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February 2007
Bank Invests in Lake Norman
By Ellison Clary

       Like many, accounting executive Jim Engel questioned his career path as he reached his mid-40s. Unlike most, he made a big change. The result is the only bank headquartered in northern Mecklenburg County.

Engel perceived the need for a financial institution that would cater to business people in the burgeoning Lake Norman area and the growth of his Aquesta Bank, based in Cornelius, would seem to bear him out. The shores of that man-made lake on the Catawba River teem with small- and medium-sized businesses, the target market Engel set for Aquesta.
“I think people recognize that the big banks do a lot of things well,” says Engel, Aquesta’s president and chief executive, as he sits casually at a conference table in the bank’s temporary headquarters. “But their target market tends to be significantly larger than ours.”
Aquesta pursues commercial customers seeking loans of $1 million to $2.5 million, Engel says. Other prime prospects include retailers who might not want that much money, industrial firms that need a bit more, and land developers whose loan requests could go as high as $5 million.
The legal lending ceiling for Aquesta is $3.2 million, but its self-imposed limit is $2 million, unless its board decides to go higher. If a qualified borrower wants significantly more, Aquesta can approach other banks to help fund the loan. However, Aquesta has the wherewithal to serve most Lake Norman businesses.
From his temporary offices in the Magnolia Estates Plaza, Engel outlines how the fledgling financial institution got there. In January 2006, Engel started raising funds for Aquesta. By the end of March, he and his helpers had the promise of $18 million, a benchmark set by the N.C. Banking Commission. When Aquesta opened August 1, it had more than 560 shareholders and $22 million.
But don’t get the idea it was easy, Engel cautions. “Quite honestly, there was a significant amount of work,” he explains. “We got commitments very fast. The hard part is actually getting a check. We held a number of investor meetings. I would have breakfast, lunch and dinner with potential investors.”
Engel attracted people such as Ginger Griffin, principal at Ginger Griffin Marketing and Design in Cornelius, a native and life-long resident of the Lake Norman area. As Aquesta’s chairperson, she is one of only two or three women to have led Tar Heel bank boards.
Other members of the 15-person board whose names are well-known in the Charlotte region include Greg Biffle, who competes in NASCAR Busch Series races; Jon Dressler of Dressler’s Restaurant in Huntersville; and Charlotte native Charles Knox Jr., a commercial real estate broker and developer with The Knox Group, which focuses on North Mecklenburg from a Huntersville office.

     Soon after its September 9, 2006, grand opening, Aquesta issued its first earnings report for the two months ended September 30. Assets had climbed to $40 million, and since have reached $56 million.
The earnings report included an operating loss of about $205,000, but Engel points to “strong growth momentum.” The average community bank reaches profitability in 5.5 quarters. “We certainly hope to be at least average,” Engel says.


Taking the Plunge

When he took the plunge into banking, Engel had fashioned an above-average career. With a bachelor’s degree from Maryville College and law degrees from Suffolk and Boston Universities, the St. Petersburg, Fla., native had put in 21 years at accounting juggernaut KPMG, working primarily in Boston and Washington before relocating to Charlotte.
He concentrated on bank taxation and in the early 1990s, when banks began building interstate empires; he made himself an expert on multi-state bank taxation. Given that North Carolina financial institutions were among the interstate leaders, it made sense for KPMG to base him in the Queen City.
Engel built an organization of 15 partners and 120 or so managers and staff. He was based in what is now a Wachovia tower in center city Charlotte.
By age 45, Engel and his family had lived in Lake Norman’s Peninsula neighborhood for a decade. They were involved in community and school activities, but Engel was restless.
“I got to the point where I could stay at KPMG and continue on, or take a chance and go into something where I thought I could make a difference,” Engel says matter-of-factly. “I said, ‘I need to do this now or never.’ So I chose to do it—to start a community bank.”

Now 47, start-up rigors haven’t robbed Engel of his youthful looks. He smiles easily as he explains why he can be effective as a community banker.
“I saw the good, the bad and the ugly of the large banks,” Engel says. It disturbed him that most banks lost their community focus as they grew. The main reason was their tendency to promote people away from their customers.

“For many small business owners,” Engel says, “they don’t see any continuity in terms of banking relationships.”
He decided he could run a community bank where people who are good with customers find an inviting career path in continuing to be customer-facing professionals as loan officers, tellers or office managers, with pay scales that encourage them to stay in their competency areas. At Aquesta, he says, small business people won’t have to “start at square one every single time they need a loan.”

