Rewriting the terms: North Carolina financial institutions are rethinking everything from branches to loans while addressing regulations and a new generation of customers.

• Position: BANKING AND FINANCE ROUND TABLE - Interview

Tax and regulatory reform, consolidation, technology and interest rates are changing North Carolina banking. What does the future hold for it? Can financial institutions prosper under new regulations? How is technology changing the industry? BUSINESS NORTH CAROLINA and the North Carolina Bankers Association assembled a panel of experts to answer these questions. Participating were James Cherry CEO of Charlotte-based Park Sterling Bank; John Fox Mid-Atlantic region president fir Memphis, Tenn.-based First Tennessee Bank, which has offices in the Triangle, Triad and Charlotte; Terry Hutchens, managing partner of Fayetteville-based Hutchens, Senter, Kellan & Pettit PA; Matthew Martin, regional executive of the Federal Reserve Bank of Richmond's Charlotte branch; Garry Rank, shareholder in the financial institutions practice of Greenville, S.C.-based Elliott Davis LLC; Ed Willingham, president of Raleigh-based First Citizens BancShares Inc.; and Thad Woodard, president and CEO of Raleigh-based North Carolina Bankers Association. The round table was sponsored and hosted by Hutchens Law Firm. Accounting and consulting firm Elliott Davis provided additional support. Peter Anderson, BNC special projects editor. moderated the discussion. The following transcript has been edited for brevity and clarity

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What's the current climate of banking and finance in the state?

Willingham: It's getting better, but it is not robust. Most banks are focused on the same clients, so competition is as stiff as ever. That narrows margins and spawns compromises on credit standards and terms. First Citizens acquired six failed institutions from the Federal Deposit Insurance Corp., and in almost every case lenders were chasing inflated real-estate prices. When the housing bubble burst, those banks didn't have any collateral. North Carolina didn't have the volatility in real estate the same way Florida, Georgia and California did.

Cherry: The industry here, as it has across much of the country, has moved from an asset-quality crisis to a net-interest-margin crisis, which will probably continue even if rates increase.

Hutchens: A large part of our practice is representing creditors from across the country. Over the last five or six years, it seems banks in North Carolina have fared better than those elsewhere.

Woodard: The industry is changing. Looking back is just wishful thinking. It is scary to look ahead because it is an untraveled road. The way we did business is going to change dramatically. That gives a new generation the opportunity to cope with new challenges.

What put financial institutions in this situation?

Martin: There are many reasons including the Great Recession, but it's like when a plane falls out of the sky: It's not just one problem but a series of them. Incentives were misaligned, so banks are dealing with the fallout. Then the Dodd-Frank Wall Street Reform and Consumer Protection Act, which aims to prevent another financial crisis, was passed. Then you throw in other things such as technology. It's a lot to cope with in a little bit of time.

Willingham: North Carolina probably had fewer bank failures per capita than many other states, especially in the Southeast. The regulatory environment here has always been good, especially for...