Larry Barbour, CEO, North State Bank

Invest: spoke with Larry Barbour, CEO of North State Bank, about keeping community banking relationship-driven amid rate volatility, technology shifts, and continued consolidation. “I have seen many banks come and go, and new banks being chartered are much rarer than they used to be. In that environment, a community bank has to be clear about its purpose and culture,” Barbour said.

How has the past year shaped the operating environment for community banks in North Carolina, and what stands out to you as the most meaningful change?

The pace of change has been relentless, and the biggest driver is interest rates, not just where they are today, but the uncertainty around where they are headed. In more than 50 years in banking, I do not remember a period when the path felt as unpredictable as it does now.

A second major factor is the relationship between the government and the private sector, especially monetary policy and how those decisions flow through the real economy. Banks are deeply impacted by forces beyond our control, and interest rates sit at the top of that list. The policies have felt inconsistent, and the downstream effects are felt by businesses, households, and community banks trying to make long-term decisions.

Banking has become increasingly commoditized, with a greater focus on securing the highest rates on deposits and the lowest rates on loans. Interest rates are important, but that singular mindset pulls attention away from learning who your bank is, what it values, and whether it is planning for the future.

North State Bank was founded in 2000 in the spirit of independence. I have seen many banks come and go, and new banks being chartered are much rarer than they used to be. In that environment, a community bank has to be clear about its purpose and culture.

What role do community banks play today that larger national institutions often cannot, especially in supporting local entrepreneurs and owner-operated businesses?

Banking should be value-based, not commoditized, and that value comes primarily through people. If you want to grow your company, growth does not necessarily mean size. Growth means the ability to understand yourself better, to have corporate self-awareness, to know your purpose and your values, and perhaps most importantly, to know where you are going.

At North State Bank, we focus on growing our people because that is how we grow the bank. Education and continuous learning matter. We read 8 to 10 books a year together, because everybody at North State Bank is expected to be a leader.

Relationships are the difference. Every person communicates; few people connect. When people feel seen, valued, heard, and understood, things change. That is true in personal relationships and in banking. You can compete on products and services, but nobody can compete with culture. Our culture reflects our values, beliefs, and behaviors. We empower our bankers. There are no loan committees here. A small business owner should be able to sit down with a leader who knows the community and can make a responsible decision with the customer, rather than sending the relationship into a back room.

It is expensive to run a bank, and regulation is expensive. Our people understand what it takes to operate the bank and how net interest margin works. If we are going to create value for customers, customers also need to create value for the bank. That is not a conflict. It is a mutual value.

North State Bank was not created to be sold. We were built to last, and not built to flip. That shapes how we think about entrepreneurs and owner-operated businesses and the long-term health of the communities we serve.

Digital banking expectations continue to shift. How does a relationship-driven bank balance technology with the personal service that differentiates you?

Digital banking is alive and well, and I use it myself. I respect technology and the role it plays in banking and in business. It’s important to note that technology can become a separator if it replaces relationships instead of supporting them. It has to supplement and enhance relationships, and it has to be at the call of the human side.

If you open accounts only on a digital basis, you never establish that feeling of being seen, valued, heard, and understood. At North State Bank, if you call us, a live person answers the phone. When you walk into our bank, someone greets you. People notice that because it is not as common as it should be, and for us, it is not just what we do; it is who we are.

Once the relationship is established, technology becomes a tool that makes service easier. But it cannot carry the full meaning of communication. Body language and tone of voice matter, and those are absent in purely digital interaction. Technology should make life simpler and reduce friction, but it cannot replace real connections.

How is demand for SBA and specialized lending changing, and what does it suggest about business confidence and expansion plans in 2026 and beyond?

The Small Business Administration has been one of the most practical tools the government has created because it helps people access funding to get their business up and going. Personally, I do not love the word qualify. Character has to be part of lending decisions and how we determine whom we help.

We have a dedicated SBA division, and it is meaningful for our bank. SBA lending also expands our reach. We are a community bank based in North Carolina, but SBA allows us to serve borrowers in other parts of the country. The challenge is building and maintaining relationships with people who may never come into the bank, but it can work with the right leadership and communication.

SBA lending is also valuable because it builds capacity. During the PPP era, we were able to respond quickly because we already had the expertise and the people in place through SBA work. That experience reinforced something important: when the economy is under pressure, relationships matter even more.

We believe in continuity when times get hard. During the Great Recession, we lived by a simple idea: if you are honorably struggling, we are going to struggle with you, honorably. Many big banks move a troubled relationship into a special assets group. We did not do that. The same person you worked with at the beginning is the same person you continue to work with, because our bankers are empowered to make decisions.

Looking ahead, what opportunities and risks will most influence investment, lending, and regional economic momentum over the next few years?

I do not think experience alone is the best teacher. Evaluated experience is. You have to look back, ask what happened, and adjust your thinking and decisions.

One concern I have is that we are moving toward a more binary economy, where the gap between those who have and those who do not continues to widen. The middle matters. If you want practical indicators of how the economy is doing, watch car sales and watch real estate sales. Those two categories tell you a lot about consumer confidence.

Another issue is consolidation. There are far fewer independent banks today than there were decades ago, and the trend continues. A system with too few banks cannot serve communities as effectively. It becomes easier to regulate, but harder to serve communities with flexibility. That is why we are not for sale. We are here to add value to the people we serve, including young people who are building their lives and businesses.

Character still matters. Integrity matters. Follow-through matters. When you reach people in their hearts, that is how trust is built. Community banks can still play a critical role by staying close to the community, empowering leaders, and keeping relationships at the center of the work.