     Living where he does, Engel is confident a community bank with headquarters near Lake Norman can thrive. He knows the area’s image of vacation homes and recreation is being altered by a fast-growing business community.
Engel named his startup bank Aquesta for the word’s roots in the Latin for water, which dominates its Lake Norman home. He also likes the “quest” element because it conjures an image of striving for a different future.


Local Decision-Making

With fast, local decision-making as its strongest lure, Engel believes Aquesta can overcome some of the traditional strengths of large institutions such as Bank of America and Wachovia, both of which maintain offices in Cornelius along with a host of other banks including First Charter, First Citizens, Regions Bank and Mooresville Savings Bank.
Engel calls online banking a commodity, and Aquesta gets its online capability from data processing companies. Further, Aquesta reimburses the fees other banks charge for using their automatic teller machines. “Essentially, our bank has every ATM in the country,” he chuckles.
A piece of technology Aquesta uses to its advantage is a machine called Check 21. Installed in a business location, it scans the firm’s checks, puts them in digital format and transmits them to Aquesta for same day deposit.
Good timing has helped Aquesta make a fast start. “Luck counts,” Engel admits. “Interest rates have been in our favor. They stopped going up about the time we opened. I think we’ll see a decrease sometime in 2007. If that happens, we could be in great position. As a new bank, we have a very large securities portfolio and we’ve done well with that.”
Engel is moving ahead with help from a Lake Norman area veteran. He hired Davidson native Buddy Caldwell, who attracted a loyal North Mecklenburg following at First Charter, as chief credit officer.
Engel has known his chief operating officer, Paul Dougovito, for two decades. When he called Dougovito in Boston to tell him of his career change, Dougovito shared the news that he was retiring from his financial career, which featured a long tenure as a chief financial officer. Engel convinced Dougovito to reconsider and move south.

Now living in Birkdale Village, Dougovito enthusiastically sings the praises of Aquesta’s headquarters building that will rise at the corner of West Caldwell Avenue and Jetton Road (right behind Aquesta’s temporary headquarters). That three-story structure, designed by Roger Layman Architects of Davidson, will house 14,000 square feet inside its stone and blue-green glass exterior. Environmentally friendly features include water reuse.
Groundbreaking is set for early this month. When Charlotte’s Edifice general contractors completes the new building in fourth quarter 2007, Aquesta’s staff should number 25.
Aquesta hopes to occupy a branch in Davidson in late summer and the bank already operates a loan production office in the Lincoln County town of Denver. Engel is looking closely at other potential branch locations that include Huntersville and the Brawley School Road area of southern Iredell County.
That takes care of expansion for the next three to four years, Engel figures, but he acknowledges Aquesta won’t stop with five offices. Ultimately, there could be more than one branch in Cornelius and Huntersville, he says, and he likes the way the Iredell County town of Troutman is growing.


The Next Frontier

Board member Knox, a former chairman of the Lake Norman Chamber, is enthusiastic about growth for the less-developed west side of Lake Norman, calling it the area’s next frontier. “Eventually, you’ll see development on all sides of the lake,” Knox says.    
     The lake-dominated areas of Mecklenburg, Iredell, Lincoln and Catawba counties are Aquesta’s natural territory, Engel feels. For signs of economic vitality, he points to continued work on Interstate 485 and improvements to Highway 16, the planned expansion of Mooresville headquarters for home improvement giant Lowe’s and the thriving NASCAR shops that dot the lake towns.
That brings Engel back to NASCAR driver Biffle. He wanted Biffle on his board for more than the obvious benefit of an auto racing connection. “He’s a very good business person, with foresight and an appreciation for planning,” Engel says.

      Can Engel envision the Aquesta name on Biffle’s Number 16 Ford? “That’s expensive,” he laughs. “I’d love to have our name on his car, but I don’t see that happening for quite a while.”
Engel feels Aquesta can make a significant difference for the towns where it operates by placing Community Reinvestment Act funds in meaningful projects. These towns often have needs that large banks consider too small for consideration.

       He cites an example for Cornelius, which he guesses doesn’t get its share of federal funds. “We paid a scholarship for Cornelius to send a person to a grant writing school,” he says.
Engel himself brings up the question of whether Aquesta might someday sell to a larger bank. He leaves no doubt that is not on the institution’s radar screen. Yet he shies from predicting Aquesta might become the lake’s dominant financial institution.
“What I’d really love to think is that we will be a very successful community bank,” he says. “As you get bigger, it becomes easier to move more toward being a big bank. What you really want to do is retain the local connections and the local decision-making.”

Ellison Clary is a Charlotte-based freelance writer.
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