Dive Brief:
- Washington, D.C.-based Founders Bank, the first de novo to receive the FDIC’s conditional approval for deposit insurance this year, is set to open April 13, according to the Washington Business Journal.
- The timing of the first branch’s opening is contingent upon local regulations surrounding the coronavirus outbreak. But Founders Bank President and CEO Martin McCarthy said the bank will start taking digital deposits April 13 nonetheless.
- Founders Bank will become the first de novo to open in the nation’s capital in 15 years and the second in the region in the past 12 months. Great Falls, Virginia-based Trustar Bank opened in July 2019.
Dive Insight:
Founders Bank raised $30 million to receive final approval from the FDIC and the D.C. Department of Insurance, Securities and Banking. The bank looks to grow to about $215 million assets and become profitable in three years, according to documents seen by the Washington Business Journal.
McCarthy said Founders does not plan to open more branches because its clients are either nearby or can do most of their banking online. Additionally, he emphasized Founders is sensitive to the impact of the coronavirus outbreak, adding that bank employees can work remotely. In addition, the company plans to incorporate proper distancing and keep spaces sanitary for when customers need to visit the branch.
De novo activity in the Washington area has been unpredictable over the past year. Although Trustar hit $100 million in assets by September, two other local efforts to open banks never got off the ground.
Tysons Corner, Virginia-based VisionBank dropped its bid to open in August, and its leaders instead joined Tysons neighbor Old Dominion National Bank.
MOXY Bank — which looked to cater to underserved, often lower-income customers — gained the FDIC’s conditional approval in January 2019. However, that approval expired — MOXY’s entry is labeled "will not open" on the regulator’s website — after the bank failed to raise the required $25 million.
MOXY’s founder and chief technology officer, Keith Walters told the Washington Business Journal he is no longer seeking to be a chartered bank, but that MOXY may succeed as a mobile-first digital bank brand in partnership with an existing bank.
Founders Bank’s opening comes amid a recent drop in de novo activity nationwide. The FDIC received 24 applications in 2018 — a 10-year high — and approved 15. But approvals fell to nine last year. In particular, the disappearance of small banks has garnered the attention of FDIC Chair Jelena McWilliams. "With 14 million American adults without a bank account, we want to see more banks, not fewer," she wrote in an American Banker op-ed.
MOXY’s Walters stressed that opening a de novo isn’t easy.
"Access to capital for true de novo banks remains difficult," he said. "Newly opened banks seem to be a reshuffling of former execs, investors and boards. It’s a new hand but the same players."
MOXY’s CEO, Casey Mauldin, left the bank in August to become chief lending officer at another de novo in the region, Maryland-based NXG Bank.
Even the region’s success stories have previous de novo experience. The launch of Trustar came a year and a half after CEO Shaza Andersen sold WashingtonFirst Bank, which she founded in 2004, to Sandy Spring Bank.
Founders Bank’s makeup, meanwhile, consists largely of former executives at Bank of Georgetown, which was sold to United Bancshares in 2016.
"We appreciate the effort it takes and understand why it’s been challenging for others. The barriers to entry are certainly significant," McCarthy said. "We’re fortunate to be well capitalized and lean in our overhead."
