Laurence Bolchoz talks like a man who knows where he’s going and how he’ll get there.
Bolchoz is CEO and president of Coastal Carolina National Bank, a 3 1/2-year-old institution that recently announced its first profitable quarter and followed that by opening a branch in Garden City Beach and moving to a new headquarters building within weeks of each other.
“Our team wants to be the premier community bank in this market,” he said, emphasizing the importance of visibility in the bank’s plan for the future.
But other area community banks have seen the same improvement in real estate numbers as has Bolchoz, and at least some are making moves of their own.
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Sandhills Bank, for instance, opened a new office on S.C. 9 in Longs on Jan. 7, and Bank of North Carolina will open a new branch in Murrells Inlet before the end of June. Mullins-based Anderson Brothers Bank is on track to build its first two locations in Myrtle Beach – the first near The Market Common to open in spring 2014 and the second a neighbor of CCNB’s new headquarters on Grissom Parkway to open in late 2014-early 2015.
“We’re everywhere (in Horry County) but Myrtle Beach,” said Bryan Lenertz, Horry County area executive for Anderson Brothers, “and we wanted to take advantage of distressed real estate prices” in the land the bank bought and low construction costs for the offices it will build.
The banks’ expansion moves are another sign of an improving economy, but Robert Burney, a banking and finance professor at Coastal Carolina University, said the improvement needs to be taken in context.
“If you’re looking at the height of the recession, it’s a boom,” he said. It’s a positive sign, but the pace is nowhere near what it was in the middle of the last decade.
Some of the growth, he said, might be from plans banks put on the shelves during the worst of the downturn, which was the case with North Myrtle Beach-based Sandhills Bank.
Bank president Jim Smith said the bank purchased land on S.C. 9 for a new office in early 2008, but delayed construction because of the economy. The bank opened in rented space next to the bank’s land, and the new building could be ready in three years, when the lease is up for the rented space.
Smith said that Sandhills had an 85 percent growth in its loan capacity last year and, being very well capitalized, is poised for significant growth in the next five to 10 years. Already, he said the bank is looking at potential sites in Myrtle Beach and along the south Strand. Smith said his primary task now is hiring those who will staff the new branches. The bank has other things it can do until new locations are opened, he said.
“We’re also considering as part of our strategy acquiring other banks,” Smith said.
Smith said that Sandhills believes the local real estate market is now at its bottom. There are many signs of stabilization, he said, but no real growth yet.
Burney said that generally, he expects bank growth to be slow, a good thing in that it will give executives time to evaluate moves before making decisions, a path that most of those now expanding seem to subscribe to.
Tommy Bouchette, president of BNC, said the pace of real estate activity isn’t as important in making the decision to expand as that the pace is sustainable. The hyper-market of 2007 to 2009 was not.
By 2010, he said, the market was in a nosedive that took a couple years to level off and only recently has begun to turn again toward growth.
Bouchette said he now sees an improved residential real estate market, more custom homes being built and a more normal migration of retirees to the area.
“We have lots of money that we’d like to put in loans,” he said.
But lenders have returned to home financing rules that were in place for decades before the run-up to the recession. While there are 10 percent down payment loans for well-qualified buyers and Federal Housing Administration loans that require less than 5 percent down, a conventional loan for an owner occupied purchase today needs a 20 percent down payment for a 30-year, fixed rate mortgage.
Additionally, Bouchette said, the level of documentation required now is higher than it was just a few years ago.
“You have to prove your income,” he said.
Lenertz said the expansion activity is now by small- and medium-sized banks. The large banks would rather put their assets into buying an entire distressed bank, rather than just pieces of it.
CCNB and BNC are taking advantage of an area bank that failed in the economic downturn. CCNB’s new headquarters building is the former office of Plantation Federal Bank, the same that used to run the Murrells Inlet office where BNC will open. CCNB’s new branch was a Bank of America office for 20 years before it closed.
Bolchoz said that CCNB has 3,500-square-feet more than it had in its old headquarters on Oak Street. The extra space will accommodate the extra employees the bank likely will hire as it grows. The bank’s mortgage group is seeing 50 percent more business this year than last, and his bankers are pounding the pavements to establish relationships that will result in new customers.
But like Burney said, CCNB’s growth will be measured, or as Bolchoz puts it, “the right growth.”
No one is talking about what comes next, although you get the feeling that some may have solid plans for the future.
But all say that this year will see slow growth, but growth.
And it wouldn’t be unreasonable to see more expansion.
As Lenertz said, “The healthy banks are trying to grow now that we see some light at the end of the tunnel.”