A recent chain of transactions involving Morehead City-based Sound Bank has freed the bank to become the building block for an entirely new statewide community bank.
Sound Bank, which has one office in Wilmington, had become part of Raleigh-based West Town Bancorp Inc. in 2017. West Town announced this week in a news release that it had sold a “substantial portion” of its interest in Sound Bank as part of a recapitalization move by Sound Bank. At about the same time, according to the release, Sound Bank “completed a private placement of newly issued shares of Sound Bank common stock, which . . . resulted in gross proceeds to the bank of approximately $62 million.”
On Tuesday, Sound Bank announced it had completed a $100 million recapitalization as part of its plan “to grow the franchise into a high performing, statewide North Carolina community bank.”
The path toward achieving that goal appears to involve becoming the seed that will ultimately sprout into Dogwood State Bank, a de novo initiative that was announced last summer. In a news release last July, longtime banker Steven Jones laid out plans for Dogwood, a statewide community bank to be headquartered in Raleigh. He would become its CEO, and Scott Custer, former president and then-senior officer of Wilmington’s Live Oak Bank, was expected to become its chairman. Custer left Live Oak Bank in November.
Jones’ and Custer’s professional relationship dates back to their involvement with VantageSouth Bank, which was absorbed by Yadkin Bank. Yadkin bank merged with Pittsburgh-based FNB in March 2017.
One month after plans for Dogwood State Bank were announced, Jones and his team applied to the FDIC for approval but pulled the charter application in November. With the assets of Sound Bank under its wings, however, Jones has indicated that his team will move ahead with plans for Dogwood State Bank.
A reported agreement for Jones and several associates to take over management of Sound Bank was confirmed by Tuesday’s news release, in which Sound Bank officials stated the bank had restructured its board of directors and senior executive team.
“Steven Jones has been appointed as a Director and Chief Executive Officer of the Bank and Scott Custer has been appointed Executive Chairman of the Board of Directors,” the release stated.
"I am excited to announce the successful recapitalization of Sound Bank," Jones said in the release. "We believe that the Bank is uniquely positioned to take advantage of significant dislocation in our markets created by the recent wave of North Carolina community bank acquisitions. We have assembled a very experienced senior management team and board of directors who have successfully executed this type of growth plan in the past. I look forward to sharing more about our plans, including the anticipated rebranding of the franchise to Dogwood State Bank, in the coming months."
Among other members of the bank’s restructured officers are David Therit and Natasha Austin. Therit will serve as Sound Bank’s chief financial officer and Austin as chief administrative officer. The two are members of the team Jones assembled last summer to launch Dogwood State Bank.
Sound Bank currently has seven locations in Eastern North Carolina. Its plans, according to the release, are “to enter the Raleigh and Charlotte markets later in 2019 and ... have key senior executives based in each of those new markets.”