Months after selling their New Jersey community bank to Summit Bancorp for a big profit, three former directors are taking on the regional through a new venture.
The former board members of Garden State Bank are busy raising up to $9 million to open Community State Bank in Teaneck, N.J. The bank is one of six start-up commercial banks seeking approval from state regulators this year.
"We all kind of decided wouldn't it be a good idea to start up a new one," said Matthew Lindenbaum, a director at Garden State until Summit bought the Jackson-based bank in January. "Since all the banks in New Jersey are being bought out by these large regionals, we just think there's an opportunity for the high-service, high-touch community bank."
The five other start-up ventures show that other investors - and former bankers - are also spying the same opportunities in New Jersey's banking scene. The rash of start-ups is likely being spurred by mergers of larger banks in the state because bankers are seeing a chance to make money in community banking.
"I think there is a clear role for community banks but they have to identify a niche and they have to embrace technology," said Elizabeth A. Summers, a bank analyst at Ryan, Beck & Co. in West Orange, N.J.
Mr. Lindenbaum, general partner of Basswood Partners LP, a Paramus, N.J., investment firm with a stake in Community State Bank, said the Bergen County start-up wants to go after customers who don't want to deal with a large regional bank. He said it will try to compete with the large banks by offering remote banking through the Internet and other channels, and "high tech services and products you don't find in a hokey community bank."
The new bank will be doing business in a county where Summit controls 22% of bank deposits.
Stuart Lubow, former chief operating officer of the $312 million-asset Garden State Bank, will be Community State Bank's president and chief executive officer. Michael Levin, a founder and director of Garden State Bank, will serve as a director.
Although the three played a big role in selling Garden State for 2.5 times book value, Mr. Lubow said they're not trying to turn a fast profit. Besides, state banking laws prohibit the sale of a new bank for five years after it opens.
The current wave of start-ups is the third to hit New Jersey in the last three decades.