_t_ interest
address a revenue california street signs though you know uh... is as a
company we've got to be more efficient you know and that's cost controls
expense saves those type thing so
uh... you know that that's where it's warm side of the equation is very more
arm
uh... focused only expense an expense asian being more efficient with the way
that you do business
the other side of that is looking for opportunities to grow you know you
revenues are our nation more it earlier you know we have had
uh... very good success on the morningside and with interest rates it
it has historic lows
you know we have seen you know an increase in uh...
in our mortgage banking phase which has been significant
one of the encouraging things that we saying recently about that is that is
the mixed in there for a while that was mostly re finance business but we are
saying an uptick
in purchase money activity which means folks are out there buying homes in
looking and so we think that's a very positive sign
the other thing that we've done is a company is is expand our wealth
management area and uh... we have uh... done that
in several markets we've been able to go out there are experienced
wealth management bikers from around the franchise and and uh... armed with that
were around our franchise and they've had a meaningful impact on our
nonexistent come on the wealth side mind that is gonna have to be that my last
word we could talk for hours about this but i want a priest and all of you
for coming on the show today uh... is great
kopit and dating offer watching
major funding for carolina business review was provided by
the duke endowment a private foundation in charlotte enriching communities in
the carolinas through higher education healthcare rural churches and children's
services
blue cross and blue shield of north carolina who was responsible for rising
health care costs join blue cross and blue shield of north carolina and many
others in a candid discussion at let's talk cost dot com
grant sergeant and international accounting tax and business advisory
organization dedicated to serving middle market companies
grant fortune a passion for the business of accounting
no font held including presbyterian in charlotte in forsyth in winston-salem
our affiliate heart hospitals of the cleveland clinic consistently ranked
number one in the nation for heart care
blue cross and blue shield of south carolina probably serving south
carolinians since nineteen forty six sunoko a global manufacture of consumer
and industrial packaging products and provider of packaging services with more
than three hundred operations and thirty five countries and by viewers like you
thank you
promotional consideration provided by business north carolina magazine
for more information visit carolina business review dot com