A Carolina comeback

Scott Custer ran Raleigh-based RBC Bank, then the fifth-largest based in the state, until departing under a heavy load of losses in 2009. He then formed a holding company — now Raleigh-based VantageSouth Bancshares Inc. — to buy struggling banks. Its fifth deal is a $299 million one with Elkin-based Yadkin Financial Corp., parent of Yadkin Bank. Billed a merger of equals (both have about $2 billion of assets), Yadkin is the acquirer, but the combined company will be based in Raleigh, and Custer will be president and CEO of the fourth-largest Tar Heel bank. The following has been edited for brevity and clarity.

 

 

This is different than your other deals.
We previously acquired four banks that needed some turning around. This is two strong companies making a stronger one. 

What are its merits?
First, size and scale. More efficiency. Second, both have strengths. We’re the No. 1 Small Business Association lender in North Carolina. Yadkin has one of the best mortgage operations. Third, both will grow into markets they’re not in. We’re not in Charlotte. Yadkin is not in the Raleigh-Cary market.

Are you done growing?
Job one is making sure this gets executed well. That will take the better part of 2014. Beyond that, we can assess where we need to go. But that time is not now.

Is there still a role for small-town banks?
It’s going to be harder for them. I’m not trying to throw them under the bus, but as a general rule, they’re going to have more difficulty because of regulatory costs, compliance costs, their ability to generate revenue is going to be harder. Will rural residents have trouble getting loans? I don’t think so. We’re still a community bank, just bigger. Our branch in Hertford, which you might argue is an underserved market, does very well.

Considering how you left RBC …
You can say it was my fault. It’s OK. Plenty of people have.

So you feel vindicated?
That was a whole different set of circumstances that was unique to that company. I don’t know how anybody could’ve affected a different outcome there. But I have huge respect for RBC. They were and still are a wonderful company. I’m more proud of what the team here has been able to build. It’s a company where bright people have found careers again.