Banner year for de novos

December 20, 2018 1:07 PM

Groups hoping to open new banks hit their stride in 2018.

Through Dec. 13, the Federal Deposit Insurance Corp. had approved 14 bank applications, with seven more pending. In comparison, the agency signed off on 10 total charters during the prior two years.

Jelena McWilliams, the new FDIC chairman, has signaled that the agency will be more supportive of de novo banks. The FDIC, for instance, recently announced that it is seeking public comment to improve the application process.

While there is more bank activity compared with recent years, it is nowhere near the volume of banks that the FDIC was approving a decade ago. In 2008, for example, the FDIC approved about 100 new banks.

De novo applications this year have come from all over the country. Three of the 13 banks approved for deposit insurance have already opened: CommerceOne Bank in Birmingham, Ala.; Gulfside Bank in Sarasota, Fla.; and Studio Bank in Nashville, Tenn.

Groups in North Carolina, Massachusetts, Michigan, Florida and Oklahoma hope to open early next year.

Organizers that receive FDIC approval still have to complete their capital raises, hire staff, set up core processors and obtain final approvals before opening.

Here is an overview of the groups that have received the green light from the FDIC in 2018.

Coastal Community Bank in Florida

Organizers of Coastal Community Bank in Hollywood, Fla., are hopeful that the bank can open by March.

The group, which received approval from the Office of the Comptroller of the Currency in June and FDIC backing a month later, will have a branch about 20 miles north of Miami.

Joe Dorsey, previously chief operating officer of Community Bank of Broward in Florida, is set to become Coastal’s president and CEO. Dorsey said the group has raised about half of its $22 million in initial capital.

Dorsey said the application process has gone smoothly so far and has been less arduous than he expected. Regulators have been receptive to Coastal’s plans and helpful throughout the process, he said.

The group has to build out its office space and finish raising capital before opening.

Dorsey said the group has recruited seasoned bankers to join the effort. Coastal is also using Jack Henry & Associates as its core processor to offer small businesses and individuals “all the bells and whistles,” Dorsey added.

“We are launching Coastal Community Bank out of a sincere belief that good banking is synonymous with good relationships,” organizers said on the bank's website. “As we renew old friendships and customer connections, we are introducing advanced banking solutions that will bring value-added services.”

CommerceOne Bank in Alabama

CommerceOne was the first de novo effort to receive regulatory approval this year.

The bank, approved by the FDIC in March, became Alabama's first post-crisis bank when it opened in June. Organizers raised more than $48 million in initial capital.

Kenneth Till (pictured), who was chief financial officer of First Partners Bank when it sold itself to Progress Bank, is CommerceOne's CEO. Till also spent 16 years at Regions Financial.

The new bank's president, Art Freeman, also has ties to First Partners.

“We have assembled a team that knows this market and industry to its core, and our management team has a proven history of success in curated financial products,” organizers state on the bank's website. “Our offerings are our service and our people.”

Megan Alexander Photography

Community Bank of the Carolinas

Community Bank of the Carolinas in Winston-Salem, N.C. received conditional approval from the FDIC earlier this month.

The bank must secure approval from its state regulator and raise $25 million in capital to become North Carolina's first new bank since the financial crisis. Three other groups in the Tarheel State have been vying for that distinction.

Organizers said in November that they had raised nearly $14 million.

The group hopes to open by early March if all goes as planned, said Jim Monroe, who would serve as the bank’s chief financial officer. Monroe added that discussions with regulators have gone well so far.

The group said in a press release announcing the conditional approval that it has commitments from more than 400 local investors.

“We’ve had good momentum and a great deal of interest in our stock offering,” proposed Chairman and CEO Skip Brown (pictured) said in the release. “Investors believe the time is right to bring back community banking. Many customers are simply being underserved by big banks.”

Pasadena City Hall building sign detail in southern California.

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Generations Commercial Bank in New York

Seneca-Cayuga Bancorp in Seneca Falls, N.Y., set out this year to charter a commercial bank so it can offer banking services to cities and other municipalities.

The company applied to the FDIC in May; it received approval on Oct. 10.

A.G. Cutrona, Generations' director of growth and profitability, said in May that the company wanted to start a commercial bank because New York laws bar mutuals from banking municipalities.

