2017 Business handbook.

• Author: MacLean, Laura

A new president, a new governor, 75 straight months of U.S. job creation and relief that controversy-laden 2016 is over--there's lots of good reasons for optimism in 2017. That is especially true for North Carolina businesses, many of which are strengthening amid the headline-grabbing political rhetoric. Small-business optimism nationally is at the highest level since 2006, and North Carolina ranked among the top 10 states for job growth in 2016 for the first time since the recession, according to Wells Fargo Securities researchers. Best of all, federal data shows that it isn't just the biggest cities that are expanding: Greenville, Hickory and Rocky Mount also added jobs last year, reversing recent trends. To give a snapshot of the state's economy, BUSINESS NORTH CAROLINA selected statistics for 10 key industry sectors and asked a diverse group of leaders to share perspectives on important trends. The general consensus is for continued economic expansion, bolstered by more tax cuts and less government oversight in the post-Obama era. Comments were edited for brevity and clarity.

BANKING

Happy days, here again

Few sectors will benefit more from Donald Trump's surprise victory than banking amid expectations of lower taxes, broader profit margins and reduced regulations. All of that is likely to happen, says Rick Callicutt, chief executive officer of High Point-based BNC Bancorp, which has doubled in size over the last five years and is valued at more than $1.5 billion.

RICK CALLICUTT

CEO, BNC BANCORP

WHY HIM

BNC Bancorp's share price has tripled since Callicutt became CEO in June 2013, outperforming in-state rivals. A High Point University graduate, he is chairman of the N.C. Bankers Association.

WHAT IS YOUR MAIN PRIORITY FOR 2017?

We are very focused on growing in the markets in which we have a presence. In some markets, we are still in the first inning.

We have about $900 million of business in the Triangle, but we could be at $5 billion. Acquisitions are not off the deck, but there would have to be a real reason to do something. For us, the field of potential acquisitions is a lot shorter list than it was. A little break for us is welcome. The expectations of sellers have gone up, so the metrics of the deal are really around the price-to-book value ratio, how much dilution you will take, and future earnings per share. A lot of institutions aren't making a lot of money. For it to be compelling, we have to show we are advancing the ball.

HOW WILL TRUMP AFFECT BANKS?

The real impact will come from a tax cut. There could be a modest savings in terms of regulatory expense and a modest improvement in net interest income. But if you look at a 20% tax rate, that's a big number. It takes 60 senators to vote for a cut, so it will take some bipartisan support. After having several meetings with our senators and congressional delegation, the tone from the Democratic side of the aisle is a lot more open to conversation than before the election. Of 33 Senate seats coming up for election in 2018, about 20 are held by Democrats. If those people are standing in the way of progress, they could get run over.

WHY DID BANK STOCKS RUN UP AFTER THE TRUMP VICTORY?

Half of the battle is confidence, and we recently saw a big positive movement in consumer confidence. It probably was too far, too fast. But I'm hoping nothing happens that dampens that confidence.

HOW DOES OWNING HIGH POINT BANK, A DEAL COMPLETED IN NOVEMBER, IMPROVE YOUR COMPANY?

High Point Bank manages $1 billion in assets, so it has been exciting to marry our wealth and private banking areas with that trust division. Banks used to have a lot of that trust business, but most of it has gone away. Most of High Point's trust division is confined to the Triad, so we look forward to taking it to Raleigh, Charlotte and our other markets.

HOW DOES NORTH CAROLINA COMPARE WITH SOUTH CAROLINA, WHERE YOU HAVE 16 OFFICES AND $1.5 BILLION IN ASSETS?

South Carolina has done a helluva job recruiting industries. But North Carolina is doing a good job also with our road system and infrastructure improvements. I heard state economic developers say recently they were working on 75 to 100 deals, so there are lots of companies looking to move here.

DOES FNB CORP.'S PURCHASE OF YADKIN BANK PRESENT OPPORTUNITIES FOR BNC AND OTHER PEERS?

Integrations are always challenging, but they have some very capable people over there. There are a fair amount of Yadkin people staying on board. Well see.

DID YOU BID FOR YADKIN?

It wasn't part of our strategic plan. We were already in those markets and it would have been painful from a people standpoint. I didn't see how we were going to advance the ball.

NORTH CAROLINA HAS HALF AS MANY BANKS AS 20 YEARS AGO.

HAS THAT REDUCED YOUR TRADE GROUP'S POWER?

The 50 or 60 banks that are still around are very strong, and the N.C. Bankers Association is one of the top three banking organizations in the country. We feel really good about where we are and our chances to make a real difference.

DOES FINANCIAL-TECHNOLOGY INNOVATION THREATEN YOUR REVENUE SOURCES?

You'd be shocked at the amount of money that has been invested in fintech that hasn't worked out. We're talking about huge losses. We have people approach us all of the time, but we've never been the first to jump in the deep end of the swimming pool. Most of the products, even those that are great ideas, haven't shown how to make money. We have to provide great service, stick to our principles and not lose sight of our mission.

