Charlotte area nears a banking milestone. Here’s why that hasn’t happened in years.

Statesville will be headquarters to a new community bank under a plan unveiled this week.

The group organizing Spirit Community Bank said applications have been filed with the North Carolina Commissioner of Banks. Approvals from that regulator and the Federal Deposit Insurance Corporation are still needed before the bank can open as planned in the third quarter of this year.

It’s a significant development for Charlotte and the state. According to the North Carolina Bankers Association, it marks the first group to apply for a state bank charter since 2008, when filings ground to a halt as the industry grappled with the financial crisis.

Since then, the Charlotte region and elsewhere have lost community banks as those firms have gotten swallowed up in mergers and acquisitions. A planned merger announced in January involving Charlotte-based NewDominion Bank will leave the city with just one bank headquartered here: Bank of America.

“Community banks have dwindled,” Spirit’s proposed CEO William Long said in an interview. Long said he’s heard from small businesses and entrepreneurs who have faced difficulties getting lending from bigger banks: “They’re taking six months to get an answer on a loan.”

“My phone rings off the hook and has for the last couple of years,” said Long, former CEO of Elkin-based Yadkin Valley Financial Corp., a community bank from which he retired in 2011. Yadkin, which became based in Raleigh in a 2014 merger, was acquired last year by Pittsburgh-based F.N.B. Corporation.

Spirit’s plans come after a group of Union County business leaders said last month they were working to launch a new bank in Monroe. Homebuilder David Cuthbertson is leading that group.

For Charlotte, Spirit’s move could help reverse a trend. Ten years ago, the city was home to the headquarters of eight banks – including Wachovia, which nearly collapsed in the financial crisis before San Francisco-based Wells Fargo bought it.

Critics of financial industry regulations stemming from the 2010 Dodd-Frank law have blamed those rules for fueling consolidations of community banks, a primary source of lending to small businesses. The new regulations have forced banks to divert resources toward compliance efforts, encouraging firms to get larger to spread the higher costs across a bigger asset base, critics have said.

Now, industry-friendly changes from Washington, D.C., are helping drive the new-bank announcements, said Peter Gwaltney, president of the North Carolina Bankers Association. Those include federal tax legislation passed by Congress last year and new leadership at regulatory agencies under President Donald Trump, Gwaltney said.

“The struggles felt by small banks are not over, but the Trump administration and Congress have certainly taken positive steps toward creating a more favorable economic and regulatory environment,” he said.

On Tuesday, the U.S. Senate advanced a large rollback of the Dodd-Frank law, enacted to prevent another financial crisis. The Senate still needs to pass the measure, which would also require House approval before reaching Trump’s desk. Supporters said the legislation would help smaller banks but critics argue it would help pave the wave for another financial crisis.

As for Spirit, if approvals are won, it would be the first bank to start up in the state since Jacksonville’s Coastal Bank and Trust, which applied for its charter in 2008 and opened the following year, according to the bankers association.

Spirit organizers said the bank’s headquarters is expected to be 139 E. Broad St. The bank is considering Mooresville for its second branch, but a final decision will be based on financial measures, Long said.

Organizers said Spirit will offer financial services with an emphasis on individuals and small- to medium-sized business. Plans are to focus on customers primarily in Alexander, Catawba, Iredell, Mecklenburg, Wilkes and Yadkin counties, organizers said.

Preliminary approval from the commissioner of banks and the FDIC could come by the end of the second quarter, according to organizers.

The bank said other executives being proposed for the firm are Chief Operating Officer Kristi Eller and Chief Lending Officer Thomas Kincaid. Proposed board members include Long; Matthew Redmond; Costi Kutteh; Gloria Hager; and Caroline Brown.

This story was originally published March 6, 2018 at 2:52 PM with the headline "Charlotte area nears a banking milestone. Here’s why that hasn’t happened in years.."