Dive Brief:
- Savi Financial Corp. received regulatory approval from the Federal Deposit Insurance Corp. to form Orca Bank, a Washington state-chartered commercial bank headquartered in Bellingham, the company announced Tuesday.
- Savi still needs the Federal Reserve to green-light the transaction. If that happens, Orca expects to open in the first quarter of 2024, Savi Financial Chairman Michal Cann said in a statement.
- “Over the past 12 months, we have come to realize that the need for a true community-based bank that serves only Whatcom County is now more important than ever,” Drew Wilkens, incoming president of Orca Bank, said in a statement.
Dive Insight:
Mount Vernon, Washington-based Savi Financial already owns a bank — SaviBank — which counts $576 million in assets and comprises 10 branches spread over four counties and serves primarily small and middle-market businesses.
The transaction would form Orca Bank through a de novo charter, and Orca would acquire SaviBank’s Bellingham branch. Savi Financial, meanwhile, would acquire Orca as a wholly owned subsidiary.
Cann will serve as chairman and CEO of Orca Bank, Savi Financial said.
The formation of a locally focused bank is especially important as larger banks place more attention on digital offerings and bigger metropolitan areas, the company said.
In April, Fed Governor Michelle Bowman said the regulatory framework should be more supportive of startup banks as the number of financial institutions continues to decline in the U.S., due mostly to consolidation.
The number of Federal Deposit Insurance Corp.-insured banks shrunk by nearly half between 2002 and 2022 — , from 9,354 to 4,708, FDIC data showed.
“While there has been a slight uptick in de novo formation over the past few years, compared to the years immediately following the 2008 financial crisis, de novo activity has been significantly outpaced by consolidation,” Bowman said this spring.
Fewer than 50 de novo banks opened in the U.S. in the last decade — compared with an average of 100 a year before the 2007-08 crisis, according to the Fed.
“A lot of places, people can’t even remember the last de novo,” Charles Wendel, president of Financial Institutions Consulting, told American Banker in a recent interview.
Between the fourth quarter of 2022 and the first quarter of 2023, three new bank charters were filed, and four applications were withdrawn, S&P Global Market Intelligence data showed.
New Canaan Bank, for example, would have been Connecticut’s first startup in 12 years, but organizers withdrew their application in December, citing economic downturns.
Despite the reduction in de novo activity, some trends — including the ongoing demand for “charter strip” acquisitions, the growth of nonbank financial entities and the growing demand for banking-as-a-service partnerships — point to the “unmet demand” for de novo bank charters, Bowman said.
“The process of creating a de novo bank starts before an application is filed, and is a multiyear process, ideally ending after a brief period of early operations with the de novo transitioning into a mature, viable banking franchise,” Bowman said in April.
