Dive Brief:
- Two banks targeting small- to midsize businesses are opening within a week of one another. Piermont Bank is set to open Wednesday in Midtown Manhattan. Upon its opening last week, Trustar Bank in Great Falls, Virginia, became the first new bank to gain approval in the state since 2008.
- The openings come amid a splurge in de novos. Eight banks have opened so far this year, according to American Banker. Seven other groups have submitted paperwork. And the Federal Deposit Insurance Corp. approved applications for deposit insurance for 14 new banks in 2018, marking a potential turnaround for a sector that reported four new bank openings in the first half of this decade, according to FDIC data.
- Piermont Bank opens after raising more than $40 million in initial capital. Organizers said last year that they aimed to raise $100 million, and amassing initial capital can still be a hurdle. Spirit Community Bank in Statesville, N.C., withdrew its application with the state after failing to raise the required $22 million.
Dive Insight:
Trustar's debut comes as other banks in the region gear up to open. VisionBank, based in Tysons Corner, Virginia, hopes to open its doors this year as a community bank for the area. And Washington-based Moxy Bank, a digital-first challenger bank, received conditional approval in January to operate in the District of Columbia. Trustar is looking to add a second branch in October.
Piermont is not New York's only recent new bank. Grasshopper Bank opened in the city in May to serve the area's innovation economy and venture capital firms.
Piermont CEO Wendy Cai-Lee said she thinks her bank will fill a void in the marketplace, targeting businesses that need to borrow $1 million to $12 million. "Most of them are multigeneration, family-owned businesses," she said. A number of Piermont’s top officers gained experience as executives at East West Bancorp, a California-based bank with full-service branches in several cities in China.
Trustar CEO Shaza Andersen served as the top officer at WashingtonFirst Bank before it was acquired in 2018 by Sandy Spring Bank, creating the largest community bank in the Washington area.
The spate of new openings may signal an infusion of new energy in banking, but the numbers are nowhere near those that arrived before the 2007-09 recession. The FDIC received an average of 143 charters a year between 2000 and 2007, according to the American Bankers Association.
FDIC Chairman Jelena McWilliams wrote in American Banker late last year, "I do not profess to know what the right number of banks in the U.S. is, but I recognize that, like many competitive industries, a dynamic banking sector needs new startups entering the marketplace."
