The Lakeside Bank has barely been in business a month and already it's making headlines. It is the only new start-up bank to open in America this year. It's not housed in some towering beacon in the sky, but a secondhand, standard double-wide trailer in Lake Charles, Louisiana.
As first reported by the New York Times, the long road traveled took more than two years, with the initial idea coming from local real estate developer Andrew Vanchiere, who was fed up with his bank. He rounded up a group of local businessmen who set out on a capital hunt. In less than six months they were able to raise $12 million.
"We were able to raise money primarily from within our zip code, from business people, as well as individuals. We don't want big investors. No one investor will own more than 15 percent," says Hartie Spence, president and CEO.
That capital was an important factor in the FDIC decision to approve Lakeside. In addition, says Spence, the new bank had a conservative business plan, a solid management team and board of directors. The bank was also helped by the company it keeps. Other banks in the region are mostly healthy.
So far this year, 118 banks have failed and the FDIC has stepped up oversight of new banks. So what gives Lakeside Bank the moxie to move forward in this environment?
"Research shows that 25 percent of the American public wants to do business with a locally owned and managed bank. That's a huge market," says Spence. Lakeside is looking to be the folksy, hometown favorite. "We want to be a plain vanilla, community bank," says Spence. "If you want a loan you want to deal with people you know. We're going to be very close, touchable," says the former offensive tackle for Louisiana State University, who has a law degree, but decided to pursue banking out of college.
"We want to run banks the way they used to be. We will not screen calls. You will get voicemail if you ask for it. We're about humans to humans. I have my home phone number on business cards," says the 70-year-old, balding, good-humored Spence, who came out of retirement to get back into the banking action, where he had been for more than 40 years.
Fishing buff goes back to fishing for dollars
In 2008 he retired from Hancock Bank of Louisiana in Baton Rouge, where he served as president and chairman for more than a decade. But he was willing to give up leisurely days of duck hunting and fishing to move back to Lake Charles which is home to "fabulous fishing and duck hunting," says Spence, who only has the luxury of casting his reel on Saturdays.
Just how country courtesy will play out with the general public remains to be seen. Lakeside plans to launch a newspaper and television marketing campaign touting its motto, "The Way Banking Should Be."
The bank has opened about 100 accounts, mostly checking and some savings accounts. Lakeside has $13 million in assets and $2 million in deposits. So far, much of the bank's business has come from its investors and directors. Lakeside offers standard banking services, such as checking and savings accounts, small business loans, certificates of deposits, as well as online banking. The bank expects to break ground on a new building in the summer of 2011, not far from where the trailer sits.
Ironically, many of the big institutions that Spence wants Lakeside to distinguish itself from, are neighbors on his street, Nelson Road. There's competition from the big guns. But he says there's room for all of them. And he welcomes a competitive environment. "Competition makes the world go round. I know the other presidents, they're friends. Nothing is better than taking business from your friend. It's friendly competition though," says Spence.
Lake Charles, "target="external" >has a population of about 71,000 and is a mix of oil refineries, casinos, as well as companies like the Shaw Group and Northrop Grumman that are adding positions, says Spence. "The banks in this region are doing well because of our diverse economy. That's the secret."
Though he's a bit of a lone wolf in the start-up bank arena this year, he is not daunted. "It's the best time to open a bank, because it's easier to make loan decisions. Then there are also people who are looking for a new bank because theirs failed," says Spence optimistically.
Raising capital was the big hurdle, he says. There will be others, particularly in this economy. Already he's learned a huge lesson – patience,"I want the business to grow extremely fast, but it can't and it shouldn't."