“Everyone has certain strengths and abilities,” says C. John Hipp III, CEO of NewDominion Bank, whose own have become well recognized in the banking industry as both a bank builder and, more recently, a bank fixer.
With remarkable successes at South Carolina Bank & Trust and Rock Hill National Bank to his credit, Hipp is here in Charlotte to effect a turnaround for the youthful, but endangered, NewDominion Bank.
“I was one of the few CEOs that had done a successful bank turnaround,” says Hipp. “When you do that, you develop a certain reputation with the bank examiners; you develop credibility.”
Along with his extensive expertise and skills, Hipp is counting on his brand new management team and the major changes they have made in policy, goals and culture to draw new investors to NewDominion.
Hipp makes clear one point: “I came to solve problems, but I didn’t come just to work through struggles. I came to build this into Charlotte’s favorite community bank.”
NewDominion carries about $400 million in assets currently. Hipp hopes to build that into a $2 to $3 billion enterprise.
Joining Hipp at the bank’s mid-town offices are Marc Bogan, COO; Blaine Jackson, CFO; and Greg Burke, CCO (chief credit officer). All are seasoned banking executives. Additionally, Bogan and Hipp have worked together a number of times in the past at South Carolina Bank & Trust and Ameris Bank.
Within a couple of months, the group will begin to raise additional capital in hopes of doubling the bank’s current assets to $800 million. This level of fundraising generally takes four to five months to complete, according to Hipp.
“What we want is to be the alternative to big banking,” says Hipp, which he says controls more than 80 percent of the market. “We’re trying to build a super community bank which operates with local decisions, less red tape and more responsiveness. We’re not going to charge fees galore and for most loans, we’ll have an answer within 48 hours. We’re building on high touch and relationships.”
Charlotte is the only city east of the Mississippi of its size that does not have a two to three billion dollar community bank, according to Hipp. “Charlotte is perfectly suited with 1.7 million people in the metropolitan statistical area. Plus, we’re not total outsiders. This will be my fourth time living here; Marc’s second. We know a lot of people here. When you add it all up, we’re pretty knowledgeable about this market.”
Owning the Problem
NewDominion Bank was established in 2005 with an initial capitalization of $40 million. It was reportedly the largest start-up bank in North Carolina history. The bank experienced exponential growth between 2005 and 2007, but then began to feel financial pressure, mostly due to unpaid or distressed loans.
“NewDominion had loaned a lot of money right at the peak of real estate values,” says Hipp.
“There is nothing inherently wrong with making real estate loans,” explains Bogan, “but it becomes a problem if you don’t have a diversified loan base.”
“In the case of NewDominion, the bucket named real estate just got too big,” echoes Hipp. “People got carried away and a lot of banks overreached. Rather than having 20 percent of their loan portfolio in real estate and development, it became 85 percent.”
Plus, while the bank was growing, it had borrowed 10 million dollars from another bank in North Carolina to help cover the growth, a move that caused concern in the subsequent economic downturn.
In late 2010, NewDominion was placed under a consent order by the FDIC and North Carolina Banking Commission. Hipp was invited in to restore the bank and move it forward. One of his first acts was to persuade the bank it had borrowed money from to convert the debt to equity.
“Having them transition from creditors to investors had a huge impact on our capital ratios and gave our new management team additional time to reposition the bank,” credits Hipp. No TARP funds were received by the bank.
“A consent order is really nothing but best practices,” says Hipp. “We are in full compliance with the consent order other than the capital component. The capital we raise will allow us to exceed the regulatory minimums, after which we hope the regulators will consider terminating the consent order.”
NewDominion aims to focus more on small business; more specifically, service, owner-operated and manufacturing businesses, and professionals such as doctors, lawyers and CPAs.
“We want to do the kind of lending that is traditional for a community bank: a car loan, equity loan, house or apartment or small shopping centers where there are high quality tenants.”
Bogan reports that the bank is poised with $20 million dollars in the loan pipeline: “Once we have achieved additional capital and satisfy all the regulatory pieces, those loans in the pipeline can be accelerated.”
Righting the NewDominion Story
Hipp, Bogan, Jackson and Burke, together with the people they’ve been able to attract and those who’ve stayed on, all share a vision of a community bank that will be meaningful in Charlotte for decades to come.
“Although some people think of a ‘community bank’ as being small, most people think of it as one they have a real relationship with,” says Hipp.
