CHARLOTTE, N.C. – North Carolina is more than home to the Tar Heels and tobacco fields. It’s quickly becoming a launching pad for entrepreneurs looking to finance their dream jobs. Much of that spirit has been fueled by the plethora of bank mergers that have impacted the state over the past few years, which have often left small business owners in the dust as divisions get scaled back or obliterated. Like the growing list of North Carolina credit unions that are seeing success in member business lending, community banks are hoping to capture some of that thunder. Enter Bank of Commerce, a soon-to-be launched institution that will primarily serve the small business owner. The concept is the brainchild of Wesley Sturges, the founding president of First Commerce Bank that was bought by Bank of Granite in 2004. A noncompete provision bars Sturges from opening another bank before August 2005. Sturges left Bank of Granite more than a year ago. Charlotte, Sturges believes, is in dire of need of such a bank. “Virtually every new job added in the past year was created by the 22,000 small businesses with fewer than 50 employees,” Sturges said. “Yet few of the banks in Charlotte, particularly the big ones, have taken a keen interest in our primary economic engine.” So far, the North Carolina Commissioner of Banks has given Bank of Commerce permission to begin its stock sale, which started on March 10, Sturges said. The bank is looking to raise $14 million in capital through an $11 per share initial public offering. If the capital is raised, it will give the bank a $2 million lending limit. A 13-member board of directors has been appointed and the proposed bank is expected to go before the Commissioner this summer. Sturges said pending FDIC approval, he is looking at an opening date in the fourth quarter of this year. Services will include commercial and consumer loans, equity lines, certificates of deposits, money market accounts, investment accounts as well as mortgages, trust services and brokerage services available through third-party arrangements. First Commerce will also offer SBA loans, Sturges said. Ironically, First Commerce Bank, which Sturges founded in 1998, also catered to small and midsized businesses and had reached $180 million in assets when it agreed to merge with Bank of Granite in July 2003. The acquisition was worth $21 million. The North Carolina Credit Union League is all for providing much-needed capital to business owners and welcomes the new bank to the fold. “The pent up demand for capital from small business owners is exactly why some credit unions in North Carolina are doing member business loans,” said John Radebaugh, NC CU League president. “We wish First Commerce well in this venture, as we think North Carolina’s entrepreneurs should have as many choices available when acquiring start-up capital. Both credit unions and banks have a responsibility to help small business owners and developers create jobs in North Carolina.” Indeed, because of rapid consolidation over the past decade, credit has been significantly reduced for small businesses and actual credit balances had fallen by less than the fall in credit limits, according to a 2004 SBA study titled The Impact of Bank Consolidation on Small Business Credit Availability. The study also suggests that while small businesses are less likely to borrow from the banking sector in markets with a greater degree of banking consolidation, when they do so they take advantage of improvements in pricing to borrow greater amounts. No surprise that small businesses have also increasingly turned to non-bank sources of financing to satisfy their credit needs, the study showed. Sturges rattled off a short list of bank mergers that have hit Charlotte recently: SunTrust’s acquisitions, SouthTrust’s pending merger with Wachovia; not to mention Bank of America and other billion-dollar entities. “Mergers continue to swallow the personal service banks, and small business is left with no financial advocate,” Sturges said. The North Carolina Bankers Association has expressed its ire over credit unions entering the MBL arena especially when the SBA opened its popular 7(a) lending program to the movement in 2003. The Association, like many other banking groups in other states, has long been against credit unions having a stake in business lending on their claims of “uneven playing fields.” Credit unions like the $983 million Truliant Federal Credit Union, $1 billion Allegacy Credit Union and others have said that they are merely providing a service to members that own businesses. Sturges said while he is “concerned” about the competition from credit unions that are based in Charlotte, he is more focused on getting the bank up on its feet by the end of the year. “More importantly, we’re looking to hire the right people for the job,” Sturges said. “If we can get that, everything else will fall into place.” -

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