With some New Orleans banks struggling in the face of potential loan defaults and chargeoffs, a group of Louisiana bankers has applied to charter a new bank in the city.
Organizers of the bank, which was in the planning stage months before hurricanes Katrina and Rita struck, filed their application with state and federal banking regulators on Nov. 22 and have already lined up a whopping $40 million in start-up capital - making it by far Louisiana's largest start-up bank.
The investors include a pair of New Orleans natives starring in the National Football League, the Manning brothers Peyton and Eli.
First NBC Bank would specialize in construction, commercial, residential and bridge lending. It would be the first new bank chartered in New Orleans in more than 14 years.
"There's a huge opportunity to lend money down here," said Ashton Ryan Jr., a veteran Louisiana banker who is to be First NBC's president and chief executive.
Public officials are still debating how New Orleans - and how much of it - should be rebuilt, but there is little doubt that the city is to undergo a massive reconstruction that is expected to cost in the tens of billions of dollars. First NBC organizers say they are convinced the venture is a once-in-a-lifetime opportunity.
They also say that while other New Orleans banks have their hands full with the hurricane-related headaches in their existing loan portfolios, First NBC comes in with a clean balance sheet and fresh capital that will enable it to step in to the market take full advantage of the increased demand for credit.
One of the organizers, David Anderson, who is to be First NBC's trust officer, said, "We're a new bank that's coming into the market with no bad debt and fresh capital, which gives us a strategic advantage."
Louisiana Bankers Association CEO Peter Gwaltney said the timing of the application could appear curious. Most new banks open in areas that are fast-growing; New Orleans is losing population in droves and revenue from tourism, its main industry, has all but evaporated.
The situation is so dire that Rep. Richard Baker, R-La., told a House Financial Services Subcommittee this month that he had learned a "very significant number" of institutions could be at risk.
But Mr. Gwaltney and other observers said the funding needed for the recovery effort could create unprecedented demand for commercial credit.
Sid Seymour, the chief examiner of Louisiana's Office of Financial Institutions, said, "The reconstruction and recovery of New Orleans is going to bring a lot of contractors and builders into the area to renovate and build new homes."
Larry R. White, an associate professor of banking and finance at Mississippi State University, said the city's mayor and the state's governor "are both saying, 'We're going to build New Orleans back better than it was before,' and that money has got to come from somewhere."
Mr. Anderson said planning for the bank got under in April. He said recent consolidation - including the mergers of Bank One Corp. with JPMorgan Chase & Co. and Hibernia Corp. with Capital One Financial Corp. - has created a opening in the New Orleans market for a community bank that could serve small businesses, which generally demand more personal service.
After leaving his position as trust officer at the $677 million-asset First Bank and Trust in New Orleans, Mr. Anderson began assembling a management team for the new bank.
Mr. Ryan left his position as the president and CEO of First Bank and Trust in June and agreed to be the start-up chairman, president and CEO.
Mr. Gwaltney said that Mr. Ryan is well known in Louisiana banking circles, and that with his vast network on contacts he is an outstanding choice to lead First NBC. Mr. Anderson called him "the Bill Parcells of banking in Louisiana," referring to the highly regarded head coach of the Dallas Cowboys.
Though the hurricanes slowed the organizers' initial progress, they stimulated investor interest, Mr. Anderson said.
After the hurricanes hit, individual investors began putting more money into the venture, and investment banking firms such as Lehman Brothers and Bear Stearns & Co. Inc. contacted the bank's organizers.
Another Manning brother, Cooper, was one of the original investors, Mr. Anderson said. After Hurricane Katrina hit in late August, he suggested to his quarterback brothers (Peyton plays for the Indianapolis Colts, Eli for the New York Giants) that they consider investing, Mr. Anderson said.
"Interest in the bank has doubled since Katrina," Mr. Anderson said.
Mr. Ryan, Mr. Anderson, and a number of the bank's key investors and manager were born and raised in New Orleans. Though the bank gives the New Orleans natives an opportunity to play a rebuilding role, the investors see the venture as a smart business decision as well.
John Calhoun, an organizer and a New Orleans real estate developer, said that other banks "are focusing on their existing clients and maybe the issues that they're having," but "we'll be able to capitalize on the redevelopment effort."
Mr. Ryan added, "We're not in the charity business, that's for sure."
Mr. Seymour said that First NBC is still in the preliminary stages of the application process but that it "would not be unreasonable" for it to be up and running in the next 60 to 90 days.
