Documenting the American South Logo
oral histories of the American South
Excerpt from Oral History Interview with Lonnie Poole, March 22, 1999. Interview I-0085. Southern Oral History Program Collection (#4007) See Entire Interview >>

Growth of banking in North Carolina

Poole discusses his decision to take his company public. This interview will interest researchers interested in the thought process behind a businessperson's decision. Poole took his company public with the help of a banker underwriter, the recollection of which spurs him to comment on the remarkable growth of banking in North Carolina in recent years.

Citing this Excerpt

Oral History Interview with Lonnie Poole, March 22, 1999. Interview I-0085. Southern Oral History Program Collection (#4007) in the Southern Oral History Program Collection, Southern Historical Collection, Wilson Library, University of North Carolina at Chapel Hill.

Full Text of the Excerpt

JM: Last thoughts? Things I haven't brought up? I’m sure there are all sorts of things. Anything that's especially pressing? LP: I guess the largest decision that a company had to make, we made in 1997. The, our company is currently publicly traded. Meaning that we registered with the Securities and Exchange Commission. Our equity, it is fully marketable. For those of us within the company known as insiders under the rules affectionately referred to as 144. That is yet another step. We were faced with a situation that we either had to be a part of the consolidation to continue and execute our growth strategy, which meant acquiring other companies, or we had to become an acquiree and become part of a company that had publicly traded currency. We examined all of the alternatives to sell the company or to grow the company and found that we needed to have the ability to raise capital through public markets and to sell our equity. We made that decision and did it in 1997. Are we really good at this? Not really. We'll get better. Once you get to a certain point in a company's history as it evolves, and I think we were ready to step up to the next milestone, and that involved going public. It's a very, very big decision. But it came down to actually three strategies. We had to have--we wanted to pursue a growth strategy that is more aggressive and that takes capital. Two, we had to have a succession strategy. That means that we could attract and hire people, middle management who could have a piece of the action, have stock ownership. You could do it, attract them through stock options. Three, they are smart enough to figure out that they are not tied necessarily to a family or a few owners who may decide to retire or sell out. There's a little more security there. So succession becomes a second strategy. A third strategy was an exit. Anytime you've got 1500 people, the likelihood of all of them wanting to do one thing, exercise one exit strategy at the same time is unlikely. In order to allow people to exit on their schedule it required you to have marketable currency. We made that decision that we wanted to be a publicly traded company and went through all that. It has its trying moments. It is considerably different than being private. On the other hand, if I were asked is it worth it at this juncture, the answer is yes. We're granted a license to print money. No one or no country is going to give you that right without tying some strings to it. We are having to get used to those strings, but on the other hand we are enjoying the ability to print money. We are acquiring companies for a combination of stock and cash. It's nice to be able to do that as opposed to going down to the bank and borrowing yet another huge amount of money, which is how our company has to this day grown and become the size that it is. JM: Did the IPO come off largely as you expected and hoped? LP: Yeah. It did. It was a--the filing range if I remember correctly was 10.50 to 12.50. Actually during the period of time that we did our road show, the whole market rose so we did our boat rises with the tide. We actually went, did our public offering at 13.50. There were lots and lots of people looking for emerging growth companies at the time. We had about eight times more orders for shares than we had shares to offer. Yeah. JM: Who's your underwriter? LP: The underwriter was at Alex, Brown, which is later been acquired is now called BT, stands for Bankers Trust/Alex, Brown. The comanager was the Deutsche Bank, which traded as a company called DMG. Deutsche Bank has just announced its intent to acquire BT/Alex, Brown. We think we're in the consolidating industry. Golly, one of the biggest changes, and I forgot to mention it just now. The thought occurred to me and crossed my mind. One of the biggest changes as we saw the state go from an agricultural and textiles and all this stuff is that way, way back we allowed banks to branch. It was a very, very big deal. By branching, our banks learned how to cover broader geographic areas. As a result, we've watched NCNB, the best little bank in the neighborhood become Nations, and they've now acquired Bank America. NCNB banked us for the middle part of our history. Even a little bank that we're with now, BB and T is the biggest bank in North Carolina as far as high share of North Carolina market. Our initial bank was First Union National Bank. I've got to say one of the biggest changes has been in banking. Banking, I don’t know where it ranks. Do you know where it ranks as an industry? JM: In North Carolina? LP: Yeah. JM: I don't know the answer for that on the roster. But it's got to be right up there. LP: Tremendous change. JM: Yeah. LP: Tremendous change. Banks are into a multiplicity of services. They're into brokerage; they're into insurance and estate planning; and the trust departments are huge. I just visited when we broke up today, this bank is actually Detroit, and they're down here because they're industry focussed, and we are in the top ten. So they are here wanting to do a part of our business. They've been over today to see BB and T. The banking world and the North Carolina banks in particular have just grown by leaps and bounds. That includes the other tier of banks. You've got First Citizens which is very much a local bank. Then you've got Wachovia, and I think when we first started banking, I think Wachovia was the biggest. Now you have Nations, which is Bank America, which is truly global. That's been a huge change.