Former U.S. Bancorp vice chairman Daniel Yohannes has joined several veterans of the San Francisco financial community to launch what they call the country's first commercial bank targeting green industries.
Peter K. Liu, vice chairman and chief business development officer of New Resource Bank, said he came up with the concept about 18 months ago.
The one-branch bank, which opened in San Francisco last month with initial capital of $24.8 million, blends the niche banking strategy of SVB Financial Group of Santa Clara, Calif., with a green banking concept flourishing in Europe, he said.
"We've seen a real rush of smart money into green and clean investing. This is part of a market opportunity that evolved from a movement," Mr. Liu, a former vice president in Credit Suisse First Boston LLC's global energy group, said in an interview Wednesday.
Environmental groups such as the Rainforest Action Network have been waging noisy campaigns to pressure the largest banking companies, including Wells Fargo & Co. of San Francisco, to do more to protect the environment. At least 41 large companies, including Wells Fargo, HSBC Holdings PLC, and Citigroup Inc., have signed the Equator Principles, which set guidelines for reviewing the environmental impact on multimillion loans.
New Resource plans to focus on lending to small and midsize businesses. It will seek opportunities among environmentally friendly businesses, "as exemplified by companies in the organic, clean energy, and green real estate sectors," according to the prospectus for the bank's initial share offering, which was completed last month.
The founders include chief executive Clay Jones, a former senior vice president in the venture banking group of Greater Bay Bancorp in East Palo Alto; director Robert Epstein, a co-founder of Sybase Inc. and Environmental Entrepreneurs, a professional network focused on green business opportunities; and Mr. Yohannes, who retired in 2003 as a vice chairman at U.S. Bancorp. He ran the commercial banking and consumer banking group after Firstar Corp. bought the old U.S. Bancorp in 2001.
An early investor in New Resource is Roger Smith, one of the founders of SVB Financial, which serves primarily start-ups backed by venture capital. He retired from SVB, then Silicon Valley Bancshares, in 1994.
"It's so hard to be just another bank. The reason I'm an investor is I like the niche play. I think this green movement is really going to take off, and I really like Clay Jones," Mr. Smith said Wednesday.
Mr. Yohannes, New Resource's chairman, said in an interview last week, "If we'd done something like this seven or maybe eight years ago, it probably would not have gotten a lot of support. But right now it gets considerable support, because a lot of businesses are emerging throughout the country, and a lot of people are supporting it, because they identify with the lifestyle."
Mr. Liu said he came up with the idea for the bank in 2004 while working on a green investing policy for two giant public-sector pension funds, the California Public Employees' Retirement System and the California State Teachers' Retirement System.
The concept has already been demonstrated in Europe, where Triodos Bank opened in 1980 in the Dutch city of Zeist. Triodos, which now also operates in Germany, Belgium, Spain, and the United Kingdom, is a founding investor in New Resource.
From 2001 to the end of last year, Triodos doubled its assets, to $2.7 billion.
Joe Morford, an analyst in San Francisco at Royal Bank of Canada's RBC Capital Markets Inc., said in an interview last week that New Resource has an "intriguing" niche strategy.
"We've been kind of skeptical about a lot of the de novo banking going on in the country, and in particular here in the West, for the plain, generic bank," Mr. Morford said. "But I think those that are targeting a particular niche, that look to be providing some real value-added, differentiated service in the market, may have a better opportunity."
Mr. Yohannes said that he is not worried about what some consider an overabundance of start-up banks in California, because New Resource's focus gives it an edge.
If there is something that he does worries about, it is what feels like the banking industry's version of global warming - margin compression.
"If you ask what's the biggest worry - it's the spread," he said. "Every banker will tell you that."
