A small Tennessee-based bank has entered the Richmond market.
Sevier County Bank in Sevierville, Tenn., opened a branch as Southern Community Bank this month in the Innsbrook Corporate Center in Henrico County.
The bank leapfrogged 400-plus miles to open the office here with plans to initially build its Richmond market operations to have more than $100 million in assets with possibly a couple of branches.
“It doesn’t make a lot of sense when you look at a map. I get that,” said John Presley, Sevier County Bank’s executive chairman, who is well known in banking in the Richmond area.
“The familiarity with the bankers here and having a credit guy that I worked with and trust, it made it a no-brainer with all of the excess cash that Sevier County Bank has,” he said. “I don’t know bankers in Knoxville, and I don’t have relationships with them or their customers. And while Knoxville geographically made more sense than Richmond, I didn’t know anybody there to be able to recruit.”
But Presley, 60, knows banking in the Richmond area.
In 1997, he was the founding president and CEO at Richmond-based First Market Bank, which had been mostly owned by Ukrop’s Super Markets Inc. and since had merged with what is now Atlantic Union Bank. He left Richmond to serve as chief financial officer for Memphis, Tenn.-based National Commerce Bancorp., which at one point owned part of First Market Bank.
He returned to Richmond in 2008 to be managing director and CEO of Henrico-based First Capital Bancorp Inc., the holding company for First Capital Bank, which was sold to Park Sterling Corp. He then served as CEO of specialty hardwood flooring retailer Lumber Liquidators Holdings Inc. for a year before stepping down in late 2016.
After fighting leukemia for 2½ years, Presley got a phone call in late 2018 from an investment banker asking if he was feeling good enough to go back to work. “I said I was but that I really didn’t want to do something that was mundane but rather do something that has some hair on it and is challenging,” he said.
The investment banker introduced him to Sevier County Bank, located in the Tennessee towns of Pigeon Forge and Gatlinburg and home to Dolly Parton’s Dollywood amusement park.
Sevier County Bank had been under a consent order from federal banking regulators since 2009 because it had a number of nonperforming assets on its books.
Presley told Ken Lehman about the possible investment in Sevier County Bank.
Lehman — who had invested heavily in community banks over the past two decades, including taking major investments in Chesterfield County-based Village Bank and in First Capital — was interested.
In August 2019, they raised $18 million in capital, giving Lehman a 40% ownership in the bank. “In a short time, the bank went being under a consent order to being a healthy bank,” Presley said.
Sevier County Bank, founded in 1909, had about $290 million in assets when Presley started looking at it. The bank has since grown to $420 million in assets.
The bank had more than $100 million in cash on its balance sheet last year with really no place to deploy it, he said.
Presley and Lehman decided to expand by opening a bank in Richmond.
“We saw an opportunity that Richmond might be a good place to start a bank,” Presley said. “We felt there were some bankers we knew that might want a fresh opportunity.”
But rather than going through the expensive and tedious process of getting a new charter for a bank in Richmond, Presley said the decision was made to make the operations here a branch office of Sevier County Bank.
He assembled a team of six bankers for the new Southern Community Bank operations, most of whom had worked with Presley at First Market Bank or First Capital Bank or both. That included Matt Paciocco, who started at First Market Bank in 2004 shortly after graduating from college. Paciocco is the bank’s Richmond market president.
The bank here is called Southern Community Bank because Presley said it provides a broader moniker that isn’t tied to a locality in Tennessee. In coming up with a new name, he wanted the name of the bank here to reflect the same “SCB” initials used for Sevier County Bank. As a result, both banks intentionally use “SCB” lettering as part of the logos to provide a link to each other.
Southern Community Bank’s office opened at 4421 Cox Road. The bank is actively making loans to small businesses as it prepares to accept deposits, which it expects to be able to do in April.
Presley said Lehman’s ownership investment in Sevier County Bank and Village Bank is “coincidental.”
“It has nothing to do with what we are doing,” Presley said. “What we are doing is very simple: we are trying to deploy some cash, make an investment in Richmond and work with bankers we have worked with before.”
Southern Community Bank expects to open a traditional branch someplace in the Richmond area possibly later this year, he said. Bank officials are in the process of finding a location. Over the next couple of years, it could have two or three more branches in the Richmond area, he said.
“Our goals are simple. We believe with this group of six people that in a relatively short period of time we can build a branch with $100 million in assets,” Presley said. “If we do that, we will be very successful and that is as far as we have thought about it so far.”
Longtime banking executive Gail Letts believes opportunities exist in the financial sector, particularly in middle market banking, which serves businesses with $30 million or less in revenue. That’s the targeted audience for Southern Community Bank.
“You’ve got this segment of true middle-market banking that has a lot of needs,” said Letts, president of Letts Consult, a consulting business specializing in working with businesses to attract, retain and develop women for executive leadership positions.
“It is all about relationship banking and delivery,” she said. “I still think there is a tremendous upside for well-run community banks that can deliver on banking needs in the lower middle-market business.”
Letts had been Virginia market president for Capital Bank, a unit of Memphis-based First Horizon National Corp. The Tennessee-based bank exited the Virginia market in spring 2019 by closing its sole office in Henrico to focus on high-growth markets.
Before that, Letts had been president of the Richmond region and chief lending officer at C&F Bank from 2013 to 2015. She also was a longtime executive of Atlanta-based SunTrust Banks Inc. and served as president and CEO of its Richmond region from 2007 to 2013. And she currently serves on the board at Henrico-based Community Bankers Trust Corp. and its Essex Bank subsidiary.
Creating a bank in a new market has advantages, Letts said, because it can strategically locate branches or financial centers in an area and be selective on the number of locations. The banking model is shifting and doing so faster because of COVID-19, she said, with financial institutions relying more heavily on technology for banking needs.
“You don’t need those mega networks of branches because people have migrated online. So it easier to enter a market ... [because] you don’t have to get rid of that infrastructure that is already built,” Letts said. “To come in and try to establish your presence is a great advantage.”