“It could be a $100 million or a $5 billion community bank; it’s how you do business,” affirms Bogan. First, the bank will be focused on the banking needs of Charlotte area residents and the business community.
“There is so much opportunity right here that is not being well served by the larger banks,” says Hipp.
At the same time, through a concept Hipp has named “the reverse solution,” the bank will focus on its customers and employees. “Larger banks focus on satisfying Wall Street, the financial community, stock analysts and big investors. My philosophy is that if you put your customers and employees first, the shareholders will make a lot of money.”
“It’s not likely at a large bank that you will get the president or the CEO of the bank to come out and walk through your plant or business and be able to make decisions right on the spot. We can offer that,” says Bogan. “When you call us, you will always get a live person. John’s accessible, I’m accessible; everyone who works with us is accessible. We give all our customers our cell numbers. They can call us—even on a Saturday.”
Customer services also include mobile remote deposit for consumers which allows an individual to utilize the NewDominion application on their cell phones to make an immediately credited deposit. Bank workers go out to customers’ businesses or workplaces and open accounts. Customers who use their debit card 10 times per month can earn cash back on up to four percent of their debit card purchases. The bank also allows customers to use other banks’ ATMs without incurring fees. “We don’t have 10,000 branches, so we differentiate by giving customers access to any ATM anywhere free!”
As with customers, the management team is committed to treating employees “like they’ve never been treated before.” Hipp says, “People want to be recognized, have time off and know that what they think matters. Marc and I walk around and sit in people’s cubicles and find out how people are. These people are family to us. They are not numbers.” Hipp points out that employees who are engaged are generally 30 percent more productive than those who are not.
Most of the bank’s employees are located in the Metropolitan Avenue offices; a few work out of the Lake Norman retail space.
“We see this, ultimately, as a 10-office market,” says Hipp. “We already know we’ll have four additional offices over the next couple of years spread out in the areas of Huntersville-University, SouthPark, Arrowood-Ayrsley, and Ballantyne-Providence.” Expansion will then likely move to Matthews, Rock Hill, Crown Point and Gaston County. “We want to have branches within a seven mile proximity of each other,” says Bogan.
Both the management team and bank employees are actively involved in the community through the Chamber, Rotary Club, City Center Partners and hospitality/tourism groups, and Hipp expects the bank to participate on a number of boards in the future.
“We allow employees the time and support to do what they have a passion for,” says Hipp. “The bank most often follows with financial support.” One employee has already been recognized nationally for her work with Big Brothers/Big Sisters, according to Bogan.
Coming Full Circle
Hipp started his banking career here in Charlotte with Wachovia Bank in 1975. “I started at the bottom. I had to go out and knock on the doors and collect car payments,” remembers Hipp. Over 16 years with the bank, Hipp was moved away and then back to Charlotte three separate times. Hipp left Wachovia in 1990 to successfully turn around Rock Hill National Bank. In 1995, Hipp was recruited to be the CEO of South Carolina Bank & Trust.
Hipp tried to retire in 2004, but was drawn back into the banking world to head up Ameris Bank in South Carolina. He tried again in 2009, but was called upon as a banking consultant and approved by the Federal Reserve to do board and management assessments. That is how he was recruited to come to NewDominion.
As his career proceeded, Hipp developed what has turned out to be a fortuitous habit—hiring Marc Bogan. Hipp first hired Bogan out of college to work at Wachovia. Then he hired Bogan as a regional executive to head up retail banking at South Carolina Bank & Trust. Later, when Hipp departed from Ameris Bank, Bogan remained in place as the company’s COO. Says Hipp, “Marc and I know each other; we know all the good and the bad.”
With law school as his original plan, Hipp didn’t major in finance or accounting before graduating from The Citadel. After fulfilling an obligation with the Army, the first job he was offered was as a manager trainee with Eckerd Drug. Ironically, it stood on the same spot (it used to be Charlottetown Mall) as the bank does now. “I’ve come 360 degrees from where I started,” jokes Hipp.
“Marc is the clear-cut successor here,” says Hipp. “I’m 60 and have a lot of energy. I have a vision and passion and I’m here to do what I can to build this super community bank, but he’s the future.”
Hipp calls the board “blessed” to have Bogan who provides depth and succession in the company. “In the next 10 years, he will be running something that is a much bigger player. As long as he sends me my dividend check, I’ll be fine,” laughs Hipp.
For now, Hipp and Bogan are engrossed in building a rock solid community bank that will be ready for the tremendous growth and opportunities to come.