Carolinas in Wachovia Vets' Minds

By Fajt, Marissa | American Banker, April 9, 2010 | Go to article overview
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Carolinas in Wachovia Vets' Minds


Fajt, Marissa, American Banker


Byline: Marissa Fajt

Four Wachovia Corp. veterans plan to build a major regional bank in the Carolinas and Virginia, and are putting a twist on the strategy similar groups are using.

Rather than seeking private-equity funds to buy failed banks, the Wachovia group - which includes Leslie M. "Bud" Baker Jr. - is eyeing an initial public stock offering to finance the acquisition of operating institutions.

"That is very different from the model most of the start-ups have been focusing on," said Steven Reider, the president of Bancography, a bank consulting firm in Birmingham, Ala.

The group is partnering with the $475 million-asset Park Sterling Bank in Charlotte, and plans to raise $400 million from the IPO. They will use that capital to buy banks in North Carolina, South Carolina and Virginia that are healthy but that may have suffered with the economy and be stretched for capital. The goal: an $8 billion to $10 billion-asset bank over the next five years. But even as the bank grows, the strategy is to provide community bank-style customer service.

"In times of change there are usually great opportunities," James C. Cherry, a former regional chief executive officer with Wachovia, said in an interview. "There are a number of banks trying to figure out what their future may look like that might be excited about building a bank centered around those values. I can't think of a better time than a time when many are trying to figure that out and we can provide a solution."

If they win regulatory approval and raise the capital, Cherry would become Park Sterling's CEO. Baker, who retired as chairman of Wachovia in 2003, would become chairman of the board. The two other Wachovia veterans are David L. Gaines, who would be the chief financial officer, and Leonard R. Robinett Jr., who would head corporate development.

Several investor groups recently have announced plans to buy a small bank, add capital and use it as a platform to buy failed banks.

One Main Street LLC, an investment fund led by veteran bankers, agreed to acquire the $15 million-asset Liberty Bank in Salt Lake City, and has targeted its initial capitalization at $300 million. And former executives of Hibernia Bank, which was acquired by Capital One Financial Corp., are leading an investor group to raise $400 million to expand First Southern Bancorp in Boca Raton, Fla.

Park Sterling's plans to raise capital through a public offering are unusual. There have been few bank IPOs since mid-2007. Most recently, First Interstate BancSystem Inc. in Billings, Mont., raised $145 million through an IPO.

Besides creating a more diverse shareholder base, raising the capital through a public offering will provide more ammunition for buying open banks, said Bryan F. Kennedy 3rd, Park Sterling's president and CEO.

"If everything goes well, it should be a more liquid stock than what most of them have," he said.

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