Why this community banker wants a national charter

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David Dotherow is a big a fan of the national charter.

So much so that Dotherow, who is working to open Winter Park National Bank in Florida, has applied with the Office of the Comptroller of the Currency for what could become the first national de novo charter in more than seven years. And he is doing it at a time when the national charter is quickly losing members.

The number of OCC-regulated banks is down 7.3% since the end of 2015, based on data compiled by the Federal Deposit Insurance Corp. That compares with a 4.4% decline in FDIC-regulated banks and a 1.3% decrease in institutions supervised by the Federal Reserve.

Several banks have scrapped the national charter in recent years, with many saying lower supervisory costs was the determining factor. Mergers have also contributed to the decline, along with the fact that the OCC has received just 13 charter applications since late 2010. All the other de novo applications being considered are for state charters.

Dotherow’s contrarian view stems in large part from the ties he has established over the years. He has spent most of his three decades in banking working at national banks, building a rapport with the OCC and its examiners.

“I’ve developed what I would think are pretty good relationships with those folks,” Dotherow said. “I like to deal with people I’m used to. … They’re very professional. They have very smart, talented people all the way up through Atlanta, Washington and all levels.”

But there is more to the decision than gut feel.

It also helps that the FDIC accepts OCC audits, eliminating the need for a separate examination. That, in theory, gives management more time to focus on growth initiatives.

“When you have a state charter, you have to deal with audits from both the state and the FDIC,” Dotherow said. National banks “don’t have to have two different groups, which take away from your core, primary purpose of developing business for your bank, not worrying about how many audits you have to deal with.”

There is also the matter of pre-emption, where the National Bank Act supersedes state banking laws in areas such as fair lending, industry observers said.

Bankers, in the end, really need to work with the charter that brings them the most comfort, industry observers said.

“It comes down to how senior management feels they’ll get along with regulators,” said Bert Ely, a banking consultant based in Alexandria, Va. “Some situations get really personal, particularly at smaller banks where the CEO is deeply involved in the exam process.”

That issue is all the more important for a newly created bank.

“It helps getting it started and approved if [regulators] know you and you know them,” said Chip McDonald, a lawyer at Jones Day. “If they think well of you, like all relationships that helps. It doesn’t change the statutory factors except they know you and trust you.”

The OCC has had extensive dealings with Dotherow, who received a national charter in 2008 when he opened New Traditions National Bank in Orlando, Fla. The bank sold itself in 2012 to Old Florida Bancshares for $45 million.

Bryan Hubbard, the OCC’s deputy comptroller for public affairs, declined to comment on Winter Park, though he said the regulator welcomes new applications.

“Applications for de novo banks enrich that system, and the OCC is encouraged to see applications from bankers who recognize the value of being part of the federal banking system and are committed to meeting the high standards required of national banks,” Hubbard said.

The agency, meanwhile, has been talking up a proposed charter for fintech firms.

Dotherow, for his part, plans to start raising $30 million in capital in April with hopes to open his new bank by August. While some proposed de novos are planning to offer niche services or target certain ethnic groups, Dotherow intends to follow a more mainstream approach.

“We want to service small to midsize companies … and consumers within our community that are looking for personal, high-level service,” Dotherow said. “I would call it traditional community banking.”

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