HOW IS HOUSE BILL 2 AFFECTING YOUR COMPANY?

We'd like to see it resolved and off the deck. I've not had a personal situation in which a transaction was canceled, but I've had conversations with people who have.

HOW DO YOU RATE NORTH CAROLINA'S REGULATORY CLIMATE?

The state doesn't have a lot of control over banks or the ability to make a major impact. Most businesspeople would tell you they support efforts to incentivize growth and ways to encourage more companies to consider our state. We always need to look at our local regulatory environment to make sure it isn't impeding progress.

GOAL FOR 2017

I want to spend more time on my boat. Given the time I had in 2016, it is not a high bar.

Caption: SHRINKING POOL STATE-CHARTERED BANKS ARE CONSOLIDATING, WITH FEWER REPORTING LOSSES AMID A STRONGER ECONOMY.

WHO HOLDS THE MOST MONEY? NORTH CAROLINA BANK DEPOSITS (AS OF 6/30/2016) N.C. IN STATE MARKET COMPANY OFFICES DEPOSITS, SHARE (BILLION) 1 BANK OF AMERICA 165 $158.7 45.69% 2 BB&T 356 54.3 15.62 3 WELLS FARGO 338 53.1 15.27 4 FIRST CITIZENS BANK & TRUST 241 14.8 4.25 5 PNC BANK 148 7.8 2.25 6 SUNTRUST BANK 144 7.6 2.19 7 YADKIN BANK 97 5.2 1.51 8 PACIFIC WESTERN BANK 1 4.4 1.27 9 BANK OF NORTH CAROLINA 35 3.7 1.06 10 FIFTH THIRD BANK 58 3.2 0.91 11 FIRST BANK 76 2.6 0.74 12 CAPITAL BANK 51 2.5 0.71 13 COMMUNITYONE BANK * 45 1.9 0.55 14 SOUTHERN BANK AND TRUST 52 1.6 0.47 15 THE FIDELITY BANK 56 1.5 0.44 Source: FDIC * acquired by Capital Bank October 2016 PROFITS OF NORTH CAROLINA BANKS FIRST NINE MONTHS OF 2016 COMPANY HEADQUARTERS NET INCOME (MILLION) BANK OF AMERICA Charlotte $14,747.00 BB&T Winston-Salem 1,758.9 FIRST CITIZENS BANK & TRUST Raleigh 177.5 CAPITAL BANK Charlotte 51.3 BANK OF NORTH CAROLINA High Point 50.7 YADKIN BANK Statesville 45.0 FIRST BANK Southern Pines 20.7 PARK STERLING BANK Charlotte 18.1 LIVE OAK BANKING Wilmington 14.7 COMMUNITYONE BANK * Asheboro 10.8 Source: FDIC * acquired by Capital Bank October 2016 LIFE SCIENCES

LIMITLESS POTENTIAL

"North Carolina: first in flight, first in life!" cheered Martine Rothblatt, throwing her fist in the air before an audience of students and researchers at N.C. State University in November. The company she founded 21 years ago, United Therapeutics Corp., is part of North Carolina's burgeoning life-sciences industry. Now, Rothblatt aims to make the state a leading manufacturer of transplantable organs through a subsidiary that preserves and restores donor lungs. With no prior experience in drug development, the former lawyer started United Therapeutics after her daughter, Jenesis, developed pulmonary arterial hypertension, a rare, incurable condition in which arteries in the lungs and heart constrict, making it hard for blood to flow. The Silver Spring, Md.-based company, which employs about 300 people at Research Triangle Park, had revenue of nearly $15 billion in 2015 and is now valued at more than $6 billion. Shares controlled by Rothblatt topped $500 million in mid-January.

MARTINE ROTHBLATT

CEO, UNITED THERAPEUTICS

WHY HER

Few CEOs are more forward-thinking than Rothblatt, whose diverse career includes founding SiriusXM radio and the Terasem Movement Foundation, which promotes the concept of extending life by creating a digital backup of our consciousness. Born as a male and undergoing gender reassignment in the mid-1990s, Rothblatt calls House Bill 2 "counterproductive for North Carolina," though she has said her company remains committed to its operations here.

WHAT WAS THE INSPIRATION FOR YOUR COMPANY?

I needed to save Jeni's life. I had donated $2 million to 10 different doctors to do research, and nothing was resulting. I knew that donating money was never going to result in a cure for her, especially since she was getting worse really, really fast. When I found out there was this medicine--it wasn't really a medicine, it was a molecule because there wasn't anything approved--it was the only chance I had. Everybody said to me, "Martine, it could be toxic. You know, it could have all kinds of problems." Now I'm very sophisticated in drug development, but back then, I didn't know anything. I just had the force of willpower that I had to do this for Jenesis. I said to myself, "If it's the last thing I ever do in my life, it's to get this drug approved for Jenesis." And if you ever meet her, she's an amazing person. She's the strongest person I know.

BIOTECHNOLOGY IS A GROWING SECTOR IN THE STATE. WHAT...