“The limited purpose commercial bank is an important development for Generations and for our communities,” Menzo Case, Generations' president and CEO, said in a press release.

Grasshopper Bank in New York

Grasshopper Bank, previously called New York Venture Bank, has been in a quiet period for several months.

The group received FDIC approval on July 3 but has not yet opened. The group’s website states: “Grasshopper is a new type of financial services company, launching soon.”

Organizers did not respond to American Banker’s interview requests.

The group must raise $96 million in initial capital, according to the FDIC's approval order. Organizers plan to focus on New York’s innovation economy.

Judith Erwin, a former executive at Square 1 Financial in Durham, N.C., is expected to became Grasshopper’s president and CEO.

The proposed bank has several well-known directors, including Raj Date (pictured), former acting head of the Consumer Financial Protection Bureau; David Munio, former chief credit officer at Wells Fargo; and William Grant, a former officer with the OCC.

(From left to right): Jennifer Compton, vice chairman; Dennis Murphy, president and CEO; Timothy Clarke, chairman

LORI SAX

Gulfside Bank in Florida

Gulfside Bank in Sarasota, Fla., debuted in mid-November.

The bank, which offers retail, commercial and private banking services, received FDIC approval in September.

The application process took about 13 months, said Dennis Murphy, the bank’s president and CEO. Murphy (pictured, center) was a senior loan officer at Gateway Bank of Southwest Florida, which sold to CenterState Bank last year.

Timothy Clarke, (pictured, right) is Gulfside’s chairman; Clarke helped start two de novos in Florida and started an advertising and public relations firm that he sold in 2005. Jennifer Compton, (pictured, left) is the vice chairman and a local lawyer.

Gulfside organizers raised $23.5 million from 248 investors over eight weeks, Murphy said. Then the group assembled a team, received final approvals, set up a core processor and moved into the office.

Gulfside is the second de novo to open in Florida in the last year. Winter Park National Bank opened in 2017.

Coastal Community hopes to open in the fourth quarter.

“It’s been great so far,” Murphy said in an interview. “We’ve been really excited and humbled by the outpouring of support from the local community.”

Lexicon Bank in Nevada

A group in Las Vegas is hoping to form Lexicon Bank.

Lexicon, which received regulatory approval on July 24, has gone through two name changes. It was most recently called Catalyst Bank.

The group applied earlier this year to open a branch in the western part of Las Vegas. Lexicon has a website largely designed to bring in investors. The group must raise at least $20 million in order to open.

John Miller, a veteran bank investor, is set to serve as Lexicon's CEO. He is a director at Pioneer Bank in Dripping Spring, Texas, and Mission Valley Bank in Sun Valley, Calif., according his LinkedIn profile.

The group has not yet announced an opening date.

TOM PROUT

Mi Bank in Michigan

Mi Bank in Bloomfield Township, Mich., is looking to raise up to $30 million.

The proposed bank, which received FDIC approval on Oct. 1, is on pace to open in March. The bank would be based about about 25 miles northwest of Detroit.

Rob Farr, (pictured) who was president and CEO of Birmingham Bloomfield Bancshares until last year's sale to Arbor Bancorp, is set to serve as the new bank’s chairman and CEO. Tom Dorr, previously an executive at Birmingham Bloomfield, will become Mi Bank’s chief financial officer and chief operating officer.

“When we open the doors ... we will have in place experienced bankers who understand the importance of responding quickly and effectively to each of our customer’s distinctive needs,” Farr said in a recent press release. “We’re a local organization and we understand the unique dynamics and challenges of Michigan companies.”

New Valley Bank & Trust in Massachusetts

Organizers of New Valley Bank & Trust are getting closer to opening Massachusetts’ first bank since 2008.

The Springfield, Mass., de novo effort, which originally planned to open as Green Apple Bank, received regulatory approvals in November. Founders are targeting an opening data in the first quarter.

The group must raise at least $25 million. Organizers have said they expect more than 300 local investors to participate in the capital raise.

“We are excited to clear these important hurdles in the formation of New Valley Bank & Trust,” Jeffrey Sullivan, who is expected to serve as New Valley’s president and CEO, said in a recent press release.

