An out-of-town bank hired away most of the senior commercial bankers at one of the Roanoke Valley’s leading community banks and used them to start a competing branch a few miles away.
One of Danville’s top banks, American National Bank and Trust Co., staffed its first Roanoke Valley branch with about a dozen former employees of BNC Bank. The branch on Ogden Road opened in January.
Employee poaching is an accepted business practice. But a retired Roanoke banker could not recall a similar episode in local banking.
“I’ve never seen this done to this extent as successfully as they did it, just hiring away a whole executive business team. It’s a hell of a coup,” Wayne Lewis said.
Analysts called the new hires in Roanoke a “lift-out,” defined in Harvard Business Review as the recruitment of a “high-functioning group of people from the same company who have worked well together and can quickly come up to speed in a new environment.” American National last fall announced two lift-outs, one in Roanoke and one in Winston-Salem, North Carolina. Investors reacted by bidding up the price of company stock.
Shares of American National’s parent company closed at $35.45 Tuesday, up 29 percent from the first announcement in early October.
Lending increases during the rest of the fourth quarter resulted in $41 million in new loans in the Roanoke market for 2016, according to Keefe, Bruyette & Woods, a New York investment banking firm. The firm disclosed that it expects to receive or intends to seek compensation for providing investment banking services to American National.
The American National footprint had never before extended north of Rocky Mount. The company’s 2015 purchase of Franklin Community Bank, which did business in Rocky Mount, brought it into the universe of bank brands collecting deposits and lending money in the Roanoke metropolitan area, which now number 17.
The majors are Wells Fargo Bank, SunTrust Bank, BB&T, which ranked first, second and third respectively in the October 2016 market share report published by the Federal Deposit Insurance Corp. The top community banks in the valley are Carter Bank & Trust, BNC Bank, Union Bank and HomeTown Bank, which ranked fourth through seventh, respectively.
Aspirations run high at American National for an upward climb in the rankings.
“We clearly feel that we can be the community bank of choice,” said Kevin Meade, executive vice president and regional president. “This team brings instant credibility, I believe, to our efforts here.”
Territorial expansion is as old as banking, but there are only a few ways to do it outside of starting from scratch. HomeTown Bank, one such institution, is the only brand both headquartered and operating in Roanoke. The rest expanded here.
“If you want a presence in a market, you either pick up bankers in that market or facilities,” said Charles Dickerson, assistant deputy commissioner at the Virginia Bureau of Financial Institutions. Dickerson spoke of no specific bank or its strategy.
Suppose The Bank of Green wants to do business in a community 100 miles away called Back but has no prior experience there. The Bank of Green would try to buy a bank already operating in Back. Or, if they were for sale, it could buy branches of a bank that was pulling out.
Skyline National Bank, based in Grayson County, entered Floyd County with its mid-2016 purchase of Bank of Floyd. Pinnacle Bank of Nashville plans to enter the Roanoke Valley market by buying BNC Bank this month or early in the third quarter. The BNC Bank brand will disappear, as Bank of Floyd did.
When a bank withdraws from a market, such as when Bank of America sold its local branches in 2014, newcomers appear. First Community Bank in Bluefield bought Bank of America branches in the New River Valley. HomeTrust Bank, based in Asheville, North Carolina, acquired the Roanoke Valley branches.
Strategic hiring also expands reach.
In February, Lynchburg-based Bank of the James opened its first Roanoke Valley branch. It now counts two former BNC personnel, Bradford Harris and Desiree Kalafut, as its Roanoke market president and branch manager, respectively.
American National, Virginia’s 14th largest bank, did the same thing at more than six times the scale. The bank said when it bought Franklin Community Bank in 2015 that it would eventually expand to the Roanoke area. Last year, CEO Jeffrey Haley reached out to Meade, who was then the regional president of BNC Bank in Roanoke, about coming to work for American National. The company also placed a help-wanted ad in Roanoke for commercial bankers.
BNC Bank had bought Roanoke-based Valley Bank in 2015 and retained many of its commercial bankers for a time. But during the second half of 2016, 13 people, or 90 percent of the BNC commercial banking team in Roanoke, joined American National. Lewis, who retired from Valley Bank in 2005, provided details of the employee moves that were confirmed by American National.
“Once American National decided to get into Roanoke, they wanted to move forward and build a team. They started interviewing folks,” said Meade, once Valley Bank’s chief banking officer and the first BNC executive who joined American. “That process unfolded over the course of several weeks.”
Around the same time, American National picked up five bankers in Winston-Salem from Yadkin Financial.
Meade described the new hires in Roanoke as senior commercial bankers with extensive local experience. They came from BNC Bank and had been with Valley Bank previously, according to personnel listings the two banks have had online.
Unlike Bank of the James, which rented a suite in a strip mall, American National bought a nearly 11,000-square-foot former petroleum company office building for $2.2 million. The company expected to spend another $1.6 million adding drive-through windows and other improvements, Haley said.
Recently, the branch staff has grown to 16 people.
Asked about leaving BNC, Meade said he didn’t want to be part of a large regional bank. A bank of American National’s size offered him the chance to consult closely with clients and respond nimbly, he said.
“There’s not 800-number phone trees,” Meade said. “You’re vested in the community.”
BNC CEO Rick Callicutt had no comment on the personnel changes but said that BNC’s Roanoke Valley operation today has a “full team of bankers” and is gaining local market share.
In December, with its hiring spree over, American National ran a photo advertisement showing its 13 bankers beneath phrase, “The strength of the Valley.”
The ad used a type face similar to the old Valley Bank logo.