Saturday, October 15, 2005

So why does SC create lots of new community banks?

Clearly South Carolina overall does not convert our innovation capacity into entrepreneurial activity at the rate of more innovative communities. But today in the mail, I received another prospectus for a community bank. This is the one area where there is lots of start-up activity in South Carolina. Why is that?

We do have a track record of having successful commercial banks. One of the most successful high-impact companies in the region is The South Financial Group, which since its founding in 1986 has grown to a market capitalization of $2 billion. More banking resources ($1.3 trillion) are headquartered in Charlotte than in all but one other U.S. city.

As a result, many successful community banks are started and grown here with regularity. Each time a community bank is grown and sold, investors receive liquidity, some of which they reinvest into the next generation of community banks. Community banks also provide a training ground for young managers, who become the leaders of the next generation of banks. There is a tremendous amount of knowledge in the community about how to successfully grow community banks, and therefore a large number of them are started.

It is this type of community knowledge and track record that needs to be developed in the region around emerging companies introducing exciting new innovations to the marketplace.

3 comments:

Dan Ruck said...

What is your point? The last paraqgraph makes no sense. Try proofreading your stuff before you post it.

Anonymous said...

The unfortunate thing about the creation of community banks is that many are organized for the purpose of being sold within a few years to a larger regional bank. This benefits the executives of the bank and not necessarily the customers or the smaller shareholders.

Swamp Fox said...

Is there anything wrong with organizing companies to grow them and then sell them to make a beaucoup of money? Making money is why people go into business, isn’t it?

If customers didn't benefit, why would they keep moving their business to the next community bank? I've got accounts with what originally was Greenville National, which is long gone. I stayed with Regions Bank, because the account officer I liked was still there. Now she has left to join a community bank. So I have a decision to make and options to choose from. Isn't giving customers options a beautiful thing?

If public shareholders didn't benefit, why would they keep investing in all the community banks that are being started? You could fool people once or twice, but you couldn't keep fooling them over a sustained period of time if they weren’t making money too.