Bankers have brought more than capital to the table in Columbia. Their belief in this city led to many projects’ success, of course, but Columbia and the state have also benefitted from a core value that the area’s top bankers have shared for decades: a growing local economy is good both for business and for the Midlands as well.
A banker’s vision of public service often goes back to the core functions of the financial institution. Joel A. Smith, III, the dean emeritus of the Darla Moore School of Business at the University of South Carolina and a veteran of decades of South Carolina banking, notes that a bank receives the community’s assets in the form of deposits and through lending, and uses those dollars to invest back in the community.
“A bank’s financial success is directly linked to the economic success of the communities they serve. They ought to care a lot about that success. It’s a naturally synergistic relationship,” says Joel, who launched his career at Banker’s Trust and then, amid the wave of mergers that swept through financial services, continued at NCNB and its successors, NationsBank and then Bank of America.
Robert Royall (Bob), another veteran of the banking scene in Columbia, also sees leadership as a natural role for a banker. “Bankers are natural leaders for their markets through their desire to strengthen and grow opportunities for all sectors to benefit. Creation of jobs with higher per capita earnings are included in the many objectives of bankers who serve their communities,” Bob says.
That sense of connection made it likely that bankers would be right in the middle of major philanthropic efforts, too. From the United Way and the Columbia Chamber to many other philanthropic efforts, bank leaders have been local leaders.
“They saw the value and they had the network to make it successful,” says Jim Smith, another veteran of Columbia banking.
Banking also has a unique economic role to play in the economy of the region with their ability to provide capital. “It is the only institution that can create a dollar,” Bob says. Connections made during a banking career at Citizens & Southern and NBSC would serve him well as he led the S.C. Ports Authority and Commerce Department.
Four major institutions were the leaders in providing that capital in Columbia during the 1970s and 1980s, in addition to many smaller banks, savings and loans in the city and region. Bankers Trust, First National, Citizens & Southern and South Carolina National were the largest sources of capital headquartered in Columbia and participated, singly or cooperatively, in many of the major deals that moved Columbia ahead. Their leaders, among them John Lumpkin at South Carolina National and Hootie Johnson at Bankers Trust, were among the first rank of community leaders as well.
These four institutions were jostling for competition all the time, yet the leadership teams all knew each other and were often in the same meeting room or restaurant together. It was a rivalry, but also quite collegial. Smaller banks did well too, in part by providing a level of personal service that made many customers feel at home, a trend that continues today.
“It was competitive but friendly,” Bob says. “You had to work harder to meet the competition.”
“It was a very tight fraternity,” Jim says as he remembers those days. He built a long career in banking, culminating at NBSC, before becoming a financial adviser at TCG and Associates/Merrill Lynch.
That competition would be set-aside on larger projects, which would often require the combined teamwork of several financial institutions plus the other leading businesses of Columbia to launch. Jim remembers that then-Columbia Mayor Kirkman Finlay gathered top executives of the four big financial institutions together to help start a major downtown project: Palmetto Center, the Main Street complex that would house the headquarters for SCANA and welcome a major hotel, too. The complex today now includes the Hub at Columbia student housing and the Marriott hotel. The project required the economic clout of the four major state banks for financing, plus the teamwork of several other big companies. “I give Kirk Finlay a lot of credit for vision there,” Jim says.
Why did it require the teamwork of several banks? Banking was a much more regulated and territorial industry back then. Modern national banks such as Bank of America did not exist in the 1970s or 1980s, Joel explains. In fact, the United States was far behind other countries in the ranking of its biggest major banks because the financial system was so regional in nature which Joel explains was not good for America.
Also, standard banks were very little involved in residential real estate loans. If a customer came to his bank for a new home purchase, he likely would be sent by his banker to a savings and loan instead. All that would change in the 1980s, and banking would enter a profound cycle of mergers and new business categories.
Entering the decade, states such as North and South Carolina allowed banks to have branches statewide, but the banks had their headquarters in-state. As Joel explains, this meant local leadership, but this also limited the capital that companies could tap into without going to a big New York institution.
“It was a different time,” Joel says. “Many other states had even tighter rules. Georgia was among those states that had separate banks chartered in each county.”
As laws were changed to allow interstate banks, the states that already had statewide banking prospered in the new environment because it was closer to what they were used to. North Carolina in particular got out ahead of the changes that were happening, helping Charlotte become one of the nation’s largest banking centers by the mid-1990s. The new laws unleashed a wave of mergers and acquisitions, first across the Southeast and then across the industry, with bank names and sizes changing year by year.
Bankers Trust merged with NCNB of South Carolina, later to become part of NationsBank.
First National merged into South Carolina National, which later became part of Wachovia (now Wells Fargo).
Citizens & Southern merged with Sovran, then with of NCNB to become Nations Bank and later to become Bank of America.
These mergers and many others changed banking for almost everyone who worked in it, though some smaller institutions have stayed locally focused and pressed on with little change over the decades.
The change certainly affected those who worked in the industry. “It was very exciting, even overwhelming,” Joel says. For those who worked in financial services, it meant years of change and transitions, so the new companies could function well. “It was also stressful on a number of careers,” Joel remembers.
Technology, most notably the automatic teller machine, or ATM, also changed the industry. Joel remembers that his bank was proud of its huge room of computers. He notes with a chuckle that similar computing power is now available in the average smartphone.
“It certainly left some anxiety for a lot of bankers,” Bob says. “Most understood that the old-time era was over.”
Joel sees positives and negatives to the current era dominated by national banks. The big national banks provide a connection to levels of capital that formerly would not have been accessible to an institution with local branches. In decades past, for example, a company such as SCANA would have had to work with a New York institution to issue bonds. Now, he notes, it can work with its local in-state bankers to do that. On the downside, there has been a lessening of the community focus since many banks are now headquartered out of state.
Even those who provided leadership in Columbia banking during the wave of mergers in the 1980s and 1990s had never seen disruption on the scale of the financial crisis of 2008. Bob still marvels at the scale of that downturn. “We had our dips but we didn’t have any major crises,” he says.
South Carolina institutions would take a pounding during the financial crisis, but many other states fared worse. The aftermath has even seen some new banks enter the field successfully, looking to find growth opportunities after other institutions have pulled back.
Trying to start a new bank in this day and age strikes Jim as a huge challenge. It’s tough to identify a market niche that can provide room for growth. “It’s hard to do a startup today,” he says.
Joel also sees any new bank facing a challenge to find room to grow amid the strong competition from current local and national banks. “South Carolina is well-banked,” he says.
One challenge for all banks, especially new ones, is the reduced opportunities to prosper. Bob marvels at the interest rates that have prevailed since the recession, which prompt people to invest their money in places besides bank savings. “I’ve never seen interest rates this low,” he says.
Despite all the changes in banking of recent decades, from national banks to the rise of the ATM and online accounts, there still will be a space, he hopes, for personal consulting and face-to-face banking. Technology has changed that, too, but he still sees that as a vital part of customer service that has not ended. “I hope it never does,” Bob says.