Arizona is in position to be the next big state for de novo activity.

Organizers for Scottsdale Community Bank and Gainey Business Bank have already received preliminary approval from the Arizona Department of Financial Institutions to raise capital as they work on charter applications. The proposed banks are also in the market for leaders and branch locations.

At least three other groups are in the earliest stages of formation, creating a level of activity that is on pace with North Carolina, where at least five groups are vying to become that state's first new bank since the crisis.

Several factors are spurring interest in Arizona, including a dearth of local banks.

Only 11 banks are based in the state, down from 56 before the financial crisis. Arizona hasn't had a new bank since Gateway Commercial Bank opened in 2007, and 15 of the state's banks failed between between August 2009 and August 2013.

The state's economy has also improved markedly since the crisis.

“We really think that now is the best time in years for opening a community bank in Arizona, particularly in Scottsdale,” said George Weisz, the proposed chairman for Scottsdale Community. “We will be a dynamic bank for a dynamic community.”

Scottsdale Community's organizers have been working on the venture for nearly a decade, Weisz said. A robust local business community, increased loan demand and some easing in banking regulation finally helped tip the scale.

Arizona was hit hard during the recession, particularly in areas such as home building, and unemployment was as high as 10.9% in late 2009, according to the Bureau of Labor Statistics.

While its recovery lagged many other states, Arizona is on much better footing now. Unemployment in June stood at 4.7%, slightly higher than the 4.1% national average, after the state added 68,000 jobs from a year earlier.

De novo interest is largely a result of a strengthening economy, particularly in Maricopa County, which includes Scottsdale, said Paul Hickman, president and CEO of the Arizona Bankers Association.

Scottsdale Community, which hopes to open its doors early next year, is authorized to raise $16 million.

The group behind Gainey Business Bank aims to raise $11 million to $13 million in initial capital. Organizers are in the process of vetting CEO candidates in hopes of opening in the first quarter, said Jim Unruh, who would be the proposed bank's vice chairman.

“We have a lot of things done but still quite a bit to go,” Unruh said.

Arizona is one of the states that let bank organizers secure preliminary state approval before filing an application with the Federal Deposit Insurance Corp. The approval allows the de novo to raise some money while checking off other boxes necessary for a full application.

At least one other group is in the process of securing preliminary approval.

Organizers of Discovery Business Bancorp in Chandler, Ariz., applied for preliminary approval about a month ago. The group is waiting to hear back before raising initial funds and searching for a president.

Discovery would serve small businesses and entrepreneurs, particularly in the medical industry, said Albert Amini, a surgeon and the bank's proposed chairman. The de novo, which has six directors in place, plans to recruit six more. In addition to financial services, the bank would provide educational resources to small-business owners.

“We want to have business banking services and be a think tank for entrepreneurs to help them grow and become more financially independent,” Amini said. “We can’t be a traditional bank. We have to be partners" with small-business clients "and have skin in the game to grow together.”

To be sure, there is no assurance that each proposed bank will open.

A group tried to form Grand Canyon Bank in Scottsdale in 2015 but withdrew its application the next year, citing too many regulatory challenges for de novos.

Regulators finally seem eager to support de novo activity, said Ernie Garfield, a former state senator and owner of Interstate Bank Developers, which specializes in forming de novo banks. He is working with several groups, including those behind Gainey, Scottsdale Community and Discovery.

Over his career, Garfield has assisted in the formation of 18 Arizona banks. Only four of those remain.

Still, Garfield was optimistic that there is enough room in the market for several new banks, noting that each organizing group has a robust list of contacts that could become clients.

“All we need is one-half to 1% of the deposits in the state of Arizona to be successful,” Garfield said.

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