Business owners may worry that one drawback of signing up with a de novo bank is that it's built to flip. And in some cities, there are already well-known serial bank entrepreneurs. Of course, any business you work with can be sold at any time. But according to the FDIC, only 5% of de novo banks are acquired in their first five years of business.
Meanwhile, more de novos are chartered every week. Consider the extraordinary case of Square 1 Bank, based in Durham, N.C., which was formally established last August. Initially, a group led by CEO Richard Casey set out to raise $105 million, the amount specified in its charter and an unusually large sum for a de novo bank. In fact, the offering was oversubscribed at $200 million.
Like other de novos, Square 1 was set on course by a merger. Casey had been an executive at Imperial Bank, where he initiated a program for lending to venture capital-backed companies. Imperial was then taken over by Detroit-based Comerica Bank. Casey left after a year, waiting out his noncompete clause, and then joined with former colleagues to launch Square 1. "It was a case of getting the old band back together," he says.
Today, Square 1 focuses on what it perceives as an underserved niche: companies that are backed by venture capital. The fledgling bank set up offices in technology parks in cities such as Austin, Seattle, North Carolina's Research Triangle, and Palo Alto, Calif. The plan is to provide a full range of banking services to this narrow band of clients. Casey and his team have knowledge of and ties to that community that run deep, he says.
Like other start-up bankers, he brings decades of experience to a bank that is brand new.
Looking for Account Ability
As with any start-up you work with, a de novo bank requires careful vetting
How do I find a de novo bank near me?
One way is to search the FDIC's Institution Directory. You can search for banks by state or Zip code and date of charter. You can also call state banking authorities or the federal Comptroller of the Currency, whose office formally issues bank charters.
How can I do due diligence on a de novo?
All banks must be insured by the FDIC to get a charter. By using the "bank find" feature on the FDIC's website, you can verify the insurance status of a bank. You can also call the FDIC hot line at 877-ASK-FDIC (877-275-3342).
How can I make sure the bank is right for me?
A lot of this will boil down to personal chemistry. You should also find out what the bank's assets are and how many customers it has. The typical de novo bank with $15 million in assets will have a loan maximum stated in its charter. If the cap is, say, $2 million, and you need that much or more, look elsewhere.
Dan Ackman can be reached at d.ackman@comcast.net.
Meanwhile, more de novos are chartered every week. Consider the extraordinary case of Square 1 Bank, based in Durham, N.C., which was formally established last August. Initially, a group led by CEO Richard Casey set out to raise $105 million, the amount specified in its charter and an unusually large sum for a de novo bank. In fact, the offering was oversubscribed at $200 million.
Like other de novos, Square 1 was set on course by a merger. Casey had been an executive at Imperial Bank, where he initiated a program for lending to venture capital-backed companies. Imperial was then taken over by Detroit-based Comerica Bank. Casey left after a year, waiting out his noncompete clause, and then joined with former colleagues to launch Square 1. "It was a case of getting the old band back together," he says.
Today, Square 1 focuses on what it perceives as an underserved niche: companies that are backed by venture capital. The fledgling bank set up offices in technology parks in cities such as Austin, Seattle, North Carolina's Research Triangle, and Palo Alto, Calif. The plan is to provide a full range of banking services to this narrow band of clients. Casey and his team have knowledge of and ties to that community that run deep, he says.
Like other start-up bankers, he brings decades of experience to a bank that is brand new.
Looking for Account Ability
As with any start-up you work with, a de novo bank requires careful vetting
How do I find a de novo bank near me?
One way is to search the FDIC's Institution Directory. You can search for banks by state or Zip code and date of charter. You can also call state banking authorities or the federal Comptroller of the Currency, whose office formally issues bank charters.
How can I do due diligence on a de novo?
All banks must be insured by the FDIC to get a charter. By using the "bank find" feature on the FDIC's website, you can verify the insurance status of a bank. You can also call the FDIC hot line at 877-ASK-FDIC (877-275-3342).
How can I make sure the bank is right for me?
A lot of this will boil down to personal chemistry. You should also find out what the bank's assets are and how many customers it has. The typical de novo bank with $15 million in assets will have a loan maximum stated in its charter. If the cap is, say, $2 million, and you need that much or more, look elsewhere.
Dan Ackman can be reached at d.ackman@comcast.net.
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