Editor’s note: This story originally ran on Jan. 10, 2005.
In the summer of 2004, Bradley Thompson and Benjie Guion were on a mission to raise $40 million for their proposed new Charlotte bank.
This morning’s stop was in Huntersville at the home of Joe Gibbs Racing, one of NASCAR’s top race teams.
The longtime Charlotte bankers had left jobs at SouthTrust Corp. in January 2004 to launch NewDominion Bank. Now in July, they were talking to former clients, friends and other potential investors about their vision for a local bank focused on business customers and the Internet.
To meet regulatory requirements, they needed to raise a minimum of $22.5 million by selling stock to investors. They had about $7 million so far and hoped to open in about five months, in November.
One of Thompson’s first deals at SouthTrust was a loan to Gibbs in the early days of his race team. Guion and Gibbs’ son, J.D., were volunteers in Young Life, a national nondenominational youth-group program.
For Thompson and Guion, Christian faith was an important part of their home and work life. They incorporated religion in many of their business relationships and were stressing these values as they built the new bank.
J.D. Gibbs, the team’s president, invited them into a spacious conference room decorated with Tony Stewart’s 2002 Winston Cup championship trophy. Thompson, the proposed bank’s chief executive, placed three investor booklets on the black marble table in front of him.
Guion launched into an explanation of the bank’s strategy. The Charlotte market had lots of business potential for them, he said. And Wachovia Corp.’s recently announced acquisition of Alabama-based SouthTrust essentially eliminated a competitor.
“The SouthTrust acquisition is not good for our friends there,” said Guion, the bank’s designated chief financial and operating officer. But “it frees up potential employees and customers. Mergers create uneasiness in the market.”
J.D. Gibbs said he was impressed by statistics they had given him about the strong stock performance of Charlotte startup banks.
“You’re taking a leap of faith,” Gibbs said. “But there’s good data there.”
He said he would pass the brochures around the office and give one to his father, who had returned to coaching the Washington Redskins. He planned on investing himself.
“You were there when we got started,” he told the bankers.
From meager beginnings ...
NewDominion’s office was on the second floor of a brick-and-glass building across the street from Carolinas Medical Center. Thompson and Guion jokingly called it “World Headquarters.”
The nearly bare interior revealed the enormity of the job ahead. A sea of worn, blue carpet was interrupted by only two mismatched tables surrounded by green plastic lawn chairs. Orange cones dotted the floor, covering exposed outlets. Only a sheet of paper on the front door reading “NewDominion Bank (Proposed)” indicated the room aspired to house a financial institution.
Thompson, 46, and Guion, 48, still faced hundreds of tasks. They needed final approval from state and federal regulators. They had to select vendors to build extensive computer and online banking systems. They needed to hire about two dozen lenders, tellers, secretaries and operations experts.
None of it would come to pass, though, if they didn’t raise the capital needed to make loans and meet reserve requirements.
From their contacts, they had compiled a list of about 700 potential investors. To get $40 million, they would need hundreds of well-off people to part with $50,000 or more.
It wasn’t on their checklist, but how their Christian beliefs would influence NewDominion was another question to be answered. Thompson and Guion believed their ministry was to demonstrate their faith, not just in their personal lives, but through their work.
It wasn’t an easy balance. While at SouthTrust, Thompson sometimes had pushed the bank to lend money to Christians who later had trouble making payments.
He also struggled when it came to firing under-performing employees, especially if they were believers. Later, Thompson said he would discover some workers ended up in a better situation.
Thompson was involved with a number of Bible studies, but didn’t force them on SouthTrust employees. At meetings and lunches, he would ask if anyone minded if he offered a blessing. He used to say prayers before general announcements to his staff, but the human resources department asked him to stop.
In the months ahead, they would search for the right mix of faith and finance.
Hunt is on for investors
Thompson and Guion spent most of their time “dialing for dollars,” as they called it, and meeting in person with individuals and groups to make their pitch.
They also were getting significant help from Xan Law and Lew Parham, the well-connected Charlotte businessmen who had recruited them to start the bank. Law, now 63, and Parham, now 72, would be directors on the bank’s board. Law called the younger bankers “the boys.”
While most of their efforts centered on Charlotte, they also sought contributions elsewhere. One day in July they rented a plane to fly to Virginia Beach, Va., where Law had a contact.
