Making change

Three out-of-town banks have decided to enter the Charleston market within the past year or so, all starting on the peninsula.Park Sterling Bank of Charlotte opened at 140 East Bay St. in spring 2011.CertusBank of Greenville anounced in June it will be the anchor a new office building at 174 Meeting St. Southern First Bank of Greenville plans to open its first local branch at 480 East Bay St. by October.Others have changed names.Charleston-based Community FirstBank became CresCom Bank after merging operations with a sister bank from Myrtle Beach.Wells Fargo of San Francisco acquired Wachovia.Canadian-owned TD Bank bought Carolina First.PNC Bank of Pittsburgh bought RBC Bank (USA).BNC Bank of Thomasville, N.C., took over the failed Carolina Federal Savings Bank.Charlotte-based Capital Bank (formerly NAFH National Bank) took over the failed First National Bank of the South’s Mount Pleasant branch.

For all its allure, Charleston’s coastline can be at times seductive and treacherous, as the banking business learned in the wake of the latest real estate crash.

Dragged down by bad loans, two small local lenders have gone under. A handful of other banks either have been sold off or bailed out by healthier financial institutions. Still, others have had to kick hard just to stay afloat.

Not surprisingly, any expansion plans hatched before the downturn were put on hold.

A few are done waiting.

The latest to wade in is Southern First Bank, which on July 16 announced it’s joining the line-up of financial institutions in the Charleston region. The Upstate company has tapped former longtime NBSC executive Len Howell to lead the Lowcountry charge.

The first office at 480 East Bay St. near Charlotte Street is expected to start taking deposits within 60 days.

“We think the Charleston market is a great market,” said Art Seaver, CEO and co-founder of Greenville-based Southern First and its parent company, Southern First Bancshares Inc.

A couple of his rivals would agree.

Before the downturn, banks seemed to be opening on every corner, eager to cash in on the soaring real estate business. The industry began to pull back around 2008 as home sales tanked and the global financial crisis mounted.

Locally, the first lender to step out from the post-recession shadows was North Carolina-based Park Sterling Bank, which picked Charleston as the jumping-off point for its South Carolina expansion in early 2011.

More than a year would pass before another lender would follow suit. Greenville-based CertusBank rode into town last month.

Next up is Southern First, which has six branches in the Upstate and Columbia, with No. 7 under construction in the Midlands.

‘Right time’

Banks still have their share of bad loans to deal with, but the worst appears to be behind most of them. The latest local evidence came Thursday when Charleston’s First Federal Bank noted that its loans and deposits are growing again. Mount Pleasant-based Southcoast Community Bank reported the same news to its shareholders at the annual meeting a couple of weeks ago.

Fred L. Green III isn’t surprised that, in markets like Charleston, outsiders are looking to expand again.

“There’s a symbiotic relationship between ... the economic health of a community and the banking industry within that community,” said Green, a former top NBSC executive who this year became president and CEO of the S.C. Bankers Association.

He cited the almost incalculable economic impact of Boeing Co.’s aircraft assembly plant has had on the region and the resilient local tourism industry.

“It would be a natural area for banks that may not be in that market but are looking to grow as the economy rebounds ... to expand into that market,” he said.

Such is the case with Southern First, which was formed about 12 years ago and is now the ninth-largest bank based in South Carolina, with more than $760 million in assets. It was formed to cater to professionals, small business owners and individuals customers, with an emphasis on one-on-one service.

“All of our growth has been organic, one client at a time,” said Seaver, the CEO. “With that said, our expansion philosophy is that it needs to be the right market at the right time.”

Howell’s hiring also was key. Like Seaver, the ex-NBSC coastal chief had worked early in his career at “C&S,” the long-gone Citizens & Southern National Bank franchise.

“We have history together,” Seaver said. “It was a great fit.”

Crowded market

Southern First’s only annual loss during the downturn came in 2010, when it was $235,000 in the red. The bank also skinned its knee that same year when it entered into a formal agreement with federal regulators to improve its practices and procedures.

It apparently has dealt with the most serious concerns. Otherwise, the government would have nixed any expansion plans. Southern First has said repeatedly in regulatory filings that it has “aggressively worked to improve these practices and procedures” and it believes it is complying substantially with the agreement.

More recently, the bank was cut loose from the restrictions imposed on it after raising about $17 million by selling stock to the federal government under the Troubled Asset Relief Program. The Treasury Department sold the TARP shares at auction this month.

Last week, the bank reported that its second-quarter earnings jumped 71 percent to $589,000, after dividends,

Seaver said Charleston is among the most attractive banking centers in the state based on deposits, growth trends and the “business infrastructure that’s there.”

“Clearly, everybody talks about Boeing, but even before Boeing, Charleston was a great market for our style of bank,” he said.

He also is aware that the local financial landscape is fiercely competitive, with more than 30 rival banks of all sizes fishing for loans and deposits. Southern First has been there before, he said.

“When we started out in 1999, there were 24 banks in Greenville. We didn’t start our bank just to be No. 25.”

Reach John McDermott at 937-5572.