A Welcome By-Product of Displaced Bankers

After a 10 year drought, De Novo activity is finally picking up with the help of some very talented bankers with years of experience under their belts. What could be better than to have these seasoned professionals filling the needs of  businesses and consumers that are in search of a community bank?

At the end of 2013, when 5-Star Bank of Bird-in-Hand, PA got FDIC approval to open a bank, it was required to have initial capital of just  $16 million. That probably wouldn’t fly today (sorry). The requirements for de novos have strengthened tremendously in the past several years. For example, the minimum initial capital required for all 2018 start-ups has exceeded $20 million, some have been more than double that. New banks are expected to lose money for the first couple of years. They need a capital cushion large enough to absorb those losses. Look at the five new banks that have opened so far this year:

3½-Star Beacon Community Bank, Charleston, SC was the first (opening January 8) and the first to open in South Carolina in ten years. It proudly announces it, “was founded by some of Charleston’s most successful and influential community and business leaders.” The initial FDIC approval for this new bank required a minimum initial capitalization of not less than $22 million. Not only did Beacon easily surpass that, it raised an additional $34.1 million in May.

3½-Star Endeavor Bank, San Diego, CA, with an initial capitalization of $26.6 million, opened its doors January 22, 2018. Similar to Beacon Bank (above) it is the product of veteran bankers putting their decades of experience together to help local businesses.

The top three executives at 3½-Star Infinity Bank, Santa Ana, CA, which opened on February 1st, have 115 combined years of banking experience. Its board is likewise comprised of local heavy hitters in the financial and commercial world. Infinity Bank’s initial capitalization was over $30 million.

The final two both opened in June; each had in excess of $45 million in initial capital: 3½-Star Studio Bank, Nashville & 3½-Star CommerceOne Bank in  Birmingham.