They met at a private terminal at Charlotte/Douglas International Airport used by the city’s business elite. As they waited to board, Guion and Law looked up to see the city’s best-known banker striding by: Hugh McColl Jr., retired chairman of Bank of America Corp.
Not wanting to miss a prime prospect, Law greeted McColl and handed him one of their investor booklets, known as circulars. As McColl talked with the front desk clerk about his flight, the silver-haired banker flipped through the pages.
“Y’all organizing a bank?” he said in his distinctive drawl.
The builder of one of the nation’s largest banks knew it could be tough for some small banks to make big returns. As he turned to leave, he challenged them.
“When are you going to make 15 percent return on equity?” he asked, heading out the door.
Challenges laid out
The centerpiece of the bankers’ pitch was their 32-page circular. Inside, the risks for investors were outlined in stark terms.
If the bank failed, shareholders could lose all of their money. Unlike deposits, the stock was not federally insured. The bank might not show a profit for two years. Dividends would not be paid for at least three years.
Shares initially would not be traded on an exchange, making it hard to sell the stock. Competing banks already packed the Charlotte market.
Still, the circular said there was room for a “locally owned and managed bank” serving mostly small and medium-sized businesses and real estate developers.
The bank’s primary market was Mecklenburg County, but Thompson and Guion also planned satellite offices in surrounding areas. The metro area had grown rapidly in the 1990s and that was expected to continue the next five years, the circular said.
Bankers often founded startups with the goal of being bought by a larger rival - raking in big gains for shareholders. To approve any possible future merger, 75 percent of shares would need to be cast in favor, the circular said.
When asked by potential investors whether they would sell, Thompson and Guion said they were building the bank for the long term, but would be obligated to listen to all offers.
Rendezvous for future
It was still dark when Thompson and his wife, Amanda, drove into a Chick-fil-A parking lot at 5:30 a.m. one September morning.
The Concord Mills restaurant was a rendezvous for a trip to Raleigh. The bankers and their directors had a 9 a.m. appearance before the N.C. Banking Commission to make the case for getting their charter, essentially the license that would let them open for business.
Thompson had rented a small bus from a Christian tour company to drive the group of about 10 to the meeting. They wanted a good show of support before the commission.
In recent weeks, they had added a number of high-profile directors to the board, including UNC Charlotte men’s basketball coach Bobby Lutz, Raycom Sports co-founder Dee Ray and former ambassador Mark Erwin.
“It’s like a game. I’m pumped,” joked Lutz before boarding the bus.
The Thompsons carried muffins, coffee and a cooler full of bottled water on board. Before they left, Bradley Thompson prayed.
“Lord, we thank you for this day,” he said, his voice husky with emotion. “We thank you for these people who have invested in us. May we be great stewards of what we have been given.”
The trip was much longer than the meeting. After a brief presentation by Thompson and Guion, the commission unanimously gave their charter preliminary approval.
NewDominion still needed to meet certain conditions before opening. It would have to raise its minimum capital and pass a final review by examiners.
State Treasurer Richard Moore, the commission’s chairman, wished them well. “No doubt there’s a lot of money and banking talent in Mecklenburg,” he said with a smile.
Bank takes shape
By late October, NewDominion was starting to look a little more like a bank. Cubicles and PCs were sprouting up around the freshly painted office.
Thompson and Guion had hired a former SouthTrust colleague to help with operations, a chief credit officer from BB&T Corp. and two administrative assistants. They also had a consultant guiding them through a lengthy checklist needed to open for business.
After one meeting with consultants about renovations to their office, they even drove up the street to check out a new Bank of America branch. Guion didn’t say who they were when they walked in, but bantered with the greeter.
“We’re snooping,” he smiled, glancing at the signs and the marketing brochures in the lobby.
Still, he and Thompson had pushed their start date to January, two months later than planned, largely because their computer vendors needed extra time.
They had reached their $22.5 million minimum capital requirement and were closing in on the state record total of $27.5 million, raised by Raleigh-based Capital Bank in 1997. But their real goal was the $40 million maximum allowed under their circular.
On a rainy Friday, the partners met Law and Parham for lunch at Myers Park Country Club. They wanted to hire a consultant, Southeast Financial Holdings Inc., for a final money-raising boost.
