De Novos: Banking With a Purpose

De Novos: Banking With a Purpose

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This year is poised to be the most active for de novo banks that we’ve seen since before he Great Recession. Five new banks have already opened their doors and two others are scheduled to open in June. While we would like to say they are all community banks, that is not the case.

3½-Star Nelnet Bank, which opened last November as Utah’s fifteenth Industrial Bank, was followed up by 3½-Star Square Financial Services this March. There are several other ILCs in organization in the Beehive State; all with the hopes of opening for business soon. The exception is Bank of St. George, which applied for a community bank charter, but seems to be stalled along the way.

Four of the new community banks that did open between 2019 and 2020 are in Georgia, which was hit hard during the Recession, losing 92 banks to failure. It’s good to see bankers filling in the community bank vacuum that grew as a result.

Similarly, Scottsdale Community Bank, assuming it is able to raise the $16 million in capital needed, will be the first in that banking desert since 2008. While 70 banks have branches in Arizona, after losing a whopping 58 banks between mergers and failures from 2006 through 2014, only 13 banks call the Grand Canyon State home today.

Another thing we are noticing, another sign of the times, is niche banks, like Climate First Bank, scheduled to open June 1st in St. Petersburg, FL. While Climate First will operate as a full-service community bank, it has a higher calling. Climate First bills itself as the first bank in the country with a mission of addressing and reversing climate issues.

There seems to be a lot of interest. By the first of March, organizers reported they had already received $23 million in signed commitments (Tampa Bay Business Journal March 2, 2021). They were only required to raise $17 million.

Another looking to open in Hialeah, Florida (Miami-Dade County) is OUR Community Bank, which plans to focus on the Hispanic and Latino population in South Florida. While 23 banks have branches in Hialeah, this will be the first headquartered in the 6th largest municipality in the Sunshine State.

Two of this year’s de novo hopefuls are geared toward women:

FWBank out of Chicago, which received conditional approval last July, was organized by women and plans to run the bank with female business owners in mind. Marianne O’Brien Markowitz, President and CEO, hopes to promote gender equality and bridge the gender gap in access to credit.

The other, Agility Bank, N.A. in Houston, is female owned and will be mostly female run. It plans to run a community bank that is digitally-focused to make banking, well, agile. President and CEO Lauren Sparks aims for efficiency and effectiveness. The bank will serve the diverse population of Houston, with a particular focus on women and minorities.

There are also Native American de novos in the works, a segment long under-represented by the nation’s banking system. It’s been 18 months since Legacy Bank, CA submitted its first application (JRN 37:10), and approval was finally granted in December. The Soboba Tribe of Luiseño Indians will finally have a bank to call their own. There are only 18 Native American minority banks in the country, none in California. In fact, over half are located in Oklahoma. The rest are scattered about, from North Carolina to North Dakota. None are located in Louisiana but a group of tribes (Choctaw, Chickasaw, Cherokee, Yamasee, and Washa) joined forces and submitted a de novo application for FBBJR Tribal Bank, Slidell, LA. To date, it has been returned twice.

Another Louisiana hopeful, ViZ Bank, has also had its application returned twice. But that’s not discouraging this minority group. A March article in Louisiana Weekly indicated a new application would be submitted within weeks. While we see no evidence of it yet, this Black/African-American owned and run bank plans to open café style branches (ViZ Life Centers) in several cities from Miami to Denver.

The premise for this bank is simple: Do Good, Live Well. Similar to Climate First Bank, ViZ Bank aims to be carbon neutral. But the environment is just one of several goals. Its primary focus, or at least the one that stands out most to us, is to provide second chances. Instead of focusing on a person’s past, it will look toward the future. Giving people the credit needed to obtain loans, start a business or even stay out of prison. All this while maintaining high capital levels, a safe loan to deposit ratio and a stable bank. We wish the entire 2021 de novo class well.

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