Back in 1982, New York National Bank was founded in the Bronx. But regulators say it’s been 25 long years since another de novo has dared the same feat in this New York City borough of 1.3 million residents. But CheckSpring Community Bank is willing to take that risk, even though its headquarters is smack dab in the middle of a borough the U.S. Census Bureau says has a median household income of $30,000. That’s because the bank's founders see opportunity: The borough includes 119,000 underbanked households—or a whopping 26 percent of the adult population, according to the federal agency, Office of Financial Empowerment.

When Charles Wilcox moved to the Bronx from Upper Manhattan in 2000, it was easy to see how underbanked the area was: There were few branches and lots of check-cashing offices. After leaving Citibank in Manhattan in 2001, where he was vp of strategic business development, he teamed up with Kelly Dillon, another Citi alumnus who was a project consultant for Morgan Stanley, and Charles’s cousin, Mac Wilcox. The trio, who founded CheckSpring Community Corp. in 2001, saw a promising challenge: banking the unbanked.

On November 5, the bank opened its doors to the public. While one can’t throw a stone in Manhattan without hitting a bank branch, it’s not the same in the neighborhood of CheckSpring’s flagship branch at 167th street and Gerard Avenue — about six blocks north of Yankee Stadium, which is home to five check-cashing stores. “The most important way [we’ve reached the unbanked] is that we’re here,” he says. “There is not another bank branch within a half a mile of us.”

CheckSpring is targeting small contractors, such as plumbers and sheet-metal operators, with under $5 million in annual revenue, and is coordinating partnerships for microenterprises with less than $300,000 in revenue. “A bank can only make a difference if it is a viable and profitable entity in itself,” Wilcox says. “We think of it as a socially responsible business, but it’s still a business.” After its first six months, the privately held bank boasts $16 million in assets and 1,500 customers, half of which were previously unbanked. That’s small by New York City banking standards, but Wilcox likes it that way.

The bank has 20 employees and its directors include Dillon, the treasurer; Mac Wilcox, evp; Demetris Giannoulias, a majority investor and president and CEO of Chicago’s Broadway Bank; and William Myers, co-founder and former CEO of Ithaca, NY-based Alternatives Federal Credit Union.

Myers says the market is a ripe one. “It’s crowded,” says Myers, now a fellow at the Aspen Institute, a non-profit in Washington D.C. “The check cashers have been profitable and a depository can deliver all the services that they deliver, plus. So you can actually do better with the same set of clients because you have a wider range of products.” CheckSpring markets itself in a grassroots kind of way. Executives attend community boards, network with local leaders, and speak at church and small-business gatherings. Current clientele consists mainly of Mexicans, Dominicans, Puerto Ricans and a growing number of West African immigrants.

The bank’s most successful project targeting new customers has been with Bronx-based nonprofit Ariva, for whom it offers free tax-preparation services for people earning under $45,000 annually.

This past spring’s program drew 232 new accounts, for a total of $59,670 in CDs, checking accounts and savings accounts. Out of the 76 customers who opened a CD account, 71 are active. “It remains to be seen how sticky those monies are,” Dillon says, “but thus far we are seeing pretty good retention.”

Wilcox hopes the bank will be profitable by 2010; his strategy includes buying neighborhood check-cashing stores to expand its branch footprint, and possibly opening branches elsewhere in the Bronx, Brooklyn, Queens or Upper Manhattan. Wilcox expects the bank won’t exceed $65 million in assets by 2011. Though he declined to provide return-on-equity or return-on-asset figures, calling them “meaningless,” Wilcox says the bank is “on par” in terms of income and ahead in expense control. (c) 2008 U.S. Banker and SourceMedia, Inc. All Rights Reserved.

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