New banks of 2019

July 9, 2019 10:03 PM

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.

David McNeese

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.

Tandem Bank

Tandem Bank is the most recent de novo to get FDIC approval.

Organizers in Tucker, Ga., received the green light on May 2. With $18 million in capital already raised, the group plans to open the bank this fall.

Charles DeWitt, a former president of CharterBank's north Atlanta region, would serve as the bank’s CEO. Michael Keller is set to become chief credit officer, while Libby Walsh would become chief financial officer.

DeWitt was also president and CEO of Resurgens Bank, which was sold to Charter in 2017.

The plan is to operate a branch-light model, with a main office in Tucker and a suite of technology offerings for commercial and retail clients.

Mi Bank

Mi Bank significantly exceeded its $20 million capital goal before opening in late May.

The Bloomfield, Mich., de novo’s organizers brought in more than $30 million on their way to opening the state’s first new bank since the financial crisis. The bank is initially focusing on small and midsize businesses in its local market.

Rob Farr (pictured), a former CEO of Birmingham Bloomfield Bancshares, has the same title at Mi Bank. Farr’s previous employer was sold in 2017 to Bank of Ann Arbor.

Farr recruited a number of familiar faces, including Jenny Meir, Mi Bank’s president and a former chief revenue officer at Birmingham Bloomfield. Tom Dorr, another former Birmingham Bloomfield executive, is the new bank’s chief financial officer and chief operating officer.

American Bank & Trust

While several new banks are planned in North Carolina, American Bank & Trust in Monroe became the first de novo in the state in more than a decade.

The bank’s founders opened their first branch on May 5 in a community just east of Charlotte, N.C. Organizers raised about $22.5 million; they plan to keep selling shares through the end of June.

“We are committed to being the bank of choice in our market area for customers who are looking for a higher level of service and an alternative to the big-bank experience,” Randy Aycock, the bank’s CEO, said in a recent press release.

The American Bank brand is known in the area. American Community Bancshares in Monroe was sold in 2009 to Yadkin Financial. Randy Helton, who served as a consultant to the organizing group, was American Community’s CEO.

Piermont Bank

A group of former East West Bancorp executives have opened Piermont Bank in New York.

Piermont debuted near Bryant Park in early July. An official ceremony is set for July 17.

The FDIC approved the organizers’ application for deposit insurance in early December, requiring them to raise $100 million in capital.

The proposed bank is led by Wendy Cai-Lee, a former executive vice president at East West. Julia Gouw, who once served as East West’s chief operating officer, joined the de novo’s board.

Other directors include Janie Barrera, founder and CEO of the nonprofit small-business lender LiftFund, and Charles Roff, who once was on the board of MetroCorp Bancshares. East West bought MetroCorp in 2014.

Trustar Bank

Trustar Bank opened earlier this month.

The Great Falls, Va., bank is also planning a commercial lending office in nearby McLean. It became the first new bank to open in Virginia since the financial crisis.

Shaza Andersen (pictured), former CEO of WashingtonFirst Bankshares, has the same title at Trustar. The $2.1 billion-asset WashingtonFirst was sold to Sandy Spring Bancorp in Olney, Md., last year.

Andersen recruited several former WashingtonFirst executives to join the effort, including Matthew Johnson, the bank’s former chief financial officer; Michael Amin, former senior vice president of operations; and Karen Laughlin, WashingtonFirst’s head of human resources. The executives would have similar roles at Trustar.

Lexicon Bank

Organizers in Las Vegas went through several different brands before zeroing in on Lexicon Bank.

The proposed de novo was originally called Sterling Bank. The FDIC approved an application for deposit insurance for a renamed Catalyst Bank in July, requiring the founders to raise $20 million in initial capital.

Lexicon is the name that organizers hope to debut later this summer.

The proposed bank would be led by John Miller, a veteran bank investor and a director at Pioneer Bank in Austin, Texas, and Mission Valley Bank in Sunland, Calif.

Diane Fearon, a former CEO at Bank of George, is set to serve as the bank’s president. The original plan had Donald Murray, a former CEO of Commerce Bank of Temecula Valley in Murrieta, Calif., serving in that role.

MOXY Bank

While MOXY Bank would be based in the nation’s capital, many of its employees would work out of Charlotte, N.C.

Casey Mauldin, who is set to become the proposed bank’s president and CEO, said that strategy should help keep costs in check. MOXY plans to rely heavily on technology and financial literacy programs as it focuses on low- and moderate-income customers.

MOXY would also qualify as a minority-owned bank. Melissa Bradley is one of the proposed bank’s organizers. She is a managing director of Project 500, a business development program designed to help diverse businesses build revenue, staff and investment.

Bradley is also the managing director at Sidecar Social Finance, which provides advisory and capital services to individuals, institutions and social enterprises.

The FDIC approved MOXY’s application in January. Organizers must complete a $25 million capital raise before opening.