CapStar Financial enters North Carolina, expands in Tennessee

CapStar Financial in Nashville, Tennessee, is on a hiring spree.

The $3.2 billion-asset bank said it would enter Asheville, North Carolina, and expand in key Tennessee markets through a series of new recruits.

For CapStar, the move into Asheville also marks its entrance into North Carolina and its first foray beyond Tennessee’s borders. It hired veteran Asheville banker Martin Nesbitt, formerly a senior commercial lender at First Horizon Bank, to build and lead a team of bankers in western North Carolina.

The bank said that Nesbitt’s family has deep roots in the Tar Heel State, with his father, grandfather and grandmother collectively serving in the North Carolina House of Representatives and Senate for nearly a half a century.

Timothy Schools, president and CEO of CapStar, described Asheville as a growth market in the tourism-driven Blue Ridge Mountains region that is underserved by community banks. CapStar has a stated goal of identifying expanding cities in and around Tennessee that are short on local banks following years of mergers and acquisitions. CapStar is focused on hiring bankers and growing organically in new markets rather than pursuing M&A.

“One of the South’s most attractive places to live and work, Asheville lost the majority of its community banks over the past decade and is now principally served by extremely large banks, often with less personal service and bankers out of Charlotte,” Schools said in a press release Friday.

“As an Asheville native, Martin’s deep local banking experience and the Nesbitt family’s long history of community involvement are the perfect match for CapStar’s unique, highly responsive and flexible business model,” Schools added.

This expansion follows recent entries in eastern Tennessee markets — Knoxville and Chattanooga — that have increasingly contributed to CapStar’s loan growth, noted D.A. Davidson analyst Kevin Fitzsimmons.

“The move strikes us as very consistent with” CapStar’s strategy to “expand into attractive growth markets via lift-outs” of talent from competitors, Fitzsimmons said.

CapStar on Monday said it hired four additional local bankers in Chattanooga, doubling the size of its team there, as well as another commercial lender in Nashville.

“In an effort to invest excess capital, diversify risk and increase revenue growth, we have attracted leading banking teams in Asheville, Chattanooga, and Knoxville over the past two years,” Schools said.

“Our initial results have exceeded expectations, with Chattanooga and Knoxville approaching $400 million in total assets, achieving pre-provision profitability in six months,” he added. Along with Nashville and Asheville, CapStar “is now strategically positioned in four of the nation’s strongest markets.”