Merit Bank, a Huntsville-based community bank, has been one of the top 10 fastest-growing Alabama banks since it was founded in April 2019 by a group of area commercial bankers and business leaders.
The shareholder-owned bank provides all types of general banking services but primarily caters to small and medium-size businesses, their owners and other professionals throughout North Alabama with commercial banking, private executive banking and agricultural lending, says Will Heaps, the bank’s president and chief executive officer. The bank serves a diverse business clientele, including rocket scientists and farmers. “As they say of our area, from the cotton fields to the moon,” he says.
Merit’s founders predetermined that consumer banking was well covered in the Huntsville area but saw a need for a locally based bank with a commercial focus. “Being locally owned and operated is important to commercial customers who want to be able to call and talk to their banker, who then can make a decision on the spot rather than having to answer to a corporate office looking over their shoulder,” Heaps says.
Since opening its Huntsville headquarters in July 2019, Merit’s assets have grown to more than $270 million, and the future looks bright — not only because of the bank’s popularity but the strength of the local economy, Heaps says. Huntsville now is the most populous city in the state, according to the 2020 U.S. Census. “While there were $7 billion in deposits in this area in 2018, now there are $11 billion,” Heaps says. “And there’s still a lot of momentum in the market. The economy continues to grow with such additions as Mazda Toyota, Amazon and the new FBI headquarters.”
Back in 2018, there were more than 30 banks in the Huntsville market, but at the time, only one was locally owned and operated, notes Mark McIntyre, Merit’s chief banking sales officer. “Other, smaller cities in Alabama, like the Shoals and Cullman, had multiple locally owned banks, but Huntsville, an economic engine for the state, didn’t,” he says.
That one other bank, Progress, has since merged with Greenville, South Carolina-based United Community Banks, which has about 200 offices in the Southeast. Merit now is the only bank owned and operated in Huntsville, Heaps says. “Others are interested in opening community banks, but it’s not easy to raise the capital and get FDIC approval,” he says. “We were able to initially raise $25 million from 200 shareholders, business owners and financially active individuals in Huntsville and North Alabama, and then in 2022 we raised an additional $17.4 million from 80 new shareholders.”
Starting a new community bank was the brainchild of Chad Falciani, a Huntsville-area serial entrepreneur, who suggested it to McIntyre, his longtime commercial banker and friend. Falciani currently serves on Merit’s board of directors and is founder and CEO of Strategix Medical Solutions, a precision medical manufacturer in Madison. Falciani’s background includes consulting on mergers and acquisitions for a private equity group acquired through one of his enterprises. “Chad had been involved with numerous businesses, but had always wanted to start a bank,” McIntyre says.
The timing for such an enterprise seemed right to both men. “We put together a plan, and I said ‘Now we’ve got to put together the right team, find the right group of people with defined roles,’” says McIntyre, who at the time was a senior vice president of commercial banking for ServisFirst Bank.
Heaps, Frank Aldag (currently Merit’s chief operating officer) and Hill Womble, all then veteran executives at ServisFirst Bank, were tapped to help start the new bank, serving on the bank’s internal management team, as well as its board of directors. Womble has since left the group. Jordan Crow, who had commercial banking and real estate experience, was chosen to become part of the internal management team but is not a board member. “Our group talked about it during the summer of 2018, and then in September, right after Labor Day, we all left our jobs to do what we needed to do to start Merit Bank,” McIntyre says.
In addition to Falciani, a handful of outside management team and board members were enlisted as part of the founding group. “Our outside directors have diverse backgrounds and brought unique skills to the table,” McIntyre says. “It was instrumental to the success of the bank to pull all these individuals together.”
Kevin Heronimus, who currently serves as chairman of the board, was a space program engineer before starting a series of successful technology companies. Steven Cost was tapped because of his accounting, financial administration and strategic planning experience with companies including Hexagon Safety & Infrastructure, where he serves as president. Jeff Huntley worked in management consulting before purchasing Huntsville’s T-H Marine, which he has grown from a small manufacturer to one of the largest accessory suppliers in the industry. Brent Romine’s government contracting industry experience includes public service as MIT’s Lincoln Laboratory assistant head of the air and missile defense division, as well as starting his own scientific, engineering and technical services company.
To capitalize the new bank, founders targeted business owners and financially active individuals throughout North Alabama to purchase stock. To expedite forming the bank, in April 2019 the group purchased the second smallest bank in the state, The Citizens Bank of Valley Head, which held $28 million in assets, Heaps says. “We could have started a bank from scratch but it would have taken a lot more time to get through the FDIC’s approval process,” he says.
The Valley Head bank, which now has two active Merit Bank branches, focused on rural personal banking. “We obtained their charter, changed the name to Merit Bank, re-branded to primarily providing commercial banking and relocated the bank headquarters to Huntsville,” Heaps says. “While our niche is commercial banking, we provide all the services any bank provides, including home loans, equity loans and auto loans.”
The former Citizens Bank continues to serve the Valley Head area community, and the Merit Bank team considers the branches a valuable part of their business.
Merit founders believe local banks and credit unions had Huntsville’s general consumer market well covered. “We do consumer banking but it’s primarily for our commercial customers,” McIntyre says. “We tend to go after our banking customers often from referrals vs. using mass marketing to drive customers to us. It’s a rifle vs. shotgun approach.”
The community bank’s management is focused on meeting customer’s needs, including by providing a seamless technology platform that’s vertically integrated, Heaps says. “While most community banks offer good service and local decision making, often their technology is not up to par,” he says. “When we formed, we decided to get the best technology out there. We look and feel like a Wells Fargo or Bank of America in terms of our technology. We want to offer the best of both worlds.”
Merit Bank initially opened with 10,000 square feet of leased space in downtown Huntsville. A 3,000-square-foot satellite was added to accommodate the bank’s mortgage department.
Because of the bank’s tremendous growth, its headquarters will now be relocated to 20,000 square feet at The Range, a new office development on Governors Drive in Westside Huntsville. The move is expected by early 2024, Heaps says.
The bank opted to lease space rather than buy because of the quicker turn around and lower expense, McIntyre says. “Because of opening a new business ourselves, we now have a better understanding of what our customers go through. Our bank is closer to the entrepreneurial spirit,” he says. “We put businesses in business.”
Kathy Hagood and David Higginbotham are freelance contributors to Business Alabama. She is based in Homewood and he in Decatur.
This article appears in the May 2023 issue of Business Alabama.
