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Despite the Economic Downturn of the Last Few Years and New Banking Regulations, ECB Bancorp, Inc. is Still In An Offensive Mode with a Proactive Approach to Growth
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ECB Bancorp, Inc. &
The East Carolina Bank
Dwight Utz joined the East Carolina Bank in July 2009 as its President and Chief Executive Officer. Dwight has worked in the banking industry since 1972 at the former CCNB Bank, Camp Hill, Pennsylvania. During his tenure at CCNB Bank, Dwight held positions in Retail Banking, Human Resources and PNC Integration Manager and advanced to the position of Senior Vice President/Regional Market Executive until PNC Financial Services Corp. acquired CCNB Bank.
From 1995-2000, Dwight
worked for PNC Financial Services Corp in Pittsburgh, PA serving as
Corporate Vice President/Manager of Human Resources and then as the Director
of Branch Network Re-Engineering, which involved developing and executing
branch plans for the retail delivery channel.
He worked at PNC Bank Corporation until 2000.
Dwight was a consultant with Comtempo Design, Inc. serving as its Retail Financial Services Consultant from 2000-2001.
Dwight returned to banking in 2001, joining Midsouth Bancorp, headquartered in Lafayette, Louisiana. He served as its Executive Vice President/Chief Retail Officer until he was appointed by East Carolina Bank to serve as President & Chief Executive Officer, effective July 1, 2009.
Dwight holds a Degree in Business Administration from Central Pennsylvania College. Dwight is a graduate of the ABA’s Stonier Graduate School of Banking at the University of Delaware, and has completed the Executive Leadership Development Program at the Center for Creative Learning in Colorado.
Dwight has been involved in several civic and national/state banking organizations, including the American Heart Association, the Rotary Club, and various Chambers of Commerce.
Dwight is a native of Baltimore, Maryland. He is married to the former Debbye Minori of Mechanicsburg, Pennsylvania. They have two sons and four grandsons.
Interview conducted by: Bud Wayne, Editorial Executive, CEOCFOinterviews.com, Published – November 11, 2011
Mr. Utz: The answer is no. We still are in an offensive mode. Obviously, we acknowledge that the economy and regulatory environment have presented some unique challenges over the past year and half, but the vision of the company remains the same. As you know we are in the process of finalizing ECB’s capital raise, and have announced our intent to purchase deposits and selected assets from seven branches of Bank of Hampton Roads. We are also in the process of obtaining regulatory approval to repay TARP. All of these are proactive steps in positioning ECB for growth in the future.
Mr. Utz: The reason the purchase from the Bank of Hampton Roads is so attractive is because we had strategically identified the Raleigh market as part of our future expansion plans. If you look at any studies about growth markets within the United States and you take away the top ten, the New York’s, the Chicago’s, LA’s, San Antonio’s, Dallas, then Raleigh would be in the top three or four growth markets. That is the attractiveness of why this acquisition of deposits from the Bank of Hampton Roads is so vibrant for our growth in that market.
Will your growth strategy moving forward involve future acquisitions or are
you going to be more organic?
CEOCFO: How stable are the areas that ECB Bancorp is in currently?
Our outer banks market, the coastal market outside of the Wilmington area,
which is down in the southeastern corner of the state, we have actually had
very good economic activity. The bulk of our customers are service industry
companies and tourism industry in these markets. The last two/three years
actually have hit all-time highs for tourism and have produced food revenue
streams for our clients. We do not see that changing in the near future.
Obviously, we have a component of second homes in these markets which have
experienced depression of real estate prices/values, but the underlying
economic drivers from the tourism industry remains strong. Due to several
factors in the economy people have made the Outer Banks as their vacation of
choice, and we believe that will be unchanged after the economy recovers.
One of our other urban areas, Greenville is a very dynamic medium sized
town. It has East Carolina University, and an expanding regional medical
center. It is becoming quite a dynamic spot in eastern North Carolina. The
weakest market we have is in our Wilmington market, which was a de novo
market we entered in 2006 where we now have four branch locations. The
Wilmington market’s tourism is largely driven by second homes and beach
house rentals. The real estate market overall there has been much weaker in
comparison, so we have not seen quite the turnaround there that we have seen
in other markets. We believe there is an opportunity to grow our footprint
in North Carolina and are evaluating entrance into the Fayetteville and
Jacksonville markets, and expanding our presence in the New Burn area. The
growth of military bases in these markets and the insurgence of businesses
to support the military bases supports our positioning of creating success
for small business and individuals through innovation and our special levels
CEOCFO: How do you break down between consumer and commercial, and is the bank involved with the real estate market, and were you affected by any foreclosures?