“We are building a team of talented bankers who are all working very hard to make this dream a reality," Sullivan added. "The energy and vitality of our team is a direct result of the positive feedback and encouragement we have received from the community.”

The bank would serve individuals, along with small and midsize businesses, in western Massachusetts.

Sullivan said in an interview earlier this year that New Valley plans to rely on technology and experienced talent to compete.

US state flag of Ohio with great detail waving in the wind.

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Ohio State Bank

The FDIC approved the application of Ohio State Bank in Columbus in late November.

Organizers, including veteran banker Dave Mallet, are trying to form the state's first new bank since 2007. Mallet was CEO of First Bexley Bank when it sold itself to First Financial Bancorp in Cincinnati in 2014

The bank's organizers, which applied to the FDIC in May, plan to offer traditional community banking services as well as business banking. Organizers must raise $24.5 million, according to the FDIC's approval order.

“In central Ohio, we had a plethora of community banks up until this past year,” Mallett said in an interview earlier this year. “Every single one of them has been sold. So the short answer is that Columbus and the surrounding communities need a strong community bank and we would like to fill that void.”

Fotolia

Piermont Bank in New York

The group behind Piermont Bank in New York hopes to build a new bank for the Big Apple.

Organizers must raise $100 million in initial capital. The group aims to become a nationally chartered bank that serves small and midsize businesses around New York area.

Several bankers with ties to East West Bancorp are involved with Piermont, including Wendy Cai-Lee, who would serve as president and CEO.

Organizers wrote on Piermont’s LinkedIn page that they are “launching a new generation of commercial banking with a laser focus on helping clients build and grow business.”

“We do not aspire to be everything to everyone," the LinkedIn page says. "Our team is passionate about supporting privately-owned business, especially multi-generation family-owned enterprises. We appreciate, respect and honor family legacy, business history and aim to address banking needs in the most practical, effective and relevant way for our clients.”

Aaron Dorn, CEO and President of Studio Bank

Studio Bank in Tennessee

Studio Bank in Nashville, Tenn., opened about two weeks after receiving FDIC approval in June.

The de novo, which raised $46 million, serves small businesses, the music industry and the medical sector.

The bank is determined to build a unique brand that appeals to Nashville’s “creators,” President and CEO Aaron Dorn has said in interviews. The group selected a French bulldog named Frenchie as its mascot and occupies an inviting office in a hip neighborhood outside downtown Nashville.

Business is going well for Studio so far, Dorn said recently. The $90 million-asset bank has been able to increase deposits and book loans.

Dorn (pictured) is focused on building a bank that rivals the last batch of de novos in the market that started between the mid-1990s to the mid-2000s.

nmcandre

Tarpon Coast Bank in Florida

Tarpon Coast Bank in Port Charlotte, Fla., is the most recent to receive FDIC approval.

The FDIC signed off on Tarpon Coast’s application on Dec. 13. The group still needs to raise $15 million in initial capital.

Todd Katz is expected to serve as the bank’s president and CEO. He helped start Calusa National Bank, which sold to a Florida credit union in 2015.

Katz was also president of Tarpon Coast National Bank in Port Charlotte until it sold itself to First Busey in Urbana, Ill., in 2005. Now he hopes to revive the name when organizers open the bank in 2019.

“The organizers of Tarpon Coast Bank believe the timing is right to bet on our local community, its development and its growth needs and invest in a new bank,” the group stated in marketing materials posted on LinkedIn.

David McNeese

Watermark Bank in Oklahoma

Watermark Bank in Oklahoma City is angling to open next month.

The de novo, which has received approvals and is raising capital, is targeting a Jan. 22 opening data, said Matthew Pollock, who would be Watermark's CEO (pictured on left, with CFO Gary McClanahan). The FDIC approved the group's application for deposit insurance on Sept. 5.

The group has raised $25 million and hired 11 employees, Pollock said. It hopes to add a few more in the coming weeks.

Organizers, who moved into office space this fall, have been focused on building out systems and product offerings, Pollock said.

“Our shareholders are anxious to start banking with us and have already started to tell the story in the community,” Pollock said. “We are very proud of the board ... we have put together, which includes some of the most well respected community leaders and entrepreneurs in Oklahoma City.”