The Duluth, Ga.-area firm had assembled capital for more than 100 community banks, but the help came with a price. Its fee was low-five figures per month.
“That’s a lot of money,” Parham said. But he added: “We’re paying them to get around to what we can’t get to.”
In addition to combing NewDominion’s list of possible investors, Thompson noted Southeast Financial had its own contacts. “I can see (the firm) getting $15 million,” he said.
He suggested hiring the firm for two months. Guion, who was starting to think the bank might only rake in about $30 million, offered a compromise of six weeks.
With the holidays, “I don’t think we will get much after December 15,” Guion said.
What role faith?
Over the past 11 months, they had been so busy hunting investors and setting up operations, Thompson and Guion had had little time to figure out how faith would fit into the bank.
So far, the name had religious meaning. Thompson had attended a forum of Christian executives learning about the burgeoning faith-in-the-marketplace movement. He sometimes prayed before meetings. He felt the opportunity to launch the new bank had been given to him by God.
Thompson suspected faith might be reflected in the bank’s mission statement, but he wanted to wait until more employees were on board to get their input. Thompson also noted it was easier for private companies such as Chick-fil-A to be out front with their beliefs than public companies beholden to shareholders.
He and Guion knew they couldn’t ask prospective NewDominion employees about religious beliefs, but they had church connections with a couple of their first hires.
One of their administrative assistants, Kathryn Mahoney, had recently quit her job at a large corporation because she said God told her to take a different path. A longtime friend of the Thompsons, she was working at NewDominion temporarily before going to seminary. She joked that she was the office chaplain.
“We’re both taking a faith walk right now,” Mahoney said.
Thompson didn’t plan on hosting any Bible studies at the bank, but he said he would continue to pray before meetings and other functions. “They do it before Congress starts,” he said.
The bankers said their faith would be most noticeable in how they interacted with employees and customers. Thompson often said his model for behavior was the Golden Rule. Guion pushed a “pay-it-forward” mentality where the bank was always looking to help people.
“I don’t think we’re going to have a flag-toting philosophy,” Thompson said. “It’s about how we live our lives.”
The final push
In November, Robert Gallert, one of Southeast Financial’s consultants, started sifting through NewDominion’s database of prospective shareholders. It was up to 1,600 names, more than double when they started in the spring.
From a cubicle in the bank’s office, Gallert made calls. Set up meetings. Ran a newspaper ad. Sent letters pressing people to write checks.
In December, investors started mailing in their subscription forms or dropping them off. An undisclosed institutional investor agreed to buy 4.9 percent of the total shares issued, which could amount to about $2 million.
The consultant was paying off. The bank had reeled in $38 million.
Now Gallert wanted to tap a source in Las Vegas that could put them over the top. A group of well-heeled investors called The Supper Club was holding a meeting there in early December.
For a $3,000 fee, selected companies made an in-person pitch for investments. Club members often wrote checks on the spot.
Thompson and Guion had been to Vegas a couple years earlier on a SouthTrust trip, but weren’t big fans of the city. Thompson hadn’t gambled. Guion had played a couple of slots.
Still, they felt this was a good chance to wrap up their money-raising, and on the morning of Dec. 7 boarded a flight for Sin City. For more than five months, they had made their pitch at homes, board rooms, restaurants and country clubs, mostly in the Carolinas. This presentation 2,200 miles away could be their last.
When they landed, Guion called Law to check in on the money-raising. They were only $300,000 or so short.
Law and Gallert were in Charlotte furiously calling prospective investors, telling them they might miss out if they didn’t commit right away.
As Thompson and Guion headed toward baggage claim, the sounds of Christmas carols mingled with the dinging of slot machines lining the corridor. At the carousels, giant TV screens overhead pumped out commercials for casinos, shows and spas.
As they waited for their bags, their cell phones buzzed with updates from Law and Gallert about investments tumbling in. The money seemed to be rolling up like the flashing displays on the slots.
“We’re $24,000 short,” Guion told Thompson after talking with Law.
On the phone at the same time with Gallert, Thompson shot back: “Robert says we’re over.”
They had done it. NewDominion had raised $40 million - the most-ever for an N.C. startup bank.
There was no reason to meet with The Supper Club now. Happy, but a little sheepish about the wasted trip, they headed to the counter to check on flights home.
Their work, though, wasn’t done. They had about a month to get ready for opening day.