You would certainly describe ECB as a small business/commercial bank. When
Jim Burson, our EVP/Chief Revenue Officer, and I joined the bank two years
ago, the consumer side was certainly there, but it was not a prevalent part
of our business model. We believe we have a golden opportunity to build the
retail business of ECB and to grow this part of our balance sheet. Our team
is giving a lot of attention to this component of our organic growth
strategy. Today we have approximately 5600 loan relationships, with an
average commercial loan size of $90 thousand. Our specialty and expertise is
with owner occupied real estate, small businesses and family owned
businesses, entrepreneurs and professional business owners. That is what we
are today. The other part of your question was, “Has the consumer been
affected by the housing market.” Certainly the answer is yes, but to a
lesser extent than in other markets of North Carolina.
Obviously, we have had our fair share of real estate related losses. We did
not have as many real estate development projects as some of our peers and
the diversification and management’s attention to managing our portfolio
provided a nice layer of insulation against the economic downturn that
occurred over the last three years.
Mr. Utz: The other comment I would make to you as it relates to consumer/commercial is that Agri-Business line of business places ECB as the second largest bank lender in North Carolina. It has been a growth area for our company over the last ten/fifteen years and is an integral component of our future growth initiatives. Over the last ten years we have not had any charge offs in our Agri-Business business portfolio.
Sure, we have rolled out an entire suite of business services traditionally
known as treasury services. Remote deposit capture is one of these services
and we are working on additional Point of Purchase opportunities that will
probably be debuted in early 2012. We plan to also add a mobile banking
solution in the 1st Quarter of 2012, which will be an important
part of our channels of delivery. In 2011, we introduced our Reward Checking
product which was designed for customers who choose to do their banking
electronically, by use of debit cards, the use of automatic deposits,
electronic statements and the use of automatic bill pay. It pays a little
higher interest if everything is done electronically. This product has
generated $65-70 million in new core deposits since its introduction last
year and has been a very successful addition to our product line.
CEOCFO: Is ECB more of a traditional bank taking on loans locally and loaning it out locally?
Absolutely! I will tell you, with deposits taken locally, loans provided
locally, you bet. Do we have a couple of participation loans? Yes, but that
is very rare and I would say that 98% of all deposits are loaned out within
the markets that ECB serves.
CEOCFO: Where does ECB stand in the new banking environment and generate revenues through fees as well as other sources of revenue?
We are obviously looking at all of our fee-generating services, but we are
also looking for other fee related opportunities. We have a very strong
mortgage loan division, and we are expanding our wealth management division
which we introduced two years ago. We are presently evaluating our options
related to offering a full array of insurance services to small business and
individuals. We believe this will enhance our non-interest income that will
aid in covering some of the expected shortfalls we expect to experience from
the passage of new and proposed regulations.
CEOCFO: What is the financial picture for ECB Bancorp today, and do you have the money you need to continue your growth strategy?
We are hopeful by the end of this quarter we will have closed on a private
placement capital raise, which has been publically outlined which will bring
us close to $80 million in capital. This new capital will position us to
pursue our growth strategy in a more aggressive manner including the branch
acquisition we referred to earlier.
The answer is absolutely! Prior to the arrival of Tom and I, ECB had not
generally been big in the investor community, but Tom and I have been
invited to and have attended multiples of investor conferences and will
continue to do so. This year we have provided presentations to approximately
80 to 100 investors as we were building the capital raise and we continue to
talk to and meet new investors every month.
CEOCFO: In closing, will you address potential investors as to why they should be interested in ECB today?
Mr. Crowder: What you have in ECB Bancorp is a bank where the current stock price has been devalued by the general market conditions, but yet the underlying quality is there. The fact that we have been able to engage six institutional investors to invest $80 million at a price that is about 35-40% above our current traded price, is an indication that they feel that there is not only current value, but a good long-term investment story here. We believe North Carolina as well as Virginia and South Carolina markets that we plan to enter as part of our growth strategy are attractive areas of the country to be invested in.
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We still are in an
offensive mode. Obviously, we acknowledge that the economy and regulatory
environment have presented some unique challenges over the past year and
half, but the vision of the company remains the same. As you know we are in
the process of finalizing ECB’s capital raise, and have announced our intent
to purchase deposits and selected assets from seven branches of Bank of
Hampton Roads. We are also in the process of obtaining regulatory approval
to repay TARP. All of these are proactive steps in positioning ECB for
growth in the future. - A. Dwight Utz
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