Dive Brief:

• Organizers who sought to open a community bank in North Carolina instead bought controlling interest in Brighton Bancorp in neighboring Tennessee, according to a Friday press release.
• The group gained the FDIC’s conditional approval in 2018 to open Community Bank of the Carolinas, provided it could raise $22.5 million. The group raised more than $18 million by March 2019 but abandoned its effort in June, according to the Winston-Salem Journal.
• Organizers are sticking to their vision of creating a regional community bank that encompasses both states. They plan to open a loan production office in Winston-Salem and later convert it into a full-service branch, according to American Banker.

Dive Insight:

FDIC Chair Jelena McWilliams has bemoaned a recent drop in de novo activity nationwide. "With 14 million American adults without a bank account, we want to see more banks, not fewer," she wrote in an American Banker op-ed.

The regulator received 24 applications for new banks in 2018 — including Community Bank of the Carolinas — and approved 15. But approvals fell to nine last year.

North Carolina has been a difficult market to launch new banks, as well. Of the five startup attempts in the state since 2017, only American Bank & Trust built from the ground up, according to the Winston-Salem Journal.

Community Bank of the Carolinas follows the path of another North Carolina de novo attempt that initially stumbled: Dogwood State Bank. Organizers of that bank bought Morehead City-based Sound Bank, rebranded it and moved its headquarters to Raleigh.

"While we were close to having our capital raised with the de novo effort, we are finding that investors are much more interested in a Dogwood-Sound Bank type of transaction because the bank will start with an existing base of business and without the de novo regulatory restrictions that impede growth," said Skip Brown, who led the charge to open Community Bank of the Carolinas and will now become Brighton’s CEO.

Brighton’s current chief executive, John Phillips, is expected to remain at the company as market president of Tipton County, north of Memphis.

Brighton had $25 million in loans and $37 million in deposits at the end of 2019. Organizers for the Community Bank of the Carolina’s did not disclose the purchase price for Brighton in the all-cash deal.

"After several months of analyzing more than a dozen banks, we have found Brighton to be an excellent fit for our growth strategy," Brown said. "We’ve been motivated all along by the belief that there is an untapped market of small business owners and consumers not being served by big banks in our markets."

Before buying Brighton, Brown had lined up an agreement to buy an unnamed bank with operations in North Carolina, South Carolina and Virginia, American Banker reported.

"Brighton will give us an immediate book of loans and deposits, which generally takes a few years to produce through the de novo process," Brown added. "Taking this path certainly provides us the potential of creating a better community bank in the long run."

Brown is not new to community banking. He founded Winston-Salem’s TriStone Community Bank, which First Community Bancshares bought in 2009.