New banks of 2019

July 9, 2019 10:03 PM

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De novo activity is strong for the second year in a row.

The Federal Deposit Insurance Corp. approved applications for deposit insurance for 14 new banks in 2018. Eight banks have opened this year, including Piermont Bank and Trustar Bank in recent days, and seven other organizing groups have submitted paperwork.

Regulators, including FDIC Chairman Jelena McWilliams, have sounded more receptive to new-bank formation.

“I do not profess to know what the right number of banks in the U.S. is, but I recognize that, like many competitive industries, a dynamic banking sector needs new startups entering the marketplace,” McWilliams recently wrote in a BankThink opinion piece for American Banker.

The business models are varied. Grasshopper Bank in New York aims to back innovative companies around the country, while Watermark Bank in Oklahoma City and Mi Bank in Bloomfield, Mich., are focused on their local markets.

Here is an update on the de novos that have opened, or plan to do so, in 2019.

Watermark Bank

Watermark opened in northwest Oklahoma City in late January after raising more than $20 million in initial capital. The bank’s organizers had ties to Southwest Bancorp, which was sold to Simmons First National in October 2017.

Matthew Pollock, Watermark’s president and CEO (left), was a regional president at Southwest. Gary McClanahan (right), the bank’s chief financial officer, previously served as a finance officer at Southwest and as director of risk management at First National Bank of Oklahoma.

Watermark, which had its application approved by the FDIC last September, is courting businesses around Oklahoma City, emphasizing entrepreneurs and new companies.

New Valley Bank & Trust

Initially envisioned as Green Apple Bank, New Valley debuted in Springfield, Mass., on May 30.

Organizers had to raise $23.5 million before opening. The FDIC, in approving the group's application for deposit insurance, originally required organizers to raise $25 million before agreeing in late April to lower the amount of initial capital.

Jeffrey Sullivan, a former community banker and bank consultant, is the new bank’s CEO. He has stated that New Valley will rely heavily on technology and experienced talent to build scale and compete.

New Valley’s senior management team also includes Hayes Murray as chief financial officer, Ryan Hess as chief lending officer and Kate Gallo Megraw as chief operating officer.

Coastal Community Bank

Coastal Community aims to open in Hollywood, Fla., a community about 25 miles north of Miami, once organizers raise the $22 million in initial capital required by the FDIC.

Florida has been a hotbed of de novo activity. The FDIC has approved four charter applications in the state since mid-2017, including Winter Park National Bank, Gulfside Bank and Tarpon Coast Bank.

Coastal Community's organizers refiled their application with the FDIC on July 5.

Coastal Community’s CEO will be Joe Dorsey, a former chief operating officer at Calusa Bank and Community Bank of Broward. Jim Afflerback is set to become chief operating officer, and Anthony Fabiano will serve as chief financial officer.

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

Grasshopper Bank

Grasshopper, a New York de novo, opened in late May after raising more than $131 million.

It relied heavily on institutional investors, including affiliates of Patriot Financial Partners, FJ Capital Management, Hamilton Lane Advisors and accounts advised by T. Rowe Price Associates and Endeavour Capital Advisors.

Grasshopper's organizers intend to focus on the “innovation economy” by offering venture banking services to high-growth technology firms across the country. In fact, the de novo effort was originally called New York Venture Bank.

Judith Erwin (pictured), a former executive at Square 1 Financial, is Grasshopper’s CEO. Square 1 was a tech lender that was sold to PacWest Bancorp in 2015. Raj Date, a former deputy director of the Consumer Financial Protection Bureau, is one of the bank’s directors.

Erwin refers to Grasshopper as “a digital-first commercial bank for the digital entrepreneur.” The goal is to collaborate with customers to design products; a beta phase is set to begin next month with input from about 100 clients.

Ohio State Bank

Ohio State Bank in Bexley has been operating out of a temporary office since April.

Five organizers, including banking veteran Dave Mallett, were responsible for raising the required $24.5 million to open the bank. Mallett was CEO of First Bexley Bank, which was sold to First Financial Bancorp in Cincinnati in 2014.

Many of Ohio State Bank’s organizers and investors had ties to First Bexley.

“We will be a hybrid community bank," Mallett said. “We will serve the community we are in and provide business banking throughout central Ohio. It’s nothing new for us. That is the exact model we used for First Bexley Bank until we sold.”

The last new bank to open in Ohio was Columbus First Bank in 2007.

New banks of 2019

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