CHARLOTTE, N.C. – North Carolina is more than home to the TarHeels and tobacco fields. It's quickly becoming a launching pad forentrepreneurs looking to finance their dream jobs. Much of thatspirit has been fueled by the plethora of bank mergers that haveimpacted the state over the past few years, which have often leftsmall business owners in the dust as divisions get scaled back orobliterated. Like the growing list of North Carolina credit unionsthat are seeing success in member business lending, community banksare hoping to capture some of that thunder. Enter Bank of Commerce,a soon-to-be launched institution that will primarily serve thesmall business owner. The concept is the brainchild of WesleySturges, the founding president of First Commerce Bank that wasbought by Bank of Granite in 2004. A noncompete provision barsSturges from opening another bank before August 2005. Sturges leftBank of Granite more than a year ago. Charlotte, Sturges believes,is in dire of need of such a bank. “Virtually every new job addedin the past year was created by the 22,000 small businesses withfewer than 50 employees,” Sturges said. “Yet few of the banks inCharlotte, particularly the big ones, have taken a keen interest inour primary economic engine.” So far, the North CarolinaCommissioner of Banks has given Bank of Commerce permission tobegin its stock sale, which started on March 10, Sturges said. Thebank is looking to raise $14 million in capital through an $11 pershare initial public offering. If the capital is raised, it willgive the bank a $2 million lending limit. A 13-member board ofdirectors has been appointed and the proposed bank is expected togo before the Commissioner this summer. Sturges said pending FDICapproval, he is looking at an opening date in the fourth quarter ofthis year. Services will include commercial and consumer loans,equity lines, certificates of deposits, money market accounts,investment accounts as well as mortgages, trust services andbrokerage 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 tosmall and midsized businesses and had reached $180 million inassets when it agreed to merge with Bank of Granite in July 2003.The acquisition was worth $21 million. The North Carolina CreditUnion League is all for providing much-needed capital to businessowners and welcomes the new bank to the fold. “The pent up demandfor capital from small business owners is exactly why some creditunions in North Carolina are doing member business loans,” saidJohn Radebaugh, NC CU League president. “We wish First Commercewell in this venture, as we think North Carolina's entrepreneursshould have as many choices available when acquiring start-upcapital. Both credit unions and banks have a responsibility to helpsmall business owners and developers create jobs in NorthCarolina.” Indeed, because of rapid consolidation over the pastdecade, credit has been significantly reduced for small businessesand actual credit balances had fallen by less than the fall incredit limits, according to a 2004 SBA study titled The Impact ofBank Consolidation on Small Business Credit Availability. The studyalso suggests that while small businesses are less likely to borrowfrom the banking sector in markets with a greater degree of bankingconsolidation, when they do so they take advantage of improvementsin pricing to borrow greater amounts. No surprise that smallbusinesses have also increasingly turned to non-bank sources offinancing to satisfy their credit needs, the study showed. Sturgesrattled off a short list of bank mergers that have hit Charlotterecently: SunTrust's acquisitions, SouthTrust's pending merger withWachovia; not to mention Bank of America and other billion-dollarentities. “Mergers continue to swallow the personal service banks,and small business is left with no financial advocate,” Sturgessaid. The North Carolina Bankers Association has expressed its ireover credit unions entering the MBL arena especially when the SBAopened 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 businesslending on their claims of “uneven playing fields.” Credit unionslike the $983 million Truliant Federal Credit Union, $1 billionAllegacy Credit Union and others have said that they are merelyproviding a service to members that own businesses. Sturges saidwhile he is “concerned” about the competition from credit unionsthat are based in Charlotte, he is more focused on getting the bankup on its feet by the end of the year. “More importantly, we'relooking to hire the right people for the job,” Sturges said. “If wecan get that, everything else will fall